Last Updated Aug 20, 2010 1:26 PM EDT
The final stage of credit card reform, officially called the CARD Act, goes into effect on Sunday, concluding a two-year process aimed at stamping out sneaky, hidden fees on plastic. The most significant piece of this stage of reform are the new rules for gift cards.
Here's what they do:
- Extend expiration dates: Money placed on gift cards after August 22 is good for five years from the date of purchase or "reloading" cash on the card. That's in response to past practices in which some issuers would have their cards "expire" within months of issuance.
- Lazarus cards: If your gift card expires when there's still money on it, you can request a new card.
- New-card fees: In the first year you get a gift card, only one fee can be imposed. That's a fee to purchase the card. Purchase fees are not common with single-store cards, but are regularly charged by the issuers of general-purpose gift cards, such as those branded with Visa and MasterCard logos. Typically, purchase fees on these cards range from $1 to $5.
- Subsequent fees: You used to be charged for inactivity, reloading, replacing, "service" and "maintenance" of your gift cards. Now, you can only be charged a fee if you don't use the card for more than a year. Even then, you may not be charged more than one fee in a single month.
- Disclosures: If your gift card imposes fees, the details of those charges must be printed on the card in the future, along with a toll-free number and web site where you can go for more answers. Card makers got a temporary delay in the implementation of this piece of the law because they argued that they'd already made millions of plastic cards that would need to be melted if they didn't get more time. Charges imposed on gift cards will be printed on the cards starting in January. For now, retailers selling the cards must tell you about the fees and post information about them prominently where they're sold.
- State laws: Importantly, if your state has even stricter rules for issuing gift cards, your state law will prevail. That means that gift cards issued in Hawaii can't charge fees for five years, rather than the one that's demanded by federal law. And if you've got a balance of less than $10 on a card in California, you can ask for the cash, says Bill Hardekopf with LowCards.com.
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