Are Bank Issued Gift Cards All They Are Cracked Up To Be?

Gift cards are a common sight in many of the retail stores today.  They are usually found near the check-out and in different values.  Once bought they can be used at any time for the products that are sold at that particular retail location of chain of stores.  This has transformed them into an easy gift idea for those on your list that are hard to buy for.  That’s great if you know what place that person likes or often frequents, but what if you don’t?  The answer could be a bank issued gift card.A bank authorized gift card is virtually identical to a regular gift card aside from the fact that it can be used in any retail location that accepts credit cards electronically.  However before you go out to get one of these cards there are a couple of negatives you need to be mindful of.When a retailer sells you a gift card they receive money without having to hand over any product at that time which is why most stores sell them.  You are basically offering them a free loan.  Out of all of the gift cards that are purchased a certain percentage will never be used and that amounts to free profit for the retailer.  For the number of cards that are used consumers often spend much more than the card’s value which assists to boost sales.  All of this has aided to give rise to an industry that doesn’t just create the plastic cards but also accessories such as gift card holders and a wide number of clever gift card packaging to give it the feeling of a more substantial present.It’s no surprise that banks wanted to get in on the action.  However you should understand that they are not entirely the same as store gift cards.  For one most of these types of cards have a purchase fee on top of the card’s denomination.  So if you wish to purchase a $50 gift card it can cost you $55.Most bank issued cards also come with an expiry date.  This is unlike store gift cards where in certain areas of the country they are not permitted to expire.  However even if you use the card before it expires you may be hit with additional fees.  Most banks charge a monthly maintenance fee which gets subtracted from the remaining value of the card monthly.  Although they most likely have a grace period of a few months.  Other fees could consist of charges for the replacement of a lost or stolen card and fees for live phone inquiries.There is a worry recently that if a retailer goes out of business any outstanding gift cards could be worthless.  Sadly these bank backed cards are not immune to this scenario.  Many people see a major credit card company’s logo on the gift card but it is the issuing bank that is liable for its monetary worth and if that bank disappears so to does the gift card’s value.However bank issued cards still present the best substitute to ordinary gift cards even with its downside.  Just make sure you and the person you are giving it to are informed about all of the fine print.