Everyday Cheapskate

Remember last May, when the president signed the Credit Card Accountability Responsibility and Disclosure Act of 2009? Yes, that one. It's the law that is designed to protect credit card holders but does not fully go into effect until August 2010. It's the one that gave banks a 15-month heads-up, during which they've gone on a rampage by increasing interest rates and slashing credit limits on their customers before they are required to comply with the new provisions of the law.

The Credit CARD Act, we have learned, includes other consumer protections, one of which has to do with retail gift cards and gift certificates. "Great," we responded collectively. No more expiration dates or ridiculous administration fees that quickly can render an unused gift card totally worthless, right?

Don't get too excited. It's not as simple as you might have imagined.

The Credit CARD Act (Section 401, to be exact) hands off the matter of creating the new rules to the Federal Reserve Board, and it gives the Fed nine months to respond.

On Nov. 16, the Federal Reserve Board announced the proposed rules. If approved, the rules will go into effect next summer.

In a nutshell, the proposed changes are not all that great. They apply only to retail store gift certificates and gift cards. Gift cards issued by Visa or MasterCard and prepaid cards received through loyalty awards or other promotional programs are not covered in the Fed's rules.

Under the new rules, gift cards still can be subject to inactivity and dormancy fees if not used within one year, and they can expire after five years.

Stay tuned for more details once the rules are approved and go into effect.

As for this holiday season, my best advice is to use gift cards you receive as soon as possible so you avoid having fees sucked out of the face values of those cards and don't get stuck holding a gift card for a store or company that files for bankruptcy. Don't assume the gift cards you buy or receive now will be covered by the new rules if you hold them until next summer. The rules will not be retroactive.

Should you have gift cards you received as gifts in previous years, regifting them is always an option, but you might want to call the toll-free number on the back of the card to learn how much value remains before you wrap it up. You could find yourself in an embarrassing situation if what you thought was a $50 card turns out to be more like $40 or less because of fees.

There still remains a great way to avoid all these problems with gift cards. It's a simple device that comes in the right color and is guaranteed to fit. It's called cash!

Mary Hunt is the founder of www.DebtProofLiving.com and author of 18 books, including her latest, "Can I Pay My Credit Card Bill With a Credit Card?" You can e-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. To find out more about Mary Hunt and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.

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