Gift Cards: Frequently Asked Questions

Thinking about a gift card program for your credit union? Here are some of the key points to consider.


This is the 2nd article on the growing popularity of gift cards with credit union members nationwide. To see the previous article on the market potential, click here.

Why should a credit union offer gift cards to its members?
Gift cards and prepaid re-loadable cards offer credit unions a unique opportunity to serve the under-banked in their communities. They are not dependent on a user’s credit history or bank balance and can be used in all places where debit and credit cards are accepted.

Due to their rising popularity, gift cards are also proving to be a great way for credit unions to forge stronger ties with their members. They help credit unions reach out to the younger age membership with a very low risk of fraud and scams. Parents use re-loadable gift cards to teach financial responsibility since these cards come with a pre-determined spending limit.

How long does it typically take to have the program set up and running?
It can take anywhere between 60-90 days from concept to implementation for a gift card program with any service provider. This time span includes the two to three weeks that credit unions will spend on in-house employee testing and a concurrent 45 days for putting up the website for personalization of gift cards.

What is the best time to launch a gift card program?
To adequately capture the maximum sales, a credit union should strive to have its gift cards program up and running by early October. Gift cards are a seasonal product with most of their sales coming in the 4th quarter of the year around the holidays. The actual transactions on most gift cards occur in the 1st quarter of the next year.

On average, how many transactions are conducted with one gift card?
While there is no limit to number of transactions as long as the full value of the gift card is not depleted, on average there are 2.5 transactions over each card’s lifespan.

What type of personalization is possible on the gift cards?
Most gift cards allow up to two lines of personal message on the face of the card. Personalization is possible in most cases by going to the issuer website.

What does it cost to get a gift card program going?
Gift cards, with their back-end processing similar to debit/credit card transactions, cost anywhere between $2500 ~ $3500 to set up while the prepaid re-loadable cards program can be setup within $10,000.

Where are most gift cards sold - online or in the branches?
Most gift card sales come in from the branches. Many credit unions have found that training their branch personnel results in higher gift cards sales.

What is the break-even point for a typical gift cards program?
Between 1,200 to 1,500 gift cards sales per year allow most credit unions to break even, although that figure varies greatly depending upon the various fees credit unions may choose to impose (or not to).

What types of fees are generally associated with gift cards?
Dormancy fees, latency fees, administrative fees, servicing fees, replacement fees for lost or stolen cards, conversion (to check or cash) fees are some typically associated with these cards. Some credit unions also charge a fee when purchasing money order or traveler’s check using a prepaid card. All fees are typically over and above the $3 ~ $8 initial purchase fees

What size credit unions are best suited to offering gift cards to their members?
While any size credit union can launch a gift cards program, typically credit unions with more than 20,000 members have more success with their programs than those with fewer members.

To learn more about gift card programs from credit unions who have successfully developed them, check out “5 Steps to Building a Successful Gift Card Program,” sponsored by PSCU Financial Services.




July 24, 2006


  • The gift card articles are helpful for CUs that are contemplating offering Gift Cards, or (like us) had an unpleasant experience the first time they were offered.
  • This article was enjoyable to read and informative. I found that it got right to the point without the author going off in a direction that had nothing to do with the subject matter. Keep up the good work.