Lending Club Blog

The Gift That Keeps on Taking

When it comes to giving gifts, they say that it’s the thought that counts. If your thoughts turn to giving a gift card, you may want to think twice.

Gift cards tend to come in two varieties: store cards for use at a specific retailer and cards that can be used like a debit card almost anywhere that credit cards are accepted.

Store cards have the obvious limitation that they can only be used at one particular retailer. If the gift giver doesn’t know the recipient as well as he thought, the gift might go unused. It’s also possible that the card will be misplaced or simply forgotten about. Some people may even throw their card away when the balance gets down below a certain amount.

Retailers are aware of all of these problems, and have found gift card sales to be a new source of profit. According to published reports citing data from the consulting firm TowerGroup, 10 percent of gift card sales last year were expected to go unused.

While the second type of cards, often marketed as prepaid debit cards, can be used nearly everywhere, they too have their problems. The first downside of these cards is that the gift giver is usually charged a fee for the privilege of giving the card. While these fees vary, $5 seems to be fairly common. This fee usually comes under the name “convenience fee” if you buy the card from a bank, or it is added to the shipping and handling fees if you buy online.

Additional fees are likely with this second type of card, the most common of which is a maintenance fee that is charged every month that the card is not used. You can imagine how quickly a card with a low balance will be drained down to nothing if you don’t use it. The companies that issue these cards have found many creative ways to charge still more fees for tasks such as adding funds, cashing out a balance, or replacing a lost or stolen card.

Finally, it is also possible that either type of gift card will have an expiration date. Some states have started to outlaw the practice of expiration dates, in an effort to protect consumers. Similarly, limits have been set on the types and amount of fees that can be applied. In order to understand the specific rules that will apply to you, carefully read the terms and conditions before purchasing any gift card.

While this information about gift cards may not dissuade you from using them, we here at Lending Club feel that only educated consumers can make informed decisions about how to spend their money.

Thursday, July 12th, 2007 at 7:30 am

Comments (0)


5 Ways to Get Your Finances Ready for the Holidays

How to Build a Budget: Part 1

The State of Debt: 2016

Types of Loans 101

See more
Lending Club Awards
  • Archives z

Recent Posts

5 Ways to Get Your Finances Ready for the Holidays

Read More »
December 1, 2016

How to Build a Budget: Part 1

Living on a budget. It can sound scary, right?… Read More »
November 21, 2016

Five Signs Your Business Needs Capital

Knowing when your business needs working capital— and promptly… Read More »
November 10, 2016

How does a car refinance loan work?

Whether your goal is to lower your monthly car… Read More »
November 2, 2016

Are you paying too much for your auto loan?

How refinancing your auto loan with a better rate… Read More »
October 25, 2016

The State of Debt: 2016

Politics can be a divisive topic, where issues and… Read More »
October 24, 2016

Lending Club Teams Up with United MileagePlus® to Offer Customers More

  When it comes to… Read More »
October 21, 2016

Patrick Dunne: A Message to Investors

I wanted to take a moment to introduce myself… Read More »
September 29, 2016

Line of Credit vs. Loan

Lines of credit (LOCs) and small business term loans… Read More »
September 28, 2016

Types of Loans 101

There are many types of loans out there and… Read More »
September 16, 2016


We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w