Gift card fees often found in fine print

INDIANAPOLIS (WISH) - The Federal Reserve is proposing new rules to protect consumers from unexpected fees and restrictions on gift cards. The rules will mandate that cards not expire for five years and consumers will be charged inactivity fees only under certain conditions. But those rules don't take effect until next August. And during this holiday shopping season, many consumers may not be aware of the hidden fees.

The gift card is seemingly the perfect present in a pinch but shopper Brian Moore admits he never reads the fine print when buying a gift card.

"I'd say a gift card would be pretty much fun for (children) because they like to come to the mall," said Moore as he was leaving the Circle Center Mall.

But in the case of the Simon gift card, the fine print is three pages long, warned personal finance expert Peter Dunn.

For example, if you read the fine print on one Simon Visa gift card, you learn there's a $5.95 handling fee. After 13 months, a $2.50 monthly fee kicks in and the card expires completely in 20 months. Often consumers don't use the entire amount on the card and retailers can charge you for that too.

"Some of these gift cards will charge you to check your balance," said Dunn.

Not all cards are created equally. For example, Simon offers an array of gift cards. While the Simon Visa gift card is laden with fees, the Simon American Express gift card is not. There’s no handling fee, no dormancy fee, no expiration date.

Often restaurant gift cards and specialty stores will also be fee free. But Dunn cautions, if you don't want to read the fine print, don't buy the card.

"Cash, although it may seem a little more callous, it's more practical. Despite inflation, cash is actually going to hold its value better than a gift card," said Dunn.