4 Reasons Why Debit Gift Cards Make Poor Gifts
It might seem like a great gift idea, to give someone a shiny plastic prepaid debit card for the holidays. It’s almost like giving someone a credit card that they don’t have to pay. But don’t! At least until you read my reasons.
My husband received 2 debit cards from his work, one from Visa and the other from American Express. It was nice to get these but as we soon found out, it became a pain to use. Also, not too many businesses take American Express so I had to be strategic about it.
1. Activation Fee. When you purchase a debit gift card, you have to pay an activation fee anywhere between $3 – $10. So if you are buying a $100 giftcard and the activation fee is $5.95, then you would pay $105.95 for the $100 giftcard. That’s a rip-off. I mean the debit card companies are already making about 3% of the purchase, everytime the card is swiped. Do they really need more?
2. Can’t Use for Online Purchases. At first, I thought we could use the debit gift cards online. But no, you cannot use them online because businesses have no way of verifying your identity with a debit card, since there is no address or personal information connected with the debit gift card.
3. Must Keep Track of Current Balance. When you spend the debit gift card, you have to keep track of the remaining balance, the exact amount. Your gift card can only be charged for the current balance or under. If you use the card for a purchase that is more than what is on your debit gift card, your card will be declined. So if you want to use it to buy something and you don’t have enough money on the debit gift card, then you’ll have to pay the difference with another form of payment. It’s such a hassle! You’ll have to ask if the business accepts 2 forms of payment.
4. Restricted Usage at Restaurants. We used our Visa debit gift card at a restaurant and boy, were we in for a surprise. We had dinner with a group of friends and when the bill came, we put the debit gift card to pay our portion. Our server spent 10 minutes trying to figure out why she couldn’t charge our card even though this was the first time we used it. The restaurant was not able to charge the entire amount on the gift card. It was a $100 gift card and our server said that they were only allowed to charge up to $80 on the card. When you use a card at a restaurant, the debit card company will only allow you to charge up to 80% on your gift card, leaving room for tip. We were able to use the rest of the debit gift card by placing the rest of the amount $20 as tip. Confusing, huh? I was just happy to be able to use the entire card at one place.
Debit gift cards come with special rules for the user. I am thankful that we got these gift cards but it did require some strategy on how to use them best. I was able to use the American Express debit gift card at Costco and Trader Joe’s.
If you really want to give someone a gift, why not give cash? Cash is easy to use and always accepted. It doesn’t come with special rules or restrictions like debit gift cards do.
