Financial Consumer Agency of Canada

Financial Consumer Agency of Canada

December 13, 2010 11:57 ET

Gift and Prepaid Cards May Carry Fees

FCAC advises consumers to look before they buy

OTTAWA, ONTARIO--(Marketwire - Dec. 13, 2010) - Gift cards and other prepaid cards have become a popular gift–giving option. But they can cost more than the amount printed on the front—and they can mean costs for the gift recipient, too. The Financial Consumer Agency of Canada (FCAC) has just produced a tip sheet, Prepaid Cards: 10 Things to Consider Before Buying to help consumers learn more about prepaid cards.

"Before you buy a prepaid card as a gift or for yourself, make sure you know all the costs and conditions these cards carry," suggests FCAC Commissioner Ursula Menke. "Fees, expiry dates, ease of use, what happens to an outstanding balance, whether the card can be replaced if it is lost or stolen—these are just some of things to consider, and they vary depending on the card."

There are two main types of prepaid cards. Both require you to pay up front to "load" money on to a card for later use and both are sometimes called "gift cards". Prepaid cards from retailers can only be used at a single store or group of stores, such as a chain or a shopping mall. Other prepaid cards, usually branded with a payment card network operator's logo, such as Visa, MasterCard or American Express, can be used with most merchants that display that network's logo.

"The only way to find out the fees and conditions that apply to the card you're considering is to read the information in the prepaid card agreement carefully before you buy it," emphasized the Commissioner. "A $50 prepaid card with an activation fee of $4.95 means that you are paying close to 10 percent of the card's value just to use it." There may also be a fee for checking your balance, customizing, replacing or loading money onto your card. Purchase fees, a monthly maintenance fee or dormancy fees could also apply. If there is an expiry date, you may lose the money still left on the card when it expires.

There are other options. Compare the costs and benefits of using gift cards versus other forms of payment. For gift–giving, cash or a cheque might also be a good choice. If you're buying for yourself, a debit or credit card may have lower fees or be more convenient.

To help you make this comparison, FCAC's Bank Account Selector Tool outlines the fees that might apply to debit card transactions. For tips on how to reduce costs with your credit card, see FCAC's Choosing the Right Credit Card for You. FCAC's Credit Card Selector Tool has details on approximately 250 credit cards available in Canada, including more than 70 that charge no annual fee. 

About FCAC

With educational materials and interactive tools, FCAC provides objective information about financial products and services and informs consumers about their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies. Through its financial literacy program, FCAC helps Canadians increase their financial knowledge and confidence in managing their personal finances. FCAC also makes sure that federally regulated financial institutions and payment card network operators comply with legislation and agreements intended to protect consumers.

You can reach us through the FCAC Consumer Contact Centre by calling toll-free 1-866-461-3222 (TTY: 613-947-7771 or 1-866-914-6097) or by visiting our website:

Consumers are advised that gift and prepaid cards may cost more than the amount printed on the front. There might also be costs for card users. If you're considering buying these cards for yourself or someone else, take the time to ask about the fees and conditions that may apply. The Financial Consumer Agency of Canada has just produced a helpful tip sheet, Prepaid Cards: 10 Things to Consider Before Buying. For more information, go to

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