Do Gift Cards Expire?

Gift cards have become famous for gifting and personal spending, offering flexibility and convenience. However, their widespread use comes with an intriguing financial twist. Americans loaded a staggering $204 billion onto gift cards in 2023, with the average person now holding $175 in unspent gift card balances.

Additionally, nearly half of Americans—47%—have at least one unspent gift card lurking in a drawer or wallet. That adds up to $23 billion in unspent funds.

Do you have any forgotten gift cards stashed away? Beware: that gift card might not be the “gift that keeps giving.” Depending on the card type and where you live, your gift card may have an expiration date or fees that can gradually disappear its value. And if you wait too long to use it, the card could become worthless.

Federal Gift Card Laws Explained

Before 2009, gift cards were a bit like the Wild West—there were few expiration dates or fee restrictions. That all changed with the passage of the Credit Card Accountability Responsibility and Disclosure (CARD) Act 2009. The CARD Act reined in the gift card industry by setting some basic nationwide consumer protections.

The Key Protections of the CARD Act

The CARD Act’s main gift card provisions include:

• 5-year minimum expiration period: Gift cards and gift certificates must be valid for at least five years from the date they were activated or when money was last loaded onto them. This applies to store-issued gift cards and general-use prepaid cards (more on the differences later).
• Limits on inactivity fees: Dormancy, inactivity, and service fees cannot be charged unless the card has not been used for at least 12 months. After that, only one such fee can be charged per month. These fees must also be clearly disclosed before purchase.
• Required disclosures: All fees must be disclosed on the gift card or on separate paper before purchase. Expiration dates must also be prominently disclosed—no hiding them in the fine print!

A Closer Look at “General-Use Prepaid Cards”

The CARD Act’s gift card rules apply to store gift cards and “general-use prepaid cards.” Banks issue these cards or credit card companies that can be used at many merchants, like prepaid Visa or Mastercard gift cards. However, not every prepaid or reloadable card is covered—the rules only apply to those cards marketed as gift cards.

Store Cards vs. Bank-Issued Cards

It’s important to note that while the CARD Act sets the ground rules, the details can still vary between store-issued gift cards and bank-issued gift cards. Store cards have more flexible expiration terms than the law requires, while bank-issued cards may expire sooner, although the funds on them usually don’t.

So, how long do gift cards last? Federal law now guarantees you’ll have at least five years to use your gift cards in most cases, with some restrictions on fees. However, the CARD Act is just the foundation—individual retailers and states can and do go beyond these protections.

So, Do Gift Cards Actually Expire?

Yes, gift cards can expire, but federal law mandates a minimum expiration period of five years from the date of purchase or last reload for most cards. While some cards, such as bank-issued gift cards, may have shorter expiration dates, state laws provide extra protections. It’s crucial to review the terms and conditions of each card to safeguard its value from expiration. Considering the card’s specifics will ensure you make the most of its benefits.

How Expiration Dates Vary by Gift Card Type

Not all gift cards are created equal when it comes to expiration rules. The type of card you have—and who issued it—can greatly impact how long you have to use it. Let’s break down the differences.

Retail Gift Cards

Retail gift cards, or “closed-loop” cards, are only redeemable at a specific retailer or restaurant. Some common examples include:

• Macy’s gift cards
• Starbucks gift cards 
• Best Buy gift cards

Because these cards are issued by the retailer themselves, they often have more generous expiration policies than the law requires. Many major retailers now offer gift cards with no expiration date at all.

However, it’s important to read the card’s terms carefully. Even if the card itself doesn’t expire, some retailers may still deactivate it after a period of inactivity. And if the retailer goes out of business, your card may become worthless.

Bank-Issued Gift Cards

Bank-issued gift cards, sometimes called “open-loop” cards, carry a payment network logo like Visa, Mastercard, or American Express. They can be used anywhere that accepts that network, giving recipients more flexibility in where to spend the funds.

However, that flexibility comes with a catch. While the CARD Act requires the funds on these cards to remain valid for at least five years, the card itself may expire sooner. If that happens, you must contact the issuer for a replacement card to access the remaining funds.

Bank-issued gift cards are also more likely to charge fees that can nibble away at the balance over time. Be sure to read the card’s terms and conditions to avoid any surprises.

