Making the most of holiday gift cards

(FOX Providence) - In 2009, Congress took action to protect college students from questionable marketing practices used by credit card companies.

Part of that credit card reform bill, which took effect last year, was also aimed at protecting consumers who used gift cards.

Students who may have received such cards over the holidays should know about these changes.

Peter Kerwin from the Rhode Island Higher Education Assistance Authority, joined The Rhode Show to talk more about it.

What’s new with gift cards this season?

We’ve talked about that credit card reform bill before because it really brought about some important changes on college campuses, but what hasn’t gotten a lot of attention are the gift card reforms that were contained in the law. A lot of people like to use these gift cards during the holidays and it’s important for the givers and the receivers to know what they are getting with these products.

There were three big changes for gift cards this year as a result of the Credit CARD Act. First, there are better expiration dates. These cards cannot expire less than five years after purchase, so it gives the recipients plenty of time to make use of the cards, rather than finding out a few months after the fact that the card is no good. Second, there’s better disclosure of the terms. If there are fees for the cards being inactive for a certain period, that has to be made clear up front. Finally, there are no more unused balance fees for the first year. In the past, those fees could immediately start being imposed and reduce the value of the card. Now, those fees can’t be imposed during the first year and they can only be assessed once a month.

What are some things people should know when it comes to buying and using these cards?

Like any other financial product, know the terms and know the fees. You have to shop around to find the best deal. Also, there’s such a variety of cards out there, you have to know what cards these new laws apply to and which ones they don’t. The new Credit CARD Act rules don’t apply to reloadable prepaid cards and prepaid cards received through a loyalty award program or promotional program.

Make sure you get a gift receipt for each card purchases and include that when you give the gift card so the card holder can replace the card if it is lost or stolen. Be wary of gift cards sold on online auction sites—they can be stolen or counterfeits.

The big thing to remember is to use these cards sooner rather than later. If you’ve given one of these gift cards to someone, don’t feel bad about reminding them to use them. That’s the best way to make sure you get the maximum value from the cards and avoid racking up fees.

You can visit the National Consumers League website, www.nclnet.org to learn more about these gift cards and other consumer issues. You can learn about how to avoid the latest Internet and telemarketing scams and get a lot of good information about the range of financial products being marketed to young people and other consumers.