Gift cards are the ultimate easy gift idea. Everyone wears them and avoids questions like “Will it fit?” or “Would you like this?” Gift cards and gift certificates are available at all kinds of stores, from mundane stores like supermarkets and pharmacies to more specialized businesses like spas and travel agencies. However, no matter where you purchase or receive a gift card, it’s important to protect yourself as a consumer and become familiar with your rights related to gift card use. After all, these are used as a form of currency and should be treated just as frugally as cash.
What can I do with a gift card I don’t want?
There are plenty of options for putting unwanted gift cards to good use. There are websites that exist for the sole purpose of buying and selling gift cards. Gift Card Granny, for example, will buy your card for 60%-80% of its value. You can also sell your card on a website like Craigslist or eBay. Other websites, like gift card exchanges, allow you to exchange your gift card for one that you’ll actually use.
If you’re feeling charitable, many nonprofit organizations, including local schools and churches, will accept gift cards as donations. Gift cards are also great for re-gifting. There’s no reason to let a gift card sit idly by!
Can my gift card expire? Can I lose my gift card balance?
The short answer: It depends on the state you live in.
The long answer: It depends on the state you live in and the extent to which your state complies with federal law.
In 2009, the Credit Card Liability Disclