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New Gift Card Rules Changed the Game on Aug. 22

gift card

Rules effecting gift card fees and expiration dates changed as of Aug. 22 as a result of the Credit CARD Act of 2009.

The media has paid a great deal of attention to how the final batch of provisions new rules impacts credit cards, but gift card fans will be pleased with the new limits on penalty fees and rate increases.

The new provisions apply to all merchants and services, whether for department store gift cards or automotive and travel gift cards.

The rules also impact gift certificates, store gift cards and general-use gift cards, including the Visa,  American Express or Mastercard gift card that can be used anywhere the network brand is accepted.

Here's what the new rules mean for consumers.

1. Longer Expiration Periods

This is the best part. Consumers will have more time to spend the money loaded on to gift cards before they expire. Across the board, gift-card balances can't expire for at least five years after purchase or after the consumer last loads money on to it.

If the card expires but the funds haven't been used, consumers can request a replacement card at no charge.

2. Limits on Certain Fees
Consumers will have more time to spend the money loaded onto gift cards before fees eat up the balance. The card issuer can't charge inactivity or service fees (such as ATM or balance-inquiry fees) unless the consumer hasn't used the card for a full year. After one year, only one such fee can be deducted per month.

This restriction doesn't apply to other fees, such as activation fees or replacement fees for lost or stolen cards.

3. New On-card Disclosures
The CARD Act requires certain information now be included on the card itself. This includes the frequency and amount of any fees a consumer may be charged. It also must, if applicable, include any possible inactivity fees.

Expiration information will be included on all card, as well as a toll-free number and website address for further information.

4. ECO-Gift CARD Act
These disclosures may not appear on cards until after the holiday season, thanks to the recently passed the ECO-Gift Card Act. Card issuers can sell existing stock, produced before April 1, 2010, through Jan. 31, 2011. These cards must meet the other requirements regarding fees, expiration and disclosure of consumers' rights through alternative methods, such as in-store signage and advertising.

That means you'll have to keep an eye out for this information when purchasing a card and pass it on to the gift card recipient. Experts anticipate most in-store signage will refer consumers to a website or toll-free number.

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Ya, i read about this on USA-Today. I think its great. It'll create more challenge or compaction among cards provider, which is a good thing for consumers.