Watch out for monthly fees, time limits and rules. Consumer Protection Issues Annual Report on Prepaid Gift Cards Montgomery County's Office of Consumer Protection (OCP) has issued its fourth annual gift card study called, "Gift Cards 2006: Retail Cards Continue to Improve (With Prodding); Bank Cards Still Have Problems." The report contains valuable information and recommendations regarding gift cards issued by 40 stores and restaurants and 10 banks/financial institutions.

Consumers looking to these prepaid gift cards to assist in their holiday shopping are confronted with understanding and comparing a variety of fees, charges, time limits and rules. In addition, more sellers this year are offering bank cards carrying the logo of American Express, Discover, MasterCard or Visa which can be used at more than one store.

The report analyzes several criteria, recommends cards with the most attractive features and warns consumers about purchasing other gift cards.

The report fully discusses the following findings:

1. Out of the 40 retail cards studied, the 20 ranked highest are: Abercrombie Fitch, Best Buy, Borders Books, Circuit City, Costco, Crate Barrel, Gap, JC Penney, KB Toys, Kohl's, Lowe's, McDonald's, Nordstrom's, Old Navy, PetSmart, Sears, Sports Authority, Starbucks, Target and WalMart.

2. Only three of the 40 studied retail cards have expiration dates: Blockbuster, Bloomingdale's and Macy's. Another three, Pizza Hut, Shell and Toys R Us, may impose monthly "dormancy fees." That means only 15 percent of the studied cards have fees or expiration dates, compared to the 30 percent of the cards in last year's study. Consumers in our area should note that new legislation prohibits imposing fees or expiration dates on cards sold in Maryland after June 30, 2006, until the cards are four years old.

3. All the bank cards studied impose a purchase/processing fee above the initial value of the cards. They also deduct post-purchase fees and have an expiration date. The report also highlights that consumers may experience problems when they attempt to apply a bank gift card towards a purchase greater than the value of the card. This is because they are used in the debit and credit card systems, which unlike retail gift card systems, are not well-adapted to such transactions.

"In the name of convenience, consumers today are faced with an array of purchase options which makes being a smart consumer a full-time job," said OCP Acting Director Eric Friedman. "This report serves as a 'gift' of information to consumers who wish to purchase the best prepaid gift cards this year."

The report is available online at http://www.montgomerycountymd.gov/consumer. The bank card data compiled in this report also appears in Consumer Reports' webpage at http://www.consumerreports.org/cro/personal-finance/gift-cards-12-06-fees-expiration-dates/overview/1206_gift-card_ov_1.htm.