Gift cards may be the gift that stops giving

Here’s the story. Last year I was given two $50 gift cards. My plan was to buy something that I wouldn’t necessarily buy for myself and apparently that occasion never occurred because a couple of weeks ago I found them still safely tucked in a drawer.

I was happy. I could treat for dinner at the expensive restaurant we had planned to go to. When the check came, I put down the two cards and the server came back to tell me that one card was worth $36 and the other $40. What? I’m not good at math, but I knew that didn’t come out to $100.

Here’s the deal. Even though these cards said there were no fees after purchase, two things were at work. One is that after a year the bank can deduct $2 or more per month from the balance on the card in what they call maintenance fees; and two is that a restaurant will commonly hold back 20 percent in hopes (I assume) that you’ll leave the card behind as a tip.

According to the National Retail Federation, 80 percent of shoppers plan to give gift cards as presents this holiday season.

“Additionally, gift cards have topped holiday wish lists for seven years running, with six in 10 consumers hoping to receive one for Christmas this year. Meanwhile the CEB Tower Group (technology research and analyst expertise for the financial services industry) reports $1.7 billion in gift cards went unused in 2012, leaving quite a bit of money on the collective table,” the NRF said.

Whew! That was four years ago. Imaging how much more money is hanging out there today. I’m not opposed to banks making money, although I think paying close to $5 to buy a $50 gift card is a bit high. But what I really don’t see is where they get away with these “maintenance fees.”

However, it’s legal. A trip to the Federal Reserve’s website found there was a law passed in 2010 that reads, “The final rules prohibit dormancy, inactivity, and service fees on gift cards unless: (1) the consumer has not used the certificate or card for at least one year; (2) no more than one such fee is charged per month; and (3) the consumer is given clear and conspicuous disclosures about the fees.”

Aha! That’s when I went back to the paperwork. The packaging clearly stated “No Fees After Purchase.” Even the tiny print on the enclosed disclaimer, that I don’t suppose anyone but me has ever read, didn’t mention these fees. Shame, shame on the banks. You can tell I’m not happy.

I now implore you, that if you purchase a gift card, to be sure to tell the recipient to use it as if it literally will burn a hole in their pocket. And, I have to ask, whatever happened to cash?