The Art of Gift and PrePaid Cards
I'm surprised to find myself taking inventory of various gift cards acquired as gifts and promotions (over the past couple of years actually). Merchants have learned how lucrative this business is because people who receive a gift card typically spend more than the face value of the card.
Here are some observations:
* gift cards (GC) and pre-paid (PPD) cards are VERY DIFFERENT. Stores can swipe a GC regardless of the value. With a PPD, you basically have a CC with a very low credit limit. Here's where it comes in handy to understand a little about CC transactions^.
* GC do not have dormant fees in states like CA
* Sharpies are handy for writing values on the GC
* PPD have expiration dates, like a CC
* some PPDs need to be activated first, just like a CC
* some GC need to be activated as well, and you have to wait until databases are updated overnight to use.
^ PPD and CC
When a CC is swiped or keyed, a pre-auth is generated. Most consumers don't need to know this, but it's certainly handy to know when using a PPD at a restaurant or gas station. When a CC is swiped, it's pre-auth'd for an amount greater than the price (restaurant) to account for tips. Or at a gas station, if you swipe, the PPD tends to be pre-auth'd for $50 or $100. When purchasing at a place like these, it's best to tell the server or attendant to charge a specific amount on the card. Otherwise, the swipe will most likely be declined.
Most retail cashiers do not understand this. For the holidays, I purchased 5 $25 PPD CC and received a $25 PPD CC promo in return. On Thursday, I went to use my promo $25 PPD CC at a local Staples to purchase supplies for my photo printer, $40+tax. The cashier insisted I just swipe my card and the appropriate amount will be charged. I told her it's a CC with a $25 limit basically, it will be declined. But she's younger and knows better, so I swipe and it gets declined. I then suggest to her that she run the card at her terminal for only $25 and then I'll pay the balance.
I'm now struggling with a $3.66 balance on a Discover PPD that expires on Monday. I hate to see it vanish, but I've been trying to spend it. iTunes doesn't like it for whatever reason ($1.95 Tiki Tiki Tembo audiobook charge won't go through, complains about the exp date). I then tried to purchase an accessory from apple.com because it allows for purchases from multiple cards. No dice, just says the authorization failed. At this point, I probably killed the 3.66 credit limit on it with some pre-auth's that may not go through anyway.
*Observation*
* I will most likely convert all future PPD to a GC.
-Coffee GC-
This looks to be my biggest collection of small balances: $0.01, $0.11, $1.41, $4.30
We're a starbucks shareholder, and up until this past year, a small Starbucks GC was included in every annual report.
Here are some observations:
* gift cards (GC) and pre-paid (PPD) cards are VERY DIFFERENT. Stores can swipe a GC regardless of the value. With a PPD, you basically have a CC with a very low credit limit. Here's where it comes in handy to understand a little about CC transactions^.
* GC do not have dormant fees in states like CA
* Sharpies are handy for writing values on the GC
* PPD have expiration dates, like a CC
* some PPDs need to be activated first, just like a CC
* some GC need to be activated as well, and you have to wait until databases are updated overnight to use.
^ PPD and CC
When a CC is swiped or keyed, a pre-auth is generated. Most consumers don't need to know this, but it's certainly handy to know when using a PPD at a restaurant or gas station. When a CC is swiped, it's pre-auth'd for an amount greater than the price (restaurant) to account for tips. Or at a gas station, if you swipe, the PPD tends to be pre-auth'd for $50 or $100. When purchasing at a place like these, it's best to tell the server or attendant to charge a specific amount on the card. Otherwise, the swipe will most likely be declined.
Most retail cashiers do not understand this. For the holidays, I purchased 5 $25 PPD CC and received a $25 PPD CC promo in return. On Thursday, I went to use my promo $25 PPD CC at a local Staples to purchase supplies for my photo printer, $40+tax. The cashier insisted I just swipe my card and the appropriate amount will be charged. I told her it's a CC with a $25 limit basically, it will be declined. But she's younger and knows better, so I swipe and it gets declined. I then suggest to her that she run the card at her terminal for only $25 and then I'll pay the balance.
I'm now struggling with a $3.66 balance on a Discover PPD that expires on Monday. I hate to see it vanish, but I've been trying to spend it. iTunes doesn't like it for whatever reason ($1.95 Tiki Tiki Tembo audiobook charge won't go through, complains about the exp date). I then tried to purchase an accessory from apple.com because it allows for purchases from multiple cards. No dice, just says the authorization failed. At this point, I probably killed the 3.66 credit limit on it with some pre-auth's that may not go through anyway.
*Observation*
* I will most likely convert all future PPD to a GC.
-Coffee GC-
This looks to be my biggest collection of small balances: $0.01, $0.11, $1.41, $4.30
We're a starbucks shareholder, and up until this past year, a small Starbucks GC was included in every annual report.