Gift cards: it’s what’s for the holidays this year. But even though those little, swipeable stocking stuffers are extremely popular gifts, it pays to understand some of the perils that go along with them.

Back in the day, expiration dates were the biggest problem with gift cards. Now, federal regulations make it mandatory for all gift cards to be valid for a minimum of five years. The real problem, though, lies in the fees—particularly with gift cards issued by financial institutions.

According to the latest gift-card survey by, out of 55 popular store gift cards backed by financial institutions and eight store-branded gift cards, nearly all of the cards issued from financial institutions carried a fee between $2.95 to $6.95; only 9% of the store-branded cards participated in this practice.

“To get the most value, you want to go with a store-branded gift card as opposed to a general-purpose gift card that has the Visa, MasterCard or American Express logo on them,” said Janna Herron, a credit card analyst at Bankrate. “The benefit of these general-purpose cards is that you can use them anywhere, but because of the fees, you’d be better off giving cash.”

In addition, with most store-branded gift cards, you do not have to worry about those pesky dormancy fees, which are charges to the card if it is not used for 12 months or more.

Industry experts say that if you are planning to purchase gift cards this holiday season, there is no reason to pay full price. Many drugstore chains carry a variety of gift cards for restaurants for about 20% off the face value. And if you happen to receive some gift cards that you never plan to use, there are websites, like, that will buy them from you for about 90 cents on the dollar.

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