A bank's gift cards cost extra

Washington Mutual Bank launched a MasterCard gift card, just in time to take advantage of the holiday buying season - and to find bank-issued gift cards getting some heat because of their fees and terms.

The launch was announced Nov. 22, with a purchase price of $3.95 for the prepaid debit card that for now Washington Mutual sells only through its Web site.

So, just for starters, a $25 gift card could cost the buyer almost $29. (The bank is waiving an additional $1 charge for shipping and handling through the end of 2005.) A purchase price is only one of the costs and conditions associated with many cards like Washington Mutual's, issued for use for more than one retailer, chain or mall.

A survey that included a comparison of those cards, including MasterCard gift cards (not Washington Mutual's specifically) and retailers' cards, recently led Bankrate.com to post this assessment on its Web site: Gift cards issued by retailers generally were "more consumer-friendly." Bank industry representatives say that such comparisons don't give adequate weight to benefits they see in their offerings.

One point they emphasize is reflected in a statement by Doug Marshall, a senior vice president at Washington Mutual, when his bank announced the entry of its MasterCard gift card. "We are particularly seeing a growing interest in bank-issued cards, because they can be redeemed wherever the brand debit cards are accepted rather than with a single retailer," he said. "In the case of the Washington Mutual MasterCard gift card, this literally means gift recipients can make purchases at millions of MasterCard merchant locations throughout the world."

In an interview Wednesday, Washington Mutual spokesman Shane Winn added that the bank offers gift-card buyers a personal touch and can put the recipient's name on a card for free.

Still, Bankrate.com found that expiration dates, to cite one point of comparison, were more typical on the cards issued for broad marketplace use, though it found such dates on some retailers' cards, too. What an expiration date means in practice varies with the issuer. Here is an excerpt of the relevant terms that spell out what it means on Washington Mutual's MasterCard gift card:

"Your Card will be valid until the entire value has been used or until the valid through date on the card ('expiration date'), whichever occurs first. The expiration date will be approximately two years from the date of purchase. If any funds remain on your card after it expires, you may request a new card with a value equal to the remaining balance or a check for the remaining value (but see Section 5 for applicable card replacement fees and cash-out fees), as long as you contact us no later than 30 days after the expiration date."

Then, parts of Section 5 must be read. Under the heading of "card replacement fee," the terms say: "If we issue a replacement card at your request, or for lost or stolen card, we may charge a fee of $15." Under the heading of "cash-out fee," the terms explain: "If you wish to receive a refund of remaining balance of card ... a $15 fee will be charged and deducted from the balance of the card before sending you the check. Refunds will be allowed when you close the card or the card expires."

Winn said most consumers use a gift card in months, but for those who don't finish by the expiration date and request a replacement or cash-out, the bank incurs costs and so charges fees.

Still, for consumers, there is a lesson: If you try to make the bank's gift card outlive its expiration date, you could be hit with yet another fee.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.