Are Gift Cards Safe? Security Protections Get a Boost This Year
Life + Money

Are Gift Cards Safe? Security Protections Get a Boost This Year


Gift cards are not just convenient, they are also a bit more secure this holiday season, according to a new survey from Bankrate.

Half of the 60 gift cards in the survey provide the ability to add a security code or PIN, up from just over a third last year. And nearly three-quarters of the cards -- especially e-cards, which exist online and are typically delivered via email -- offer some form of loss and theft protection, such as registering the card online.

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 “As data breaches have become a fact of life, a lot of cards incorporated a way to recover the balance of the card if it’s lost,” says Claes Bell, CFA, banking analyst at Bankrate. “For example, some general purpose-cards allow people to change the PINs to something they like, so if anyone gets the card, they won’t be able to use it without the PIN.”

That’s a needed perk for many gift recipients. A separate Bankrate survey found that one in four Americans had lost a gift card before spending the entire balance. That happened to Millennials even more frequently, with two in five losing a gift card before using all of the funds.

Bankrate also found that the number of fees and other “gotchas” continue to shrink. Only 13 percent of the cards in the survey have any kind of purchase fee, down from 17 percent last year. However, all of the general-purpose gift cards that can be used anywhere — such as the American Express or Visa gift cards — come with purchase fees between $3.95 and $6.95. Only 4 percent of store-branded cards charge this fee.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 has largely gotten rid of the worst features of gift cards. For example, gift cards must be good for at least five years before expiring. Bankrate’s survey found that fewer than one in 10 gift cards have any kind of expiration date. The act also dictated that inactivity or dormancy fees could only kick in after 12 months of non-use. Only five percent of the cards Bankrate surveyed feature these fees.

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“It seems like gift cards a good deal for the consumer and easy for recipients to get the full value that the gift-giver paid for,” says Bell.

Bankrate’s survey also shed some light on which gift cards are best for your loved ones. Older Americans (over 65) prefer cards from a specific store or restaurants, while those younger would rather a general-purpose card. For procrastinating gift-givers, two-thirds of cards are available as e-cards, according to the survey.