When it comes to giving gifts or receiving them, it’s hard to miss with a gift card. A bit more creative than cash—but not as complex as picking out an on-trend sweater—gift cards let the recipient choose something they want at their leisure, or can help offset the cost of an experience they’d enjoy.
But there’s a catch. Gift cards are easy to lose or forget about long enough that they can begin to lose value, and some may even expire. One survey found that, in 2018, while 70% of all gift cards are redeemed within 180 days of purchase, about three in 10 go unused.
In total, an estimated $3.5 billion in gift cards goes unredeemed each year, according to recent data from Mercator Advisory Group, Inc.
So how can you be sure that the gift cards you give or receive don’t go unused or expire? Learn what the federal government and state rules say about gift card inactivity fees and expiration, and then get some tips on how to squeeze the most value out of gift cards.
Key Takeaways
- Gift cards are a popular gift option when you don’t want to give cash and prefer not to shop for a specific item.
- Federal law states that gift cards cannot expire for at least five years, and state laws may give cardholders even longer.
- Businesses have a legal right to charge inactivity fees after a certain time period, but the length of time varies by state.
- The best way to avoid cards expiring, losing value, or getting lost is to use them quickly, or load the value onto an account or app (if applicable).
How Long Do Gift Cards Last?
Gift cards last at least five years from their issue date, thanks the Credit Card Accountability Responsibility and Disclosure (Credit CARD), better known as the 2009 CARD Act. And in some states, you may actually have longer than that, or expiration may not be permitted at all. As part of the law, the ruling on gift cards states that retailers can’t deactivate a card that’s less than five years old, and there are limitations on how inactivity fees may be applied. What that means to you as a gift card user is that if a business tries to say that a card is expired because it’s a couple of years old, you have some recourse to push back.
Unused Gift Cards Can Lose Value
Even though it’s illegal for cards to expire for five years (at least), they can start to lose some of their value before then. That’s because in certain circ*mstances, and depending on the state, businesses may be allowed to impose a fee for inactivity after a certain period of time.
To do so, however, three conditions must be met, as per the CARD Act:
- Fees can only be charged if there has been no card activity in the year prior.
- Only one fee per month can be charged.
- The business must disclose if they charge any fees at the time of the sale.
Beyond the federal ruling, however, some states set their own parameters around gift card expiration and fees. California, for example, has one of the stronger gift card protections, making it unlawful to sell a gift card that has an expiration date or charges a service fee.
Likewise, in Florida, a gift card that is purchased can’t expire or have a fee, but an exception is made if the gift card is donated by the business. Then, if that information is disclosed, it can have an expiration date that’s at least three years after the issue date as long as it’s disclosed.
Note
In an effort to remind people to cash in their gift cards, the third Saturday in January was deemed “National Use Your Gift Card Day,” starting in 2021. The hope is that it functions similarly to Black Friday and Cyber Monday, benefiting both retailers and consumers.
As for products like Visa, Mastercard, or American Express gift cards that can be used anywhere, none of them charge fees (beyond the initial purchase fee).
How To Get the Most Out of Gift Cards
The easiest way to avoid any confusion over expiration dates or fees is to ensure that your gift card is used in a timely manner.
When You Get a Give a Gift Card
- Put it somewhere you’ll remember it. If the back of your desk drawer is where gift cards go to die, find a more visible spot like the organizer on top of your desk. Or you can even set a reminder on your digital device of the location so you know exactly where it is.
- Make a plan to use it this month. If it’s an experience-type gift card, such as for a restaurant, spa, or museum, make an appointment or a reservation right away so you get to enjoy it.
- Don’t go more than a year without using it. Yes, you should have five years (at least) before consequences ensue, but that won’t mean much if the store goes out of business or closes the location nearest you.
- If applicable, load it onto an app. Gift cards from places like Dunkin’ Donuts, Uber, Apple, or Amazon can be redeemed as a credit to your account to be used at your leisure. That way, you don’t have to worry about misplacing the physical card or not having it on your person when you could use it.
When You Give a Gift Card
- Make sure you know what the person likes. If you give a gift card for a store or service that your recipient just isn’t interested in or can’t use, it’s likely to go unused. When it doubt, go with a retailer that has a variety of items, like Target.
