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New Gift Card Rules Protect You Better

Federal rules designed to help gift card holders go into effect Sunday.

They regulate expiration dates and offer more of a shield from hidden fees.

The rules result from the Credit CARD Act (Credit Card Accountability Responsibility and Disclosure Act of 2009), which Congress aimed at credit card industry practices deemed anti-consumer.

Gift cards are big business -- $88 billion a year, according to the Tower Group, a consulting firm - and some $5 billion worth go un-used.

That, CBS News Business and Economics Correspondent Rebecca Jarvis pointed out on "The Early Show" Friday, was because the cards expired, fees ate away at their value, or holders simply didn't use them.

But, she added, gift cards are fun and convenient -- you can buy them for many different retailers.

The new regulations, says Jarvis, call for FULL DISCLOSURE of fees and expiration dates ON THE CARDS.

Under the incoming rules, gift cards purchased Aug. 22 or after must hold their value for five years. Each time you reload your card, the five-year clock starts on the amount you add. Physical cards can have an expiration date, but not your money. So if your card expires before five years and there's still money left on it, call the card company and ask it to transfer your money to a new card. They must do this for free or return the remaining balance.

Companies will also be prohibited from charging nonuse fees unless -- and this is a big exception -- you failed to use the card for 12 months.

Also, no more than one fee (of any kind) can be charged to the cardholder in a single month, though there are NO LIMITS ON HOW MUCH THAT ONE FEE CAN BE.

The rules apply whether the cards are bought online, through the individual stores, or at a grocery store or pharmacy.

Still, Jarvis observed, some things aren't covered:

Prepaid Debit Cards: These are very popular with people who don't like having a credit card, and include prepaid phone cards and rechargeable debit cards from the big credit card companies. These don't fall under the same rules.

Rebate and Loyalty Cards: If you send in a rebate and get a debit card in return, that's not covered. A loyalty card is what a business sends serving as a promotional coupon or voucher.

One-time Transaction Fees: You often see, particularly on gift cards issued by the big credit card companies, that it costs something like $4.95 just to purchase the card. That fee can still apply.

Jarvis stresses that gift cards were never meant to be savings products. You need to use them or lose them.