American Express drops monthly fees on gift cards
— -- American Express is nixing monthly fees on all its gift cards, attempting to appease holiday shoppers who may worry that their cards will lose value if not used quickly.
The elimination of the $2 monthly fee is effective immediately and includes cards that have already been bought.
The National Retail Federation's gift card survey for 2009 will not be released until next month, but the move could lead to a welcome boost for gift card sales. The once-popular gift cards had a weak showing in the 2008 holiday shopping season.
When people were asked last year why they were less likely to buy a gift card during the holiday season, 9.8% said they were concerned that the card would expire or include additional fees, according to the NRF.
The NRF expects shoppers to pick discounted merchandise as holiday presents over gift cards this year.
"In a recession, people are looking for merchandise on sale," said Ellen Davis, NRF vice president. "Instead of buying a $50 gift card, many will opt for a $50 sweater that's on sale for 35 bucks."
American Express said the change isn't a response to the new gift card reforms passed as part of the sweeping credit card law this year.
Starting in August 2010, that law will ban issuers from putting an expiration date on gift cards, unless it's at least five years after the card was loaded.
It's not clear whether a monthly fee's eventual depletion of a card's value would count as a de facto expiration date.
"That particular issue hasn't yet been addressed," said Gerri Detweiler, a spokeswoman for Credit.com, an online financial services company.
With the Federal Reserve set to provide further guidance on the new rules, Detweiler said issuers will likely have to tweak their policies.
The elimination of the monthly fee is not a reaction to the new law, said Alpesh Chokshi, president of the global prepaid unit at American Express. "There's no relation. We've wanted to take (the fee) away for years," he said. "We're simply listening to our customers."
