Credit Cards, Debit Cards, Gift Cards and What You Need to Know About Using Them; Part 3 of 3
Staten Island’s only community-based business bank highlights the positives and negatives of Gift Cards
STATEN ISLAND, N.Y. – Purchasing a gift card can be a quick and convenient way to mark a special occasion or show your appreciation. There are, however, some things you should know before buying one.
With this in mind, Victory State Bank is sharing the following information from the Department of Financial Services:
A stored-value card (also known as a pre-paid card or gift card) has an embedded computer chip or magnetic strip that contains the value of the card. The money can be accessed by 'swiping' the card, using a password, or entering a code number printed on the card into a telephone or other keypad. The issuer keeps track of your balance until all of the money is used up, then the card can be discarded or refilled. These cards are sometimes used as alternatives to checking accounts.
There are two types of Stored Value Cards:
- Single-purpose, or 'closed-loop,' cards - such as a gift card - can only be used to purchase goods at a particular retailer, or for a particular purpose, such as a prepaid telephone card that can only be used to make phone calls.
- Multipurpose, or 'open-loop' cards, can be used to make debit transactions at retail locations, as well as receive direct deposits and withdraw cash from ATMs. Some multipurpose cards are branded by credit card companies such as Visa or MasterCard and can be used wherever those cards are accepted.
Stored Value Cards can be obtained in a number of ways. You may get a payroll card from an employer, an electronic benefit card from a government agency, or a phone card or gift card from a retail store. Multipurpose prepaid debit cards are usually obtained by telephone, online, or at check-cashing outlets and money transfer company locations.
- The Positives:
- Reloadable multipurpose Stored Value Cards may provide a banking alternative to people who do not have access to a bank account.
- You will not create new credit debt by using a Stored Value Card. You are spending your own money.
- You can book hotel rooms, purchase airline tickets, rent cars, buy concert tickets, shop online and pay bills by phone or the Internet without a credit card.
- Transit system fare cards are Stored Value Cards. They are useful for charging different fares for different services and can automatically discount fares for seniors and persons with disabilities. In some cases they can even be replaced if they are lost, stolen, or damaged.
- The Negatives:
- A Stored Value Card does not have your name on it and generally no refund is available if it is lost or stolen.
- Stored Value Cards do not report spending and payment habits to a credit reporting agency, so having one and using it responsibly won't help build credit or repair damaged credit.
- There can be fees associated with pre-paid cards that can lower its value. Some of those fees include:
- Entrance/Activation fees
- Maintenance fees
- Monthly fees
- Annual fees
- Point of Sale fees (using the card in a retail store)
- ATM transaction fees
- Out-of-network and/or International ATM transaction fees
- Transaction limit fees
- Bill payment fees
- Phone or online transaction fees
- Money transfer fees
- Inactivity fees
- Dispute fees
- Reload fees charged by third parties to put more money on the card.
- The Positives:
About Victory State Bank:
VSB Bancorp, Inc. (OTC: VSBN) is the one-bank holding company for Victory State Bank. As Staten Island, N.Y.’s only community-based commercial bank, Victory State Bank operates five full-service locations on the Island: The main office in the community of Great Kills, and branches in the communities of West Brighton, St. George, Dongan Hills and Rosebank. For additional information, Victory State Bank may be reached at 718-979-1100 or visited online http://www.victorystatebank.com.