The Fed recently released its guidelines for the last stage of the implementation of the Credit CARD Act of 2009. The new rules include limitations on credit card penalty fees, which are set to step into effect in August this year.

The Credit CARD Act stipulates that going forward, credit card companies should only be able to charge credit card fees that are “reasonable and proportionate” in relation to the offense. The interpretation of exactly what is “reasonable and proportionate” was left to the Federal Reserve Board to specify, as has been the case with other details of the new credit card law.

Under the new guidelines proposed by the Fed, the penalty fees charged by credit card issuers cannot exceed the amount of a violation. For example, if a cardholder sends in a $25 minimum payment past the due date, the resulting late fee cannot exceed $25. Similarly, when cardholders go over their credit limit, card issuers can no longer charge a fee higher than the amount by which the credit limit was exceeded. In other words, if you exceed your credit limit by $20, card issuers will no longer be able to charge a $39 over limit fee as they currently do. (And of course, under the new law, cardholders would still have to opt in for credit card overdraft protection for card issuers to be able to charge a fee).

Barely off the presses, the Fed’s proposed guidelines drew fire from consumer groups. Many consumer groups argued that capping credit card fees at transaction dollar amounts leaves the door wide open for higher penalty fees in the future. For example, if a person’s minimum monthly payment is $300, the new rules, in theory, would allow card issuers to charge a $300 late fee.

Given the competitive credit card environment, this is not a likely scenario. Still the example illustrates how the new Fed guidelines do little to effectively cap credit card penalty fees. The Fed rules would only reduce late payment fees for people with a balance of less than $2,000 (presuming a 2 percent minimum payment), a minority of credit cardholders. Consumer advocates had hoped for a percentage fee capper, such as 5 or 10 percent of the amount due, to comply with the requirement of the Credit CARD Act to make fees ‘reasonable and proportionate.’

Other parts of the Fed’s guidelines were met with greater approval. Under the new rules, credit card companies will no longer be able to charge multiple penalty fees on single transactions. The Fed also closed the door on inactivity fees, which some credit card issuers have introduced for cards that are not used on a regular basis. Some consumer groups, however, pointed out that the Fed guidelines do not prevent the inactivity fee from re-emerging under the guise of an annual fee, which is waived only if the cardholder spends a certain amount each year.

The public has 30 days to comment on the Fed’s proposed guidelines at FederalReserve.gov. The finalized rules will step into effect on August 22 this year.

Will the health care of the future require patients to give out their credit card information before the doctor will see them? Indeed, if a new trend in physician payment services catches on, consumers may have to put their credit card information on file before getting certain services, much as is currently done when booking a hotel room or renting a car.

Two business service providers for physicians, mPay Gateway and Athenahealth, Inc, both recently launched new payment processing systems to help physicians collect payments from patients, while simultaneously reducing administrative costs. By implementing the new, pre-visit card swipes, doctors and medical clinics can reduce the risk of issuing services they might not be able to collect payment for.

Under mPay Gateway’s new credit-card payment program, for example, a patient arriving at a doctor’s office is given an estimate of a procedure’s cost. They are then asked to swipe their credit card, and, only after doing so, are admitted to see the doctor. Following the procedure, the patient is given a detailed statement of provided services and a receipt. The program then contacts the patient’s insurance company (if any) for coverage and then charges whatever balance remains to the patient’s card.

For medical providers, it’s a win-win situation: the new payment systems allow them to reduce operating costs while increasing revenues. Over the past years, health insurance companies have been increasing co-pays and deductible on many insurance plans. As a result, individual health-care bills have risen to over $300 billion per year in the U.S. alone, and they are projected to double in the next five years. For physician’s and medical clinics, the growth in individual health care bills is presenting an increasing problem. Nearly 20 percent of medical debts-a whopping $50-$60 billion-go unpaid. So not surprisingly, the new payment processing systems, which require patients to submit their credit cards for payment before receiving services, has broad appeal among medical providers.

