By law, gift cards cannot expire in less than 5 years, but there may be non-use fees. Here’s everything you need to know about gift card expiration.
Federal Gift Card Laws
In 2009, President Obama signed the Credit Card Accountability Responsibility and Disclosure Act (a.k.a. CARD Act) into law. This law, which mostly deals with consumer protection from credit card companies, also included new rules for gift cards. Some highlights of the new rules are as follows:
1. Gift Cards Cannot Expire Any Earlier than 5 Years
The law states that a gift card or general purpose prepaid card may not expire any earlier than five years from the date of activation (or the date when funds were last added to the card) and that if there is an expiration, the terms and conditions of that expiration must be clearly disclosed prior to purchase. Typically, that means companies will print the expiration time-frame (if it exists) on the card itself or on the carrier holding the card at the time of purchase.
Although open loop gift cards such as Visa gift cards, Mastercard gift cards and so forth still have published expiration dates, I haven’t seen a store or restaurant gift card (closed loop) with an expiration date on it for a few years. Once the gift card law went into effect, companies complied and, in many cases, just eliminated expiration dates altogether. Several states also subsequently passed even stricter state-level gift card laws that made expiration dates illegal. To avoid confusion across state lines (e.g. our gift card can expire in Arizona but not in California), most companies adopted the no-expiration rule for all of their stores in all states.
To be absolutely certain that your gift card will not expire, read both the front and back of the card to find the terms. Since federal law requires that expiration dates must be clearly disclosed, I would expect to see a “good thru” date or an “expires on” date clearly published. If you don’t find it, chances are good the card will be valid as long as the store remains solvent. (If the store goes into Chapter 11 bankruptcy, then the gift card may be impacted for a different reason.).
Though I’m speaking generally here, it’s a good idea to check the terms and conditions for your card to see if the expiration date applies to your situation. If you can’t find the terms listed on the card, call the number listed on the back of the card. If your card has expired, call the card company anyway. In some cases, the physical plastic has expired, but the funds on the card haven’t, and you might be able to get a replacement card.
2. Gift Cards Exempt from Non-Use Fees for One Year
It used to be that gift card companies charged fees to load cards and immediately began imposing monthly fees to deplete the balance of the gift card until the full load value had been drained. But that’s no more! Gift cards are now exempt from dormancy, inactivity or service fees unless the card has gone unused for a year and the non-use fee terms are clearly disclosed prior to purchase. Plus, no more than one non-use fee can be imposed per calendar month.
If you haven’t used your card recently, check the balance. Use any remaining value quickly to stop further inactivity fees from being charged. (Follow these tips if you keep forgetting to use your gift card.
3. Load Fees Allowed
Activation or reload fees are allowed if the fee amount (or explanation of how the fee will be determined) is clearly disclosed prior to purchase. Are you seeing a pattern here? Federal law is telling gift card issuers to put it all on the card table–to tell the consumer everything he or she needs to know about fees and expiration dates before purchasing a gift card. Since disclosure is required by law, read before you buy.
4. Phone and Promotional Gift Cards Not Covered
Prepaid phone cards, promotional gift cards, loyalty cards and paper gift certificates are not covered by these rules. If you receive a gift card without paying for it (e.g. cable company sends you a free gift card as a thank you for switching services), pay close attention to the terms because those gift cards can (and often do) expire very quickly. If you are worried you’ll forget to use the card, then put it in your wallet next to the debit or credit card you use most often. The next time you go to the store, pay with the promotional gift card. Continue to do so until the balance is depleted.
(More information on promotional gift cards here.)
State Laws Are Often Better
As previously mentioned, many states passed gift card laws as well. If the state laws are more stringent, they take precedence over federal gift card laws. In California, for example, store-issued gift cards cannot expire, and if the balance on the gift card is less than $10, you can cash it out. (That’s great to know when a gift card’s value drops to single digits.)
To find out if your state has passed any state gift card laws, check this matrix. Knowing my state laws has helped me get the best value for my gift cards on more than one occasion.
Where to Get Help?
The answer to the question, “Do gift cards expire?” really means asking the question, “Does MY gift card expire?” or “Does THIS gift card expire?” By law, gift card fees and expiration dates must be clearly written on the card and must be disclosed before purchase. No surprises. If you can’t find these terms on the card you’re considering, don’t buy it. If you are wondering about the terms on a gift card you already have, then read it—front and back. If you don’t find the answer, call the issuing company. A few minutes of investigation could save you from having an expired gift card declined at the point of sale or from losing the value of a gift card you haven’t used.
If you have other gift card questions or need gift card help, add a note in the comments below or leave a message on @GCGirlfriend on Twitter.
Happy Gift Carding!
~Shelley Hunter, Gift Card Girlfriend