Gift Credit Cards

Gift credit cards look at a lot like normal credit cards, except they have no real similarities. In truth, the only things that make gift credit cards like credit cards is that they are payment methods that are both swiped.

Gift credit cards are popular as a way to give a “gift card” that works everywhere. Most retail outlets accept some type of credit card—Visa, MasterCard, American Express, or Discover. Thus, gift credit cards are a great way to give money to someone to spend anywhere without giving cash.

Using a gift credit card
Using a gift credit card is as easy as any other credit card. At the point of sale terminal, a gift credit card is swiped through and the user then tells the cashier that the transaction is a credit transaction, or presses a button on the screen to indicate as such. After that, the store may require a signature, but in most cases no signature is needed.

Using a gift credit card will not allow you to borrow money. Instead, only what is preloaded onto the card can be spent, and there is no way to go into negative balances. This makes them great training cards, as even checking accounts attached to debit cards can be spent into negative balance territory.

Each brand of card is different, but each should offer a mechanism to check your balances. The major four credit card companies have an online tool where you can enter the account number to see the balance at any time. Alternatively, some stores have an area on each receipt where the balance is reported. Typically, the balance is noted at the bottom of the receipt so the user can spend with confidence.

Other uses for gift credit cards
While gift credit cards can be used for gift giving purposes, there are a few other ways to effectively use your gift credit card:

1. Manage budgets
An excellent way to manage your spending habits is to use a gift credit card. By purchasing several gift credit cards, you can set your monthly spending habits and divide your purchases into separate cards. For example: If you want to limit your spending on restaurants, and clothing stores, you could purchase gift credit cards each month for the amount of your budget. Once the money is gone from the card, there is no more spending on either budget item. Consider this a post-millennium improvement on the “envelope system” for budgeting.

2. Monitoring child’s spending habits
Some parents find that a gift credit card works excellently for monitoring their child’s spending habits. A gift credit card leaves a digital purchase trail online, which can be used to see where the user is spending the money, and how much they’re spending at each place. Additionally, a gift credit card works great to show responsible spending habits and to encourage thoughtful use of plastic.

3. Online purchases
A gift credit card is a much better way to purchase products online than other cards. While credit cards and debit cards are protected against fraud, the owner of the account can be held liable for some of the loss. On the other hand, purchasing a gift credit card to use online allows you to buy products without risking the possibility of fraudulent charges, losses to your account. Once used, a gift credit card can be thrown away, or returned for later reuse by someone else. A few companies offer “virtual credit cards” which are accounts with no physical plastic card. Instead, the number is used to spend money online through a pre-funded account.

In summary, gift credit cards are great for the gift-giver and responsible spender alike. They offer the convenience of using a card instead of cash, and a much needed divisor between your cash and your bank accounts, which only boosts their inherent security benefits.