Already, mPay Gateway’s program has been shown to reduce unpaid medical bills by up to 80 percent, as the co-pay is simply now charged to patients’ credit cards and then deposited into the medical providers’ bank accounts. In addition to ensuring patient payments, the new payment services are also marketed as helping to reduce administrative costs, promote faster processing, and reduce the risk of fraud or theft from abuse of mailed, paper invoices.

For consumers, if the new payment processing systems catch on, it could turn into a troubling trend. Patients to clinics who don’t pay their co-pay right away would end up having the payment added to their credit card accounts. For patients who have revolving credit card debt-and, according to research done by comScore in 2008, 55 percent of Americans fall into that category-processing doctors’ bills onto a high-interest credit card could compound debt at an alarming rate. By lumping in medical debt with other debts, interest charges could cause a procedure’s cost to inflate far above its upfront charge.

Just as bad, for people with frequent health issues, the increased credit card debt could lower their credit score by affecting their credit utilization ratio, an important component of FICO scores. Also, the mounting high-interest credit card debt from medical expenses sooner or later would push financially strapped consumers over the edge and into default, further trashing their credit score.

Once a person’s credit score goes bad, it creates a snowball effect of additional issues. Since many prospective employers and landlords check applicants’ credit scores, the lives of people with significant medical expenses could be seriously affected if they are not given sufficient time to pay off their medical bills before the debt lands on their credit report.

Already, medical debt ranks among the top causes of bankruptcy in the U.S. According to a study in the August 2009 issue of The American Journal of Medicine, 62.1 percent of 2007’s bankruptcies were caused by either medical debt or an illness-related loss of income.

Furthermore, those who can’t afford health insurance are often the ones shouldering the highest credit card balances: according to a 2007 report, “Borrowing to Stay Healthy,” published by Demos, insured households carried an average of $10,973 in debt while their uninsured counterparts struggled with $14,512 in credit card debt.

At the onset, it seemed like a great idea-why not issue Geico-branded credit cards to existing customers of Geico Car Insurance? Best know for its charming, Cockney-accented mascot gecko and its recent cavemen ads, Geico was bought by Buffett’s Berkshire Hathaway in 1996 and it is today one of the largest car insurance companies in the country.

Issuing credit cards to millions of already existing customers seemed like an easy way to tap into the often lucrative profits of the credit card market. And so, the Geico Platinum MasterCard was born. However, what seemed like a natural fit, quickly turned out to be a bad idea. Before the MasterCard venture, Geico executives had warned Buffet that instead of getting the best of Geico’s customers, the credit card offers might attract the less credit-worthy segment of Geico customers. They turned out to be right.

As a so-called “low-cost” provider; Geico attracts consumers who are concerned about saving money, which for the most part are those with lower incomes. While the risk of issuing car insurance to a high-risk clientele is negligible, issuing credit cards turned out to not be such a hot idea. Before selling off its debt portfolio, Geico suffered an immediate $6.3 million in losses from bad credit card debt, according to Reuters. Another $44 million went down the drain, when Buffett finally decided to get out of the credit card business and sold Geico’s $98 million portfolio of “troubled receivables” for 55 cents on the dollar. All told, Buffet’s self-titled “very expensive business fiasco” cost $50 million-not exactly chomp change, even for a billionaire.

The failure of the Berkshire Hathaway venture was in part spurred by bad timing: in the wake of the 2008 credit debacle and the ensuing economic recession, all credit card issuers have been struggling with record credit card defaults.

However, Buffet’s misadventures also highlight the risk that credit card issuers face when issuing credit cards to people with bad credit and poor borrowing habits. Bad credit card issuers enter a high stakes game with the odds against them: those with a history of bad credit often perpetuate the financial mistakes that created the bad credit in the first place—which include being more likely to take on too much debt and then fail to repay it.

Still, while the loss is considerable, in Buffett terms it is still just water under the bridge. Over the past four decades, Buffett has built Berkshire Hathaway into a company valued at almost $200 billion. And despite recent losses, Geico is doing just fine; it remains the third largest car insurer in the U.S., adding two million customers in the last three years alone.

