Hidden holds on gift card dollars

If you’ve followed my work, you probably already

know that I hate gift cards for a variety of reasons.

Just ask the holders of Toys RU sand Babies R Us gift card who won’ t get around to using them before the April 15 deadline about why gift cards st ink. Their money will suddenly vanish into thin air.

Well, here’s one more reason to hate gift cards: prepaid

gift cards that are branded by credit card issuers like Visa, MasterCard, Discover and

American Express all have a dirty little secret.

Sure, you already know they come with activation fees ranging from $2.95 to $6.95 that you must pay when you want to buy one for a gift recipient.

But did you know that they also put a 20 percent hold on the money on the gift card when it’s used at salons, restaurants, hotels or for a car rental — basically any place you would likely leave a tip or incur incidental expenses?

So let’s say you go out to eat with a $100 Visa gift card that somebody gave you in hand. If your bill is above $80 before the tip — you do know that a tip of 20 percent is quickly becoming the new tipping standard, don’t you? — the charge will be declined.

That’s because the issuer wants to create a little breathing room for that potential gratuity.

This is the same thing that happens when you use a debit card at a gas station. You might only pump $40 of gas, but the gas station may put a hold for $100 or $150 on your checking account to protect themselves.

I you must pay with debit at a gas station, you should always go inside and prepay for a specific amount of fuel.

So what is my preferred alternative to gift cards?

Just give cash! You never have to worry about tip holds, expiration dates or any kinds of junk fees.

Clark Howard Save more, spend less and avoid rip-offs