Beware the Gift Card Fee Monster This Holiday Season

While recipients prefer general-purpose gift cards over store-branded cards, there's often a big difference in fees between the two.

While recipients prefer general-purpose gift cards over store-branded cards, there's often a big difference in fees between the two, according to research by Bankrate.com.

Just over half of the 1,001 people in a nationwide phone survey Bankrate.com commissioned from Princeton Survey Research Associates International said they prefer general-purpose gift cards, such as cards with American Express, Visa, Discover and MasterCard logos. In particular, two-thirds of people who make more than $75,000 a year prefer general-purpose gift cards.

But these general-purpose cards tend to charge more fees to either buyers or users than brand-specific gift cards from retailers, Bankrate.com found.

Of the 56 widely-held gift cards that Bankrate analyzed, 100 percent of the general-purpose gift cards charged purchase fees, while only 11 percent of brand-specific gift cards did.

Gift cards from Staples, Toys "R" Us, Chevron and Texaco charge purchase fees. A standard gift card on Toys "R" Us's website has a $1.95 purchase fee, while an eGift card is free. Customizing a photo on your own Toys "R" Us gift card costs $4.50.

Seventy-one percent of general-purpose cards included a dormancy or maintenance fee, with the possibility that the recipient would incur costs if they don't use all of the funds after a year. Meanwhile, none of the brand-specific cards charge a dormancy or maintenance fee.

"The good news is that the CARD Act of 2009 took care of a lot of the transparency issues so it's easier to compare them," said Bankrate.com credit card analyst Janna Herron

Herron said she was surprised that not all Americans have received or given a gift card as a gift, according to the survey. Two out of three people surveyed have given a gift card as a gift, while three out of four have received one.

While gift cards are rising in popularity, retailers are starting to explore ways for customers to give money digitally, such as gift cards shared through Facebook. Starbucks recently launched a way to give gift cards via Twitter. Herron said she hopes to add a question to next year's Bankrate survey exploring gift cards with digital payment methods.

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