Find the best credit card offers online.Instead of giving away gift checks, a growing number of retailers shift to using rebate cards instead. This is in response to the heavy volume of consumers who use plastic instead of cash for purchases. However, according to Consumers Union (CU), even with full implementation of the Credit Card Act, customers are unlikely to benefit much from this set-up.
CU explained that even if gift cards resemble rebate cards, this new federal law as well as state laws does not cover the latter. Because of this, there is no regulation as to how short its expiration dates end and there is also no limitations on the fees that might come with it.
Absent the law’s coverage, Michelle Jun, staff attorney with Consumers Union, stated that while retailers are saving money, there are fees that could eat into rebate savings. Aside from this, rebate cards also come with other restrictions which could diminish its value.
Industry analysts estimate that billions of dollars total the amount of funds issued on this kind of cards. One firm, the Mercator Advisory Group, went as far into saying that as much as $9 billion was ladened into such in 2008 alone.
Consumer Union (CU) stressed that there are big differences between a “gift card” and a “rebate card.”
Among the prohibitions included in the Credit CARD Act of 2009 is that a gift card could still be used within five years from its issuance or purchase and that no fees would also be allowed for a period of 12 months.
On the other hand, rebate cards allow consumers to accumulate cash, services or merchandise based upon a card’s usage. Often, they are offered because of loyalty to a company or for a specific purchase. Such provisions, sadly, does not apply to rebate cards.
CU also cited two forms of rebate cards. The “open-loop” from MasterCard, Visa, Discover or American Express is one. As long as the network is accepted, such cards may be used. The “closed-loop,” however, can only be used on the issuer store or retailer.
A gift card has a restricted money equivalent issued by banks or retailers as an alternative to a non-monetary gift. It does not accumulate in value. Retailers and manufacturers used to issue it in the form of gift checks. Its advantage lies on the fact that it provides options for customers to either spend it or deposit the money in the bank. With rebate cards, this cannot be done.
Pamela Banks, policy counsel for CU, proposed that the time has come for the law to catch-up on rebate cards or plastic payments to protect consumers from expiration dates and hidden fees.
