Shoppers handing out gift cards this holiday season will get the most bang for their buck from the store-branded versions, a new study finds.
Research from Bankrate.com revealed that individual stores charge fewer fees for their branded gift cards than the all-purpose ones issued by banks and credit card companies.
The study found that of the 55 store-branded gift cards examined — including Best Buy, Amazon and Office Depot — just 9 percent charge a purchase fee, while only 2 percent charge a dormancy or maintenance fee.
Of the eight bank- and credit card-issued gift cards analyzed, all of them charge a purchase fee ranging from $2.95 to $6.95, while 75 percent charge a fee for not using the card for 12 or more months.
"The key takeaway for consumers is that they're going to get the most value from store-branded gift cards," said Janna Herron, credit card analyst for Bankrate.com. "The benefit of general-purpose cards offered by banks and credit card companies is that they can be used anywhere, but because of the fees, you would be better off giving cash."
The research found that banks and credit card companies are more likely to charge fees because they need to generate revenue for their gift card businesses, while retailers are less dependent on those fees since the money on the card will be used for goods and services at their stores.
Overall, the survey found that the majority of retailers sell gift cards that don't have expiration dates, offer electronic gift cards and cards that can reloaded with more money. In addition, two-thirds of the companies that sell gift cards will replace the card or the money on if it is lost or stolen.
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