Ever spent hours wandering from store to store, looking for a gift for someone that would be useful yet not commonplace? Consider an option that’s been around for quite a while, but is still relatively unknown – a prepaid gift card.
Fashioned after a gift voucher and a debit card, a prepaid gift card is worth a fixed sum of money and can be swiped at any store. The value of – or the amount loaded on – the card is entirely up to you.
For instance, if your gifting budget calls for a spend of Rs 1,000, you can buy a gift card worth that amount. The person you gift it to will be able to make purchases up to Rs 1,000.
A gift card is unique in terms of the flexibility it gives to the receiver in relation to what they can shop for, and where they can shop. It looks much like a debit or credit card, with a magnetic strip and signature panel on the back, which must be signed by the person who is to use it.
A gift card can be used multiple times, at different establishments, for varying amounts until the amount loaded on the card is exhausted. Any establishment that accepts a debit or credit card will accept gift cards as well. The card can even be used for online purchases.
But keep in mind that a gift card may be used for purchases only. Cash cannot be withdrawn from the card; inserting it into an ATM will show you only the balance on the card.
The card cannot be topped up either – meaning, once the amount loaded has been exhausted, more money cannot be loaded onto the card.
These cards come with an expiry date, which can range from a year to five depending on the issuing bank. If there is any amount left on the card at the time of expiry, the bank usually returns that amount after deducting bank charges.
Banks impose a time period after the date of expiry within which the card must be returned in order to collect the outstanding balance. If the amount on the card has been exhausted before expiry, simply return the card to the bank.
It may be a tedious task to keep track of the amount already spent and the balance remaining on the card. Therefore, each card comes with a net banking user name and password, as well as an ATM pin. The balance may be checked either through the issuing bank’s net banking services or its ATMs.
Not all banks offer prepaid gift cards; there are only a handful that do, namely, Axis Bank, IDBI, HDFC Bank, ICICI, IndusInd Bank, SBI and a few others. Purchasing a card is a fairly simple process done over the counter.
To begin with, you are not required to hold an account in the bank in order to purchase a gift card, given that card is paid for before issue of the card. But you do need to carry copies of proof of identification and address as well as photographs. Of course, if you hold an account in the bank, these proofs aren’t necessary.
You also need to carry the amount you intend to load onto the card, either in cash or via a cheque.
If you are an account holder in the bank, the amount will most likely be transferred directly out of your account, dismissing the need for cash or cheque.
Purchase of the card simply requires the filling out a form and handing over the money. You will receive the card immediately, but activation of the card will take at least a day. In case the payment is made through a cheque, the cheque must be realised before the card is activated.
Processing your card application requires a fee, but these are usually minimal at Rs 100 to Rs 200. It is higher in some banks such as Axis and IDBI, where fees are one per cent of the amount loaded onto the card if the value of the gift card is more than Rs 10,000.
A gift card can be got for any denomination, starting from Rs 500 in most banks. The ceiling on the gifting amount, though, varies widely depending on the bank. The cap ranges between Rs 10,000 (HDFC Bank) and Rs 50,000 (ICICI and Axis).
Though the procedure for purchase is simple and, theoretically, requires an hour at most, you can run into unforeseen trouble. So don’t try to get a gift card at the last minute.
For one, the cards are meant to be available at all branches, but this is not always the case. Smaller branches may not stock cards at all times and may direct you to a bigger branch. Two, your cheque may take a couple to days to be processed and the card will be activated only after that.
If the gift card has been presented to the benefactor and if that person uses it immediately, the transaction will be declined.
Gift cards are only one type of prepaid cards offered by banks. Other types include forex cards, such as those offered by SBI and HDFC, which can be used for purchases and cash withdrawals in the required foreign currency overseas.
There are other prepaid cards also, but these are primarily meant for corporates and not individual consumers.
Another form of a gift card is those issued by retail establishments instead of banks. In this case, a retailer will give you a card instead of a voucher and you can use the card more than once as long as it is in the same establishment.
This type of card is one step above a gift voucher, as multiple transactions can be carried out, even if purchases are restricted to that establishment. Landmark, for example, has cards such as these.
A gift card is a hybrid between a gift voucher and a debit card. It offers the advantage of the former with the flexibility of the latter.
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