The incredible shrinking present

It's the gift that keeps on taking.

Bank gift cards, which seem like a great idea, especially in this graduation season, have a lot of advantages over plain old retail gift cards.

The bank cards, emblazoned with the logos of card companies such as American Express, MasterCard or Visa, can be used at most places where debit cards are welcome.

And the bank cards are easy for the buyer to find. They're available in banks, supermarkets, pharmacy chains and even neighborhood liquor stores.

But beware.

Unlike retail gift cards -- which in California and other states must not carry extra charges -- the largely unregulated bank gift cards are loaded with them, for both the gift giver and receiver.

For the buyer, there is usually a "purchase fee" that could add a 15% or larger premium to the face value.

And if the receiver doesn't follow the card rules, often buried in small print, he or she could be assessed a variety of charges that could eat up the value of the card before it's enjoyed.

In that case, don't expect much of a thank-you note.

Robert Sherman, a spokesman for American Express, defended the fees.

"When you get a card for a store, it's an advance purchase on their merchandise," he said. "We are selling a financial service, and with that financial service comes fees."

But the full extent of the rules, and sometimes even the fees, is not knowable when the card is purchased. It remains hidden until the package is opened and the printed insert is revealed. And those things are about as much fun to read as a prescription drug insert.

Even longtime analysts in the field can be caught off guard. Take Tower Group's Brian Riley, who has been involved in the financial card business for nearly 30 years.

"I bought a card for my son to send to him in college and they charged me a $9.95 fee for the purchase," Riley said. "Only when I had the card in my hands and broke the seal did I find out there was also a $4.95 monthly charge. That's a huge maintenance fee."

If you're lucky, the maintenance fee will be waived for at least the first few months of use. American Express doesn't start collecting it until a year after the card is purchased.

Sherman said the maintenance fee was to cover continuing costs, including for customer service operators. "The longer a gift card is held," he said, "the more likely it is there will be a call in to one of our service representatives to ask the balance."