WRAL SmartShopper

WRAL SmartShopper

Thursday thoughts: Store vs. bank gift cards

Posted December 13, 2012

Gift cards


Many of you will give gift cards to friends and family this holiday. Before you buy, make sure you know the pros and cons of buying store issued gift cards vs. bank cards (like a Visa or American Express gift card). has just released the results of a study comparing the fees and safety of various types of gift cards. You'll want to read it before making your gift card decision.

Below is the gift card article published by NerdWallet (and re-posted with permission). You can find even more information including additional statistics in the full article HERE.

NerdWallet Study: Neither Store-Issued Nor Bank-Issued Cards are Guaranteed Free or Safe This Holiday Season

A NerdWallet study of the most popular bank and store gift cards found that 100% of bank cards charged purchase fees, while nearly 20% of store gift cards do not refund the balance if lost or stolen – a significant drawback, given that the cards’ primary value lies in security and inexpensiveness.

If you’re not one to stalk the aisles, hoping to find the perfect present, gift cards are a popular alternative: They’re more festive and safer than cash, and they’re perfect for someone who likes to shop on their own. Conventional wisdom holds that store-issued gift cards – which can only be used at a specific retailer – are low-fee and easily replaceable, while bank-issued gift cards – which can be used anywhere – have slightly higher fees but are more versatile. But not all gift cards are fee-free or even replaceable, as NerdWallet found.

NerdWallet analyzed the 17 most popular store gift cards, 9 bank-issued gift cards and 70 prepaid debit cards and plans and found that:

Store gift cards are no guarantee if lost or stolen.

18% of store gift cards would not replace the funds if lost or stolen. Still more required that proof of purchase (registration or receipt) be shown to receive a refund.

Store cards are not necessarily free if purchased online: While some had free-shipping offers, 29% charged a shipping fee for physical gift cards.

Bank cards may provide security, but charge a premium for it.

100% of surveyed bank-issued cards charged a purchase fee.

A full 67% of bank-issued cards charged an inactivity fee, beginning after 12 months.

All would replace the card if lost or stolen, but 33% would levy a fee, averaging just over $3.

Poorly chosen prepaid debit cards are worst of all.

82% of prepaid cards charged an activation or monthly fee, averaging $8.29 and $6.26 respectively.

61% charged a replacement card fee, averaging $7.92.

Perhaps most troubling, 31% charged for every PIN transaction made.

Well-chosen prepaid debit cards offer the best of both worlds.

Certain prepaid debit cards had no monthly, purchase or replacement fees, making them more versatile than store credit cards and more affordable than bank-issued ones.

The American Express Bluebird’s only fees are a $5 in-store purchase fee (no shipping fee if purchased online) and a $2 ATM fee if the cardholder does not use direct deposit.

With the lack of fees, versatility and security, it has better features and is less expensive than gift cards.

Gift Card Tips

Here are a few essential tips when considering a buying a gift card this holiday season:

  • The American Express Bluebird is a low-fee, safe option, but requires registration with a Social Security number.
  • Store-branded gift cards don’t have inactivity fees unless there is no activity for 12 months or more, per the CARD Act of 2009.
  • Don’t buy a store gift card if they charge you shipping fees. Instead, send an e-gift card. If you’re set on giving a physical gift card from that store, you might as well get a bank-issued one, which will provide greater versatility.
  • Make sure the store card will replace if lost or stolen. Also be sure to register the card (if applicable) and to keep a receipt as proof of purchase.
  • Bank-issued gift cards will probably cost you, from mandatory fees like purchase and shipping to incidentals like replacement or inactivity charges.
  • Avoid flashy prepaid debit cards. Cards that tout celebrity endorsements, such as the Twilight or Russell Simmons RushCard, often come laden with purchase, monthly, and even per-transaction fees. If you decide to get a prepaid debit card as a gift, look carefully at the fee schedule – what you see may surprise you.
  • Beware of bank card acceptance. If you choose to get a bank gift card, be aware that some networks aren’t as widely accepted as others. American Express and Discover gift cards may carry the least fees, but since they aren’t as widely accepted as Visa or MasterCard, you’re more likely to get stopped at the register.

My thanks to for offering the information! 

Which do you prefer to buy: store gift cards or bank issued cards?

For me, I won't pay a fee for a gift card. Ever. So I never buy bank issued gift cards. Ever. If there is not an actual gift or a store gift card that I know the recipient would like to have, I often give cash. There are no fees with cash and it can be spent at any store. 

For a couple lists of local and national gift card bonus promotions, click on the links in the box above.




Please with your account to comment on this story. You also will need a Facebook account to comment.

Oldest First
View all
  • mhdeland Dec 14, 2012

    Thanks Faye!

  • Faye Prosser - Smart Shopper Dec 13, 2012

    Here's a link to a long list of gift card promos:

    Here's a link to some gift card promos from local companies:

  • ncbeachbound2 Dec 13, 2012

    Good questions and one I would like to know the answer to too. Need to buy a couple of gift cards to finish (hopefully) out Christmas shopping this weekend and would like to get a deal out of it myself if possible.

  • mhdeland Dec 13, 2012

    good to know. Thanks

    Do you know who has the best promo for buying gift cards? Like buy $50 worth of Gift cards and get a $10 gift card back.