Prepaid Cards

Prepaid cards not explicitly marketed as gift cards fall into a separate category. These include:

• Prepaid phone cards
• Reloadable prepaid debit cards
• Transit cards

While these cards aren’t covered by the CARD Act’s gift card provisions, other laws like the Electronic Fund Transfer Act may offer similar protections. However, the exact expiration and fee rules vary widely, so reading the fine print is crucial.

The key takeaway? Before you buy or use any gift card, make sure you understand which type it is and what rules and restrictions apply.

State Laws Offer Additional Protections

While federal law sets the minimum protections for gift card users, many states have gone above and beyond the CARD Act to give their residents even stronger rights. Here are a few standout examples:

• California: The Golden State bans expiration dates and most fees on store gift cards and certificates. The only exceptions are cards produced before 1998 and those with a value of $5 or less. California law also requires stores to cash out gift cards with a $10 or less balance upon request.
• Florida: Florida law prohibits expiration dates, most retail gift cards, and certificate fees. The state also requires retailers to reimburse the customer for any remaining balance of a gift card once the balance falls below $5.
• New York: In the Empire State, all gift cards must be valid for at least five years from purchase. New York law also requires the terms and conditions to be printed on gift cards or their packaging, not just available online.

Many other states, including Massachusetts, Rhode Island, and Washington, have versions of these consumer-friendly gift card rules. When state law provides stronger protections than federal law, the state law applies. Check your state’s gift card laws to know your full rights.

Exceptions to the Rules: Promotional and Paper Certificates

While the CARD Act covers most gift cards, there are a few key exceptions to be aware of:  

• Promotional and loyalty cards: Cards given away for free as part of a promotional or loyalty program are exempt from the CARD Act’s expiration and fee restrictions. However, if the terms are properly disclosed, these cards may expire sooner or carry additional fees.
• Paper gift certificates: Old-fashioned paper gift certificates are also exempt from the federal rules as long as they are issued exclusively in paper form. However, these certificates may still be covered by state consumer protection laws.

If you receive a promotional card or paper certificate, be sure to read the fine print carefully to understand any expiration dates or fees that may apply.

Tips for Gift Card Buyers

If you’re planning to give a gift card, you can take a few simple steps to ensure your recipient gets the full value:

• Provide the terms and conditions: Make sure to give the recipient the card’s terms and conditions, not just the card itself. This way, they’ll know the expiration date and any applicable fees upfront.
• Consider the retailer’s policies and stability: Stick to reputable retailers with clear, consumer-friendly gift card policies. Be wary of giving gift cards from retailers that may be on shaky financial ground—if the company goes under, the card may become worthless.  
• Buy from trusted sources: Only buy gift cards directly from the issuing retailer or a trusted reseller. Avoid online marketplaces or auction sites, which may sell fraudulent or already-used cards.

Advice for Gift Card Recipients

If you’ve received a gift card, follow these tips to make sure you get every penny’s worth:

• Use it early: The longer you hold onto a gift card, the greater the risk that it will expire, incur fees, or that the retailer will go out of business. Aim to use gift cards within a year of receipt.
• Register your card: If the issuer allows you to register your gift card, take advantage of that option. Registering your card typically provides additional protections, like recovering funds if the card is lost or stolen.
• Spend down small balances: If you have a card with just a small balance remaining, try to find a way to use up the total amount. Some states require retailers to cash out small balances on request.
• Watch out for scams: Be wary of anyone demanding payment by gift card, especially over the phone. Gift cards are a typical vehicle for scams because they are difficult to trace. Report any gift card scams to the Federal Trade Commission (FTC).

Give and Receive Gift Cards with Confidence

Giving or receiving a gift card doesn’t have to feel like navigating a minefield. More and more people are using them every year. 39% of U.S. adults say they have made an effort to use gift cards more frequently over the past year. You can confidently enjoy gift cards by understanding the key rules and following a few smart tips.

Federal regulations offer essential safeguards for gift card users, ensuring protection. However, expiration dates and fees may differ based on the card type and state laws. By staying informed and proactive, both purchasers and recipients can navigate these nuances effectively. Individuals can make the most of their value while sidestepping any potential setbacks.

For buyers, providing the terms and conditions upfront and considering the retailer’s policies is crucial. Recipients should use their cards promptly, register them if possible, and spend down small balances to ensure they make the most of their gift card value.

Most importantly, think of a gift card like cash—it’s best used sooner rather than later. By being an informed consumer, you can make the most of these convenient gifts without letting any value go to waste. If you suspect a gift card scam, report it promptly to the authorities to help protect yourself and others.

Happy gift card giving and spending!