Most Americans have multiple credit cards, while the majority hold 3-5 credit cards, some have as many as 10-12. Few people really need that many credit cards; for the most part, the cards are left-over relics from the days when lucrative no-fee 0% APR offers flowed like milk and honey.

In the changing credit card environment, however, it could soon get costly to have too many credit cards. Some card issuers are reintroducing annual fees and other fees linked to card usage, which could quickly turn unused credit cards into a liability.

However, simply cancelling unused credit cards isn’t that straightforward either. Most experts advise against closing credit card accounts, because it may lower your FICO score. In particular, cancelling a credit card could affect your credit utilization ratio, a measure of how much credit card debt you carry in relation to your total credit available. It could also shorten the length of your credit history, another component of FICO scores.

However, while the overall caution against cancelling credit cards is well-founded, it is not a one-size-fits-all advice. Depending on the specifics of your personal financial situation, closing inactive credit cards might not affect your credit score, or could affect it minimally, as long as you go about it correctly. Here are some tips to minimize the effects of closing credit cards.

1. Pay down credit card debt first
The best way to minimize the impact of closing a card involves maintaining a healthy available credit-to-debt, or utilization ratio. In general, the drop in your credit rating from canceling a card will run proportional to the increase in your utilization ratio. To avoid impact on your credit score, keep the utilization ratio below 30 percent, and ideally at around 10 percent.

To get a sense of how much closing a card would affect your credit utilization ratio, total the credit limits among all your cards, then divide it by the total balance you typically have outstanding each month. For example, if the total credit limit across all cards is $20,000, and the typical monthly balance on all the cards is $2,000, the credit utilization score will be 10 percent, which is considered within the ideal range for boosting this component of credit scores.

If you cancel a card with a $5,000 credit limit, and keep the same average monthly balances on the cards, the credit utilization score increases to 2,000/15,000 or 13 percent, which won’t affect the FICO score much, if any. However, if you carry a monthly balance of say $6,000, cancelling that $5,000 card would create a utilization score of 6,000/15,000, or 40 percent, causing your FICO score to take a hit.

The greater the increase in credit utilization, the greater the drop in credit scores. While an increase in the credit utilization score from 10 percent to 13 percent, for example, will only trigger a minor dip, a jump from e.g. 10 percent to 85 percent in credit utilization could cause a score to plummet over 100 points.

One way to safeguard against spikes in your utilization ratio is to pay down the balances on all your cards. For example, if you have five cards and wish to close one of them, make sure to pay off as much debt as you can on the other four before cancelling the fifth. This way, although your overall available credit decreases, you’ve decreased your debt as well, maintaining a healthy ratio.

2. Keep credit card balances low
For people unable to pay down their credit card debt, closing a credit card without affecting the utilization ratio can be much more difficult. However, there are a few things you can do to minimize the impact. Firstly, shifting monthly expenses to debit cards or prepaid cards can help minimize the effect on the credit utilization ratio. Why? Because the total you’ve charged for the month counts towards your credit utilization ratio, even for cards that you pay off in full each month. By shifting spending to debit cards, you can avoid having the charges counted as part of the credit utilization score.

Secondly, if you’re looking to cancel a card because it introduced an annual fee or changed terms in ways you’re unhappy with, consider applying for a new credit card before canceling the old one. The credit line on the new card will help you maintain you overall utilization ratio, even as you get rid of cards with annual fees, or other unattractive terms.

3. Close new credit cards before old
New credit cards don’t hold as much weight as their predecessors do when it comes to bolstering credit scores. A ten-year-old credit card contributes more points to your credit rating than one that just arrived in the mail. Consequently, if you are looking to pare down your credit cards, to minimize the effect on your credit score, get rid of the newer ones first, all other things being equal.

If there is one positive fall-out from the credit crisis, it is that more Americans are reining in credit card spending and paying down credit card debt.

According to a recent study by BillShrink.com of 150,000 consumers, nearly 60 percent of credit card users are now paying off their monthly card balances in full. This is an almost 33 percent increase from last year, when less than half of consumers (46 percent) paid off their credit card balance at the end of each month.

