How to Avoid Gift Card Scams

HOUSTON, December 4, 2006 - Disposal credit cards and gift cards also known as pre-paid or pre-denominated cards have become very popular. These cards are frequently sold by retailers, banks and major credit card companies. If you are not sure what type of gift to purchase for that special someone, those stored-value cards may be the answer.

Many gift cards now look more like a credit card instead of the traditional paper gift certificate. You can load the gift card with any amount of money and give it to someone for a gift.

Disposal credit cards and gift cards can offer a considerable amount of flexibility. When purchasing a card there is no need to reveal your identity, there is no credit check and having a bank account is not required. The disposal credit card, which is usually issued by banks and major credit card companies, can be a good alternative for those with less than stellar credit who do not want to apply for a credit card or tie up a large sum of money for a secured card like a debit card.

Keep in mind that you cannot build a credit history, however, with a disposal credit card. This type of card also offers some security when purchasing items on line. Usually the card or the card number is good for a one-time only use. The card number allows consumers to buy goods on line without disclosing their personal credit card number. To do this consumers can download an application from the financial institution’s website to use a unique card number for each transaction and set a dollar limit on that transaction.

The Better Business Bureau of Houston, based on experience, is now warning people that while these cards are convenient some come with very hefty fees.

When you purchase the card, you will pay a fee that is based on the denomination of the card. These can range anywhere from a $1.50 to more than $7.50 per card. Some disposal cards are loaded with other types of fees. If you receive a card here are some fees to watch out for:

• Most disposal cards expire within 1-2 years although some may expire in 6 months.
• If you do not use all of the stored value and ask for a check to close the account many institutions will charge as much as $15.00 for a "closure fee".
• Some disposal cards allow ATM access but you will be charged a fee. If you use the card at an ATM not owned by the bank that issued the card, it could cost you an additional fee.
• Some banks will charge a monthly service fee if you do not spend the stored value within 6 months.
• When shopping for a disposal card, we advise consumers to shop around to avoid paying a high fee.
• To avoid fees for expired cards, use the card as quickly as possible and do not use an ATM.
• If you want cash from the card, buy an inexpensive item and ask for extra cash back from the merchant. Many retailers will allow you this option.

It is very important that you know who the issuing card company is because there are some on the Internet that are not connected with banks and/or companies that are generally known which have fees much higher than those previously mentioned. As always, shop and compare and before you purchase or donate check it out with the BBB - it is however impossible to check it out with us if you do not know the correct name and location of the company. So do your homework if you plan on using either one of these cards.

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