credit & debt

Gift or Gift Horse?

Watch out for fees that erode your balance.

Gift cards are expected to account for 17% of holiday spending this year, up three percentage points from 2005. Such cards could bring holiday cheer to those hard-to-shop-for people on your list -- or leave them with the sour taste of expiration dates and nuisance fees.

Bank-issued gift cards, in particular, may be loaded with fees. American Express, Discover, MasterCard and Visa all offer these cards, and terms and conditions vary widely. Amex charges a $3.95 purchase fee; a Citi Prepaid MasterCard costs $9.95. Lose an Amex gift card and it will cost $5.95 for a replacement; replacing a Citi card costs $10.

After a year, Amex subtracts $2 a month as a maintenance fee if there's still a balance on the card. That's one fee Citi doesn't chargeÑbut it hits cardholders with a dozen others, including an ATM-withdrawal fee and even a fee for some balance inquiries.

New federal rules call for an expiration date to appear on the front of each bank-issued card and for clear disclosure of any fees. Issuers must also tell consumers how they can get more information -- such as a toll-free number or Web site.

Cards issued by individual merchants may also carry fees, but usually not as many. And some states have passed laws to help prevent consumers from being left high and dry. Connecticut and California, for example, prohibit expiration dates and service fees on gift cards; other states, such as Louisiana and Maryland, set limits on fees and expiration dates.

In any case, be sure to read the fine print so that you know what you're buying -- and let the recipient know about the terms and conditions of using the card. It could spare you a lifetime of fruitcake revenge.

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