The findings are in line with data from the Federal Reserve showing that revolving consumer credit (largely a measure of credit card balances) has been declining for 15th month in a row. November last year saw a record drop of $17.5 billion, followed by a $8.5 billion decrease in revolving consumer credit in December.

The changing habits around credit card usage may signal that consumers have begun to cut back and monitor their finances more closely in the face of a continuing weak economy and high unemployment rates. It may also in part be caused by a shift in consumers’ attitude towards credit cards.

Over the past year, as credit card companies took steps to tighten terms before the new credit card rules stepped into effect, many cardholders saw interest rates shooting up on existing credit card balances, or had credit limits sharply cut back. And while card issuers under the new credit card law won’t be able to raise interest rates retroactively, unless a cardholder is 60 days behind with payments, the dramatically changing credit card terms over the past year has taken its toll on consumer confidence, as more woke up to the downside of credit card usage.

Consumers looking to curb credit card spending instead have been turning to other types of plastic. Debit card usage has been steadily on the rise for a number of years, and it increased sharply last year, with a 13.8 jump in Visa debit card transactions and a 10 percent in MasterCard debit card transactions in the U.S. from 2008 to 2009.

Prepaid credit cards, popular among people who don’t have a bank account, are also growing in popularity. According to Mercator Advisory Group, a credit and payment research service, the amount of money loaded on prepaid credit cards is expected to almost grow from about $4 billion in 2008 to $14.1 billion by 2011.

Many consumers prefer debit cards, because they offer the same payment convenience as credit cards, without the risk of accumulating high-interest credit card debt by underestimating charges or being tempted to make impulse purchases.

Gift cards make great presents. They are quick and easy to buy, and you don’t have to worry about whether or not the recipient will like the gift. Gift cards make great presents even for the man (or woman), who has everything-no need to fret about whether she will like that Deluxe Shiatsu Foot Massager from The Shaper Image or if the Nose & Ear Trimmer with Vacuum will be to his liking; with a gift card, your special someone can pick something out for him or herself.

Not surprisingly, gift cards are becoming ever more popular; last year, Americans spent approximately $87 billion dollars on store gift cards alone-and that’s excluding bank issued cards, such as Visa or American express gift cards.

But despite the versatility of gift cards, every year hundreds of millions of dollars of value get lost on gift cards, because recipients either lose or forget about the card or can’t find a use for the card. With numbers like this in the balance, it would be only a matter of time before a secondary market for gift cards emerged.

A new breed of websites provide exactly that, giving gift cardholders the option to turn unwanted cards into cold, hard cash. With the help of sites ranging from Ebay to PlasticJungle.com, consumers have found a way to turn what was once a shopping spree at Nordstrom into a portion of their next month’s rent.

PlasticJungle.com, GiftCardRescue,com, MonsterGiftCard.com and many other such sites offer gift card recipients the chance to convert their cards to cash or even swap them out for other gift cards. Cards are purchased directly by the site, often at 60-90% of original face value.

Purchase price is determined by a number of factors: cards with greater liquidity, such as a Sears or Target card, will fetch more than brand-specific ones, such as gift cards from Old Navy or Red Lobster. Seasonality may also come into play; gift cards for the NFL Shop are more likely to fetch big bucks around the time of the Superbowl than they are in early April.

For people looking to cash in one card for another, gift card exchange sites give users the ability to purchase new cards at discounted rates. Many sites offer a better deal for those looking to trade in as opposed to simply cash in. Most of the discounted gift cards are priced at 90 percent of their original rate, but the keen shopper may be able find bargains of up to 30 percent off—especially if the card is from a lesser known merchant. Many gift card exchange sites also provide you the option of donating cards for the benefit of your favorite charity or nonprofit organization.

Even a partially used card has value; as long as the remaining balance is over $25, gift card exchange websites are happy to take it off your hands-and replace it with cash or credit.

If your gift card total hits below the $25 mark, or if you want to try your luck in the consumer marketplace, Ebay is a hot spot for the re-gift card exchange. People looking to cash in a Target gift card can collect as much as 95 cents on the dollar, whereas less versatile cards, such as Talbots cards tend to go for as low as 75 cents per dollar.