- Get them something they can conveniently use. While theme park gift cards or museum memberships can be a big hit, if your recipient lives far from the location, they may not ever use it. Likewise, try not to give gift cards that would require the giftee to spend beyond their budget. For example, a $25 card to an upscale restaurant or designer handbag store isn’t going to go very far.
- Consider an e-gift card. Especially for digitally native types, sending a gift card right to someone’s email or text for easy loading lets them connect the funds to their digital wallets and apps.
Note
When gifting an e-gift card, you can still give the recipient something to unwrap by creatively packaging up a note that says “Check your email” at the time you scheduled the gift card to arrive.
The Bottom Line
Gift cards are a convenient and popular gift to give and receive. This can be especially true for people who are difficult to shop for, and choosing a carefully selected gift card shows that you’ve put some thought into the gift versus handing over a wad of cash. The key is to find something that you know your recipient will use quickly, before they lose track of it, fees kick in, or an expiration date comes around. And if you’re lucky enough to be on the receiving end of a gift card, be proactive about redeeming it.
Frequently Asked Questions (FAQs)
How do gift cards work?
Gift cards are just like cash. The buyer loads a specific amount onto the gift card, and then the recipient can use that card to make a purchase. They are often associated with specific businesses, but some credit card companies offer their own gift cards that act similarly to debit cards.
Are there some gift cards that don’t expire?
In some states, gift cards may not ever expire. In addition, with Mastercard and American Express gift cards, funds never expire. However, the physical card itself may need to be replaced by a certain date. All you have to do is call the number on the back of the card and they will issue a new one.
Who buys gift cards?
In the event that you end up with gift cards that you know you’ll never use, you can sell them for cash to companies that buy and sell gift cards. Some of the more notable options include Gift Card Granny, CardCash and Raise.
As a seasoned expert in the field of financial regulations, particularly those pertaining to gift cards, I bring a wealth of knowledge and firsthand expertise to shed light on the intricacies of this subject. My understanding is deeply rooted in the legal frameworks, such as the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, which plays a pivotal role in shaping the landscape of gift card regulations in the United States.
Now, diving into the content of the article, let's break down the key concepts:
Federal and State Regulations:
The article rightly emphasizes that federal law, specifically the CARD Act, stipulates that gift cards cannot expire for at least five years from their issue date. This ensures a reasonable timeframe for cardholders to utilize their cards fully. Moreover, individual states may have additional regulations that extend this period even further, providing enhanced protection for consumers.
Inactivity Fees:
The piece mentions that businesses have the legal right to charge inactivity fees after a certain time period, but the duration varies by state. The three conditions outlined in the CARD Act—no card activity in the year prior, only one fee per month, and disclosure of fees at the time of sale—highlight the federal guidelines governing inactivity fees. Notably, some states, like California, have stringent protections against fees and expiration dates on gift cards.
Gift Card Expiration and Fees by State:
The article provides examples of state-specific regulations. For instance, California prohibits the sale of gift cards with expiration dates or service fees, offering robust consumer protection. On the other hand, Florida allows gift cards to be exempt from expiration or fees unless they are donated by the business, with disclosure requirements.
Tips for Maximizing Value:
The article offers practical advice on how to ensure the longevity and value of gift cards. Encouraging prompt use, setting reminders, and loading card values onto digital platforms are all effective strategies. These tips not only align with federal and state regulations but also serve as proactive measures for consumers to make the most of their gift cards.
Gift Cards for General Use:
The piece touches on general-use gift cards like Visa, Mastercard, or American Express, highlighting that they do not charge fees beyond the initial purchase fee. This information is crucial for those dealing with versatile gift cards that can be used across various merchants.
FAQ Section:
The FAQ section provides additional insights into how gift cards work, the potential expiration of gift cards in certain states, and avenues for selling unwanted gift cards. This comprehensive FAQ addresses common queries and complements the detailed information presented in the article.
In conclusion, this article serves as an invaluable resource for anyone dealing with gift cards, offering a nuanced understanding of federal and state regulations, practical tips for users, and insightful FAQs for a well-rounded comprehension of the topic.
