. Gift cards and Prepaid credit cards | Manitoba Parentzone

Gift cards and Prepaid credit cards

If you have a pre-teen or teenager in your life right now, it’s almost certain you know how difficult finding the right gift for them can be. Gift cards and prepaid credit cards can feel like a perfect solution – and both have become popular gift options in recent years. These cards have different benefits and challenges than cash, and as a parent, you might wonder how you can help your child best manage the amounts they receive in gift cards or prepaid cards.

Kids and teens can be especially happy to get gift cards for several reasons. As opposed to cash, gift cards can be used online, to buy minutes on games, music, or actual, tangible items in an online store. Mall gift cards can give kids and teens the flexibility to shop in several stores at one shopping centre, which might give them more variety in terms of what they can purchase. And, since kids may see their parents using debit cards and credit cards rather than cash, having cards might give them a sense of being an adult, which can be pretty exciting!

But gift cards can come with some challenges, though. Because of their size, they can easily be lost or misplaced. This is probably more likely if your child isn’t at the stage where he or she carries a wallet or purse yet. As well, because gift cards are for a specific amount, there is the issue of either spending more than the value of the card, or of having a small remaining balance that ends up not being used. Children might also have a different sense of gratitude for a gift card. They might feel like the items they purchase are something ‘they’ bought rather than a gift received from someone else. And, although the Manitoba government has introduced regulations around gift cards, some card issuers also charge fees for periods of non-use, and balances may expire at some point.

Because gift cards offer your child some freedom related to when and possibly where they may shop, the issue of how and why we spend money may come up. This is a fantastic opportunity to talk to your child about budgeting and spending. If your child spends his or her whole gift card at once, it will be gone: is that ok with them, or would they prefer to save some of the value? Is it okay with you? There is also the issue of buying trendy toys or clothes that may not be ‘in’ for long. Although we, as parents, might shake our heads, sometimes these items might actually be very important to your child, as they may give a sense of social status, identity, or acceptance within a peer group. Even if the item seems like a needless expense to you, making some minor mistakes with spending can teach a lesson – and you might not have to say a word. Just be sure to listen and empathize with your child if he or she regrets the purchase later.

If your child or teen receives a gift card for a birthday or holiday, there are some things you can do to help him or her manage spending.

  • Set a good example for your children by creating a budget, spending wisely, saving consistently, and, if it fits for your values, giving to others.
  • If your child makes impulse purchases or spends money on very trendy items, check in with yourself – do you shop this way too?
  • Help your child express gratitude to the giver by sending a thank you note. It is a nice touch if your child can indicate what he or she has purchased, or plans to purchase, and what this means to him or her.
  • If your child wants an item that is priced higher than the value on the card, give some thought to how you will proceed. Will you ask that he or she saves the amount, offer to pay the difference, or recommend a different item?
  • Sometimes, you will see gift cards and prepaid cards for sale on community buy and sell websites at a discounted price. Be cautious about these offers, as, unfortunately, scams do happen.
  • Remind your child that gift cards are just like cash – if they are lost, they may be gone forever. Encourage your child to keep the gift cards in a safe place, like a piggy bank or wallet.
  • Help your child to record their transactions so they are aware of the balance on their gift card or pre-paid credit card at all times.
  • Encourage your child to create a budget for the total value of their gift cards or prepaid credit cards, to collect all their receipts, and to monitor their spending.
  • Your financial institution may also have good information about prepaid credit cards, budgeting, and gift cards. Consider checking their websites or dropping by your branch.

Check out these links for more information about gift cards, prepaid credit cards, and talking to your children about money.

Manitoba law does not allow sellers to charge activation, transaction, or maintenance fees for gift cards, except a maximum monthly dormancy fee of $2.50 for cards issued by multiple sellers such as shopping malls. A supplier is however, allowed to charge a fee for customizing a card, or for replacing a lost or stolen card. Expiry dates are allowed only if the card is issued or sold for specific goods and services (for example, an oil change, or a pedicure), or if nothing of value is exchanged for the card at the time of issue. You can read more information regarding gift card legislation at Requirements for Prepaid Purchase Cards – Consumer Protection Office, Province of Manitoba.

The government has recently proposed regulations that would help consumers have full access to the funds remaining in their pre-paid credit cards. This proposed regulation would prohibit financial institutions from imposing a maintenance fee for at least one year after the card is activated, and from imposing an expiry date on balances. To read more about this, click here: Prepaid Payment Products Regulations – Government of Canada