Gift cards are similar to prepaid cards, a.k.a. stored value cards, however, prepaid cards tend to target people with poor credit and typically come with hefty fees. While some gift cards come with a small purchase fee, for the most part, they don’t come with monthly fees.

If you are one of the three out of four Americans, who according to surveys crave greater knowledge of how to manage their personal finances in general and credit cards specifically, here is one unexpected resource: credit card companies.

Most credit card companies offer an excellent array of tools and resources to help consumers understand and manage credit and their personal finances better. The best sites take this one step further, making financial education fun and entertaining through videos, online financial games, and interactive tools. Here is a sampling of some of the better financial education sites:

Visa’s Practical Money Skills
Visa is the largest electronic payment processing system in the world with lots of resources to spend, and it shows. This site offers extensive resources, not just for credit card management, but for everything pertaining to personal finances, including planning for college, investment basics, advice for landing a job, finding the best elderly care for again parents, and much more. While the site, not surprisingly, has a definite Visa slant, it excels with its numerous fun, creative resources, which offer a new spin on money matters. A series of educational games aim to make finances fun; adults and kids alike can test their financial savvy on interactive financial games, such as the Financial Football Training Camp, Ed’s Bank, or the “Smart Money Quiz Show.”

MasterCard’s Priceless Pointers
Just how priceless MasterCard’s pointers are is for users to decide, however, this site does offer a number of innovative features to help make financial education more exciting and accessible. Users can view videos that give advice on how to make budgets work, safer online shopping, and more. Interactive tools help users figure out how much they can spend each month without compromising their long-term financial goals or let consumers calculate how much they can save by paying off credit card debt and other types of loans faster.

Discover Financial Education Tools
Discover Financial Services recently added a “Straight Talk” section to their financial education section to help card members better understand the new credit card landscape. The new program features a wide range of basic information, including videos reviewing the recent credit card changes introduced by the Credit CARD Act, including changes to statements, over-limit fees, and the allocation of credit card payments, and a series of articles on a variety of credit card-related topics.

Also useful are a number of free online credit card tools, which can assist cardholders with managing their credit card spending and credit card debt. For example, if you are looking to keep better track of your expenditures, an easy-to-use tool offers a visual tracking system to compare card spending from month to month. If you want help structuring a debt-payoff plan, a “pay-down planner” can help you calculate how long it will take you to pay off your credit card debt under different scenarios. Discover also offers helpful advice on how to navigate the challenging economic environment.

Chase’s “Clear and Simple”
This site likewise is a broad personal finance site, catering to a wide range of consumers with different needs. In addition to the interactive features, what makes this site useful is that the information is organized according to different demographic groups, which makes it very easy to find the resources pertaining to users’ specific financial needs. Different sections focus on financial advice for young professionals, new families, members of the military looking to make important financial decisions before deployment, or seniors looking to make the most out of their retirement savings. For cardholders looking for help with things from budgeting their family finances to consolidating small business debt, the site provides a variety of helpful tools and calculators.

In addition, while the financial education website resources differ from card issuer to card issuer, the website of almost all card issuers give cardholders the option to create reports of past credit card charges organized by category. This is a basic financial management tool, which can be extremely useful for keeping track of where your money goes and curtailing expenses.

Signing up for an online round of Texas Hold’em used to be as simple as purchasing a pair of pants on LandsEnd.com: simply fill in your credit card information and submit. However, the world of online gambling recently was rocked, as credit card giants Visa and Mastercard took steps to curtail credit card usage for online gambling.

MasterCard was the first to block internet poker players and other gamblers from using their credit cards to deposit money on online gambling sites, and last week Visa followed suit. While neither Visa or MasterCard have announced their reasons for the crack-down, many speculate that the credit card giants’ moves came in anticipation of the new Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed in 2006 and is due to step into effect on June 1 this year.

The UIGEA calls for the blocking of all “unlawful Internet gambling transactions,” a phrase that many gambling proponents denounce as too vague to properly enforce. Lobbying efforts pushing this argument so far have succeeded in postponing the implementation of the new internet gambling law for another six months, from December 1, 2009 to June 1, 2010.

