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Check for fees, expiration dates on gift cards — and don't forget to use them

| Friday, Dec. 27, 2013, 12:01 a.m.

There's a good chance you got a gift card for Christmas.

That's not a news flash from the North Pole. It comes instead from the National Retail Federation, which estimated in a recent report that more than 80 percent of shoppers would buy a gift card for someone this holiday season.

The average person will spend about $163 on gift cards, the group's survey found. That's up 4 percent from last year and represents the highest average amount since the retail association began tracking such things 11 years ago.

Total spending on gift cards this season will reach about $30 billion, the group predicted.

There are a few things to keep in mind when it comes to these convenient and ubiquitous holiday goodies. First off, some gift cards come with a ticking clock.

In some states, retailers are allowed to place an expiration date on gift cards. Or they might attach service fees for using them or even a so-called dormancy fee if you don't use them.

Nationwide, new rules for gift cards were laid down in 2009 by the Credit Card Accountability, Responsibility and Disclosure Act. They require consumers to use a gift card at least once a year to avoid service, dormancy and inactivity fees. They also limit retailers to one such fee per month.

Expiration dates are allowed by the federal law, but only after at least five years.

Department store gift cards will be the most commonly received this Christmas, according to the National Retail Federation. About 40 percent of card givers will take this well-traveled path.

Other favorite picks, the group found, are restaurants, electronics stores, online merchants and gas stations.

Be careful if you're thinking about giving a prepaid debit card as a gift. They may be handy, but they also can come with a variety of fees.

For example, MoneyGram's AccountNow Prepaid Visa debit card has a $9.95 monthly fee, a $4.95 activation fee, a $2.50 charge each time you withdraw money from an ATM, and an additional $1 fee each time you need to check your balance, according to a recent study by BankRate.com.

On the other hand, the American Express Prepaid card comes with no monthly fees, no activation fee and one free ATM withdrawal per month. It pays to shop around.

“You might buy a prepaid card that's worth $40, but with all the fees, it could end up being worth just $30,” said Bob Phibbs, a New York retail consultant.

The National Retail Federation estimates that about 60 percent of consumers are happy to receive gift cards. But if you're among the disgruntled 40 percent, don't sweat it.

There are online marketplaces where people can buy and sell unwanted gift cards. Sites such as Gift Card Granny and CardCash will allow you to convert a card into ready money — often about 75 percent of the card's face value.

A quick word about scams: Watch out. There have been reports of scammers going to the racks of gift cards in stores and writing down the various card codes.

Then they check to see whether the card has been activated by going to websites such as GiftCards.com. Once a card is up and running, the scammers use the code number to buy merchandise online.

Always take a close look before buying to see whether a gift card has been fiddled with, such as a loose or scratched sticker or coating over the card code.

And if you did get a gift card for Christmas, use it. About $1 billion in gift-card value goes unused each year, according to the consulting firm CEB TowerGroup.

A gift card that gathers dust in a drawer is free money for a retailer.

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