Many have opted for gift cards to help simplify their gift giving.  Most gift  cards have no expiration date and are typically not reloadable.  The card is generally for a fixed amount and cannot be exchanged for cash.

A gift card may resemble a credit card, but does not offer a line of credit.  The card is identified by a specific number or code and is not usually embossed with an individual name, making it flexible and a great gift idea.  For security reasons, many of them have no value until they are activated by the cashier.  To thwart counterfeiting, the data is encrypted and the magnetic strip is often placed differently than on credit cards.

They can be custom tailored to meet specific needs and a custom message or photo can also be added to personalize the card.  Additional fees may apply.

Gift cards are vastly different from gift certificates.  Certificates are usually sold as a paper document with an authorized signature by a restaurant, store, or other individual establishment as a voucher for future products or services.  They typically require no electronic authorization and may or may not have an expiration date or administrative fees.

An addendum to the Credit CARD Act of 2009 directs the federal government to create consumer-friendly standards pertaining to gift cards.  The new regulations prohibit retailers from setting expiration dates unless they are at least 5 years after the card’s date of issue or the date on which funds were last added to the card.  Retailers are also no longer able to access dormancy, inactivity, or service fees unless the card has been inactive for at least 12 months, and if fees are added after that period, the details of such fees must be clearly disclosed on the card.  Retailers are not allowed to levy more than one fee per month.

The Great Recession has produced a renewed dedication to financial literacy on all levels.  After the passage of the Credit CARD Act, many parents wondered how they were going to teach their kids to use plastic responsibly.  That’s where prepaid cards have come in.

One of the most important things for parents and teens to watch out for when selecting the right card are the fees.  In lieu of interest rates credit cards carry on balances, prepaid cards can be riddled with fees.  As a responsible and engaged consumer, you should teach your teen to thoroughly examine fee schedules before signing on.

Prepaid cards are a great alternative to cash allowances and offer convenience and security.  Your child can only spend the money that has been loaded onto the card and the funds are completely safe.  It’s a convenient way to manage and track spending in real-time and curb over-spending as they learn financial responsibility.

Most cards allow the user to set up alerts when the card balance gets low and view  real-time transaction activity.  The card can also be suspended if it is ever misplaced or stolen.  Setting up direct deposits are often free  and available in real-time.  Instant loads for emergencies are also available when your child is away from home for added peace of mind.