Internet gambling has been sharply on the rise, and credit cards have been key players (no pun intended) in enabling this increase. Since 1997, online gambling has doubled every year, spurring a fierce legislative fight to get online gambling more closely regulated. Consumer advocates, however, worry that introducing further government regulations of online gambling will amount to little more than legalizing it through the back door.

Consumer advocates point to the risk for consumers: 15 million people display some sign of gambling addiction, and young adults are particularly susceptible: according to studies, 76 percent of 18-year-olds engage in gambling. With the proliferation of student credit cards, college students are at even more vulnerable; about three out of four students now have a credit card, students are very comfortable with the internet, and most have 24/7 access to free, high-speed connections in dorm rooms and throughout campus.

The Visa and MasterCard crack-down affects almost all credit cardholders, with the exception of those using Discover and American Express. Visa and MasterCard are the world’s largest electronic payment processing companies; every single credit card transaction charged to cards issued by e.g. Citicard, Bank of America, Chase, Capital One, and other are processed through either Visa or MasterCard. In short, if the ban remains in effect, all online gambling transactions using credit cards bearing the Visa or MasterCard logo will be blocked.

It remains to be seen if the Visa and MasterCard crack-down is a long-term policy change or a short-term exercise. However, don’t expect online gambling sites to fold just because the two credit card giants have withdrawn their support: online players still have a variety of internet payment options available, including Echecks, Ewalletexpress and Usemywallet, which facilitate quick and secure bank-to-online-casino transfers. And as long as payment options are available, consumers are likely to continue to “shuffle up and deal.”

Credit card issuers stand to lose $15 billion in revenue from as a result of the new credit card rules, which stepped into effect last week. Not surprisingly, they have wasted little time in coming up with ways to restore lost income.

With the door slammed shut on retroactive interest rate increases, card issuers have turned their attention to one source of revenue poorly regulated by the new law: credit card fees. Over the past year, penalty fees and balance transfer fees have been steadily climbing. The median late payment fee now stands at $39, and making a 0 percent APR balance transfer now typically will cost you 3 to 5 percent in balance transfer fees.

In addition, card issuers are experimenting with creative new ways of increasing fee income, some entirely new, some a return of old fees with a new twist. Here is a sampling of some of the credit card fees that could be coming soon to a credit card near you:

The Inactivity Fee

The inactivity fee targets cardholders, which rarely use their credit card. The fee can run as much as $19 a month, almost $240 a year.

Apart from costs, the inactivity fee has a number of unfortunate consequences for cardholders. Firstly, since many people who don’t use a card don’t check the monthly statement, cardholders might easily miss the new charge and end up with late payments and other penalties on their account.. Secondly, cardholders who opt for closing the account to avoid the fee, might see their credit score go down, because closing the account could hurt their credit utilization ratio, an important part of the credit scores.

So far the inactivity fee has been tested by smaller card issuers, such as Fifth Third bank, and the larger card issuers have yet to jump on the band wagon. However, card issuers generally keep an eye on the state of each other’s lending practices, so if the fee appears to be successful, the large lenders may adopt it. There is one easy cure, however: use the card. Currently the fee gets assessed only after the card has not been used every 12 months, so rotating credit cards could easily protect you against this fee.

The Return of the Annual Fee

While cards with an annual fee have almost become a thing of the past for anyone with good credit, card issuers are now testing the waters to see if cards will annual fees will fly. In the fourth quarter of 2009, credit card companies sent out nearly 400 million credit card offers, and more than one third featured an annual fee-the highest percentage in a decade.

In addition, some large card issuers, like Bank of America, have run tests on a small percent of their cardholders, introducing annual fees ranging from $29 to $99. And while it’s still possible to find rewards credit cards without an annual fee, many of those featuring the most attractive rewards, also feature annual fees.

