I’m not sure why, but lately I’ve been seeing a lot of prepaid credit cards being advertised as gift cards. And why not — it’s like giving a gift card but without constraining where you can spend it. It’s great for the credit card companies, since they make money, and good for the gift giver I suppose, since it seems more thoughtful than giving cash.
I’m sure the credit card companies make quite a bit of money off these things. First, there’s the transaction fees that they charge on any credit card transaction, that I doubt they waive for products they market as gift cards. Second, there are the hefty maintenance fees that they charge, up to $50 a year. Third, there are activation fees (though thankfully I haven’t any evidence of a card that charges both an activation fee and maintenance fees). Fourth, and possibly most lucratively, is that the credit card company gets all the money that you don’t spend on the card.
And this is a story about how much work it was to spend almost all the money on the cards. When you think about it, how exactly would you charge $100 on a credit card? Unless you have a lot of time on your hands, the only way to do that is with the cooperation of the merchant. Some brick-and-mortar cashiers are nice enough to ring up your transaction separately. Some online merchants (dell.com, for instance) let you pay with multiple credit cards and specify each one.
Oh wait, did you forget about the one dollar holds that most merchants issue to make sure your credit card is valid? It’s ok, I did too. That means that you have to ask the merchant to put $99 on the card. Or you have to get them to put the hold, wait the few days until it disappears, then go back. Too much work for a dollar? The credit card company is counting on you thinking that.
I found what I consider to be a decent solution: I used my prepaid cards to buy myself Amazon gift cards. Amazon gift cards, compared to the prepaid cards, are far more flexible. They are applied automatically to any purchase on amazon.com, can be used partially or to pay for part of an order, and never expire. This is great, since I can just transfer the money to my amazon account and be comfortable knowing that I’ll spend it eventually.
Oh, but what billing address did your gift giver sign you up for? Of my three cards, one was easy, since they only had one of my addresses. For one of the other two, I had to try a number of address+phone number combinations until Amazon could get the charge through. For the other one, I had to go to the gift card site and enter my billing information.
In the end, I managed to get all but $2 of the money transferred to Amazon. And spent an hour doing it. Not that I’m not thankful for the money that I received, but if you’re considering giving someone one of these prepaid gift cards, do everyone a favor and get them an Amazon gift card instead.