Source: Balance Financial Guide
With the holiday season approaching, gift givers will be turning to gift cards as an easy, reliable gift. As you probably know, gift cards are debit cards with a prepaid balance. While they can be an easy way to make someone happy without having to guess taste or need, be aware that you could be paying a premium for the convenience if you don’t shop around first. What they are There are two basic varieties of gift cards:
So which type should you buy? If you want to make the most of your money, give a store card, since they tend to have no or very low fees. However, if you want the recipient to have maximum shopping flexibility, go for the general-purpose gift card. While they tend to be fee-heavy (which can erode the value of your giving dollars), the shopper isn’t limited to one specific store. The advantages Of course if you are simply stumped over what to get someone, any gift card may be better than a random selection. They are easier to use than paper gift certificates, safer than cash, and more festive than a check. Just figure out how much you want to spend and choose a store or financial institution. All the recipient has to do is shop. In the case of the general-purpose card, the “giftee” can even take out cash at an ATM. Another benefit is that they can be used as an effective tool to introduce the concept of credit to children and young adults. Since gift cards look and act much like credit cards, if you give one to a minor they will begin to become accustomed to using plastic. There will be no bill to pay at the end of the month, but there is a limit on how much they will be able to spend, so they can learn to be savvy consumers early. One last advantage is that thanks to the Credit Card Act of 2009, the balance on a gift card cannot expire for at least five years from the date of purchase or last reload. The drawbacks Both types of gift cards come with a few downsides but because general-purpose cards have more advantages, they also can come with more extensive fees. Be sure to weigh the costs and compare products before you buy one. The terms will be apparent on the application. Fees can include but are not limited to:
While many of the “General Purpose” cards do allow ATM access, the transaction fees can be steep. And if the card is used at an ATM not owned by the issuing financial institution, even more charges will be deducted. Service fees are another consideration. Want to speak to a customer service agent? There could be a fee for that too! Gift cards can indeed be a great present. But before you buy, shop around for a card with the least amount of fees and restrictions. That way your dollars will stretch the furthest and your loved one will reap the most from your generosity. When you talk to Jovan Harris, a Procurement Specialist with MLGW, you immediately know her top priority ... her beautiful family. Jovan started working at MLGW in 2014 and that's when she learned how much LG&W Federal Credit Union could help her and her family and moved from a larger financial institution to the credit union. "After evaluating banking opportunities," says Jovan, "LG&W Federal Credit Union proved to be the greatest help to me and my family. We take advantage of holiday loans and other low interest loans that make a difference for us." Jovan also feels that LG&W Federal Credit Union's customer service could not be matched. "Being able to walk into a financial institution and the staff knows your name makes you feel more valued and respected," she said. "The loan officers and bank representatives are truly working on my behalf." Since joining, Jovan has received holiday loans, a credit card, and other low interest loans from the credit union. "LG&W Federal Credit Union has shown the greatest help to me and my family." |
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