The Charge-More Fee

The charge-more fee is a new twist on the annual fee introduced by Citibank. Starting April, many Citicard holders will be charged a $60 “service” fee each year. The fee, however, will be refunded if cardholders spend more than $2,400 a year. In other words, to avoid the annual “service” charge, Citicard holders will need to spend about $200 a month. In a letter announcing the new fee, Citi quotes “the rising costs of doing business.”

The You-Don’t-Know-You’re-Paying-It Fee

To make up for lost income, credit card companies are likely to increase interchange fees, i.e. the fee merchants pay to each time a customer pays with a credit card. Interchange fees range from 1 percent to 3 percent of the total purchase price, and they have been steadily on the rise. Merchants are likely to pass the cost on to consumers by raising prices; which means that everyone pays for those fees, even people who don’t pay with credit cards.

In short, while the new credit card rules have brought some protections, there are plenty of reasons to remain on the alert. As always with credit cards, being aware of the newest credit card tricks and traps is the best way to take advantage of the many benefits of credit cards, while, hopefully, avoiding their pitfalls.

The provisions of the Credit CARD Act of 2009, which stepped into effect Monday, February 22nd, introduced many new protections for credit card users. The new law aims to make gift cards more user-friendly as well; however, consumers will have to wait until August 22, 2010 for these new protections to become effective. Still, if you familiarize yourself with the current downside of gift cards, it’s easy to avoid their drawbacks in the meantime.

At present, the two major drawbacks of gift cards are that some come with expiration dates and monthly inactivity fees. Under the new credit card law, gift cards can’t expire for at least five years after purchase. In addition, gift card issuers cannot assess a monthly inactivity fee until at least one year after the card was sold. The new credit card rules also stipulate that the terms of the card, including inactivity fees and expiration dates, must be printed directly on the gift card, providing purchasers and receivers with easily accessible information about the key terms.

The new rules will apply to both bank-issued and store-issued gift cards. Bank-issued gift cards, are generic cards issued via Visa, MasterCard, Discover, or American Express. Store or merchant-issued gift cards, on the other hand, are issued by specific vendors, such as department stores or restaurants. Bank-issued gift cards are increasingly popular due to their ease of use; a bank-issued prepaid gift card is essentially like a debit card, which can be used to at any number of physical or online stores. The holder of the gift card may need to register his or her name and address before using a gift credit card online, but otherwise internet purchases are as easy to make with gift cards as with credit cards.

If you’re considering purchasing a gift card for someone before the new law steps into effect, you can protect yourself against card expiration dates and inactivity fees by doing a bit of shopping around. The four major credit card companies, American Express, Discover, MasterCard and Visa all offer expiration-free gift cards. Some also offer free shipping, but they all charge a purchase fee.

Please note, however, that while funds on gift cards issued through the major credit card companies won’t expire, the card itself features a “valid thru” date to satisfy the needs of merchants, who require plastic expiration dates during transactions. After the “valid thru” date, a replacement card (free of charge) must be acquired. If the recipient of the gift card is not aware of this, he or she may find themselves unexpectedly unable to use their card (until a replacement arrives in the mail), or even worse, may presume that the card has expired.

For store-issued gift cards, Amazon.com, Borders, Home Depot, and Starbucks are only a few of the many merchants who offer expiration-date free cards that also come with free shipping. In addition, prepaid cards from these merchants come without a purchase fee.

To make it easier for you to compare, BankRate.com’s 2009 Gift Card Study offers a sheet listing the nation’s top bank- and store-issued gift cards, which allows you to easily compare gift cards against different criteria, such as free shipping, purchase fees, expiration dates, etc.

Prepaid gift cards can also be purchased directly from banks, however, there may be unique bank-applied fees and restrictions associated with card. It is always best to check with the bank to see which extra rules may apply.

If you currently have an unused gift card, to play it safe, contact the gift card issuer to find out what fees and conditions come with your particular card. Customer service numbers and websites are usually listed on the back of gift credit cards. Familiarizing yourself with the issuer’s policies now can prevent inconveniences down the road.

It’s also important to remember that even after spending the entire balance on a gift card, don’t throw it out just yet; if you decide to return any purchases, you will need to present the card so that the merchant can credit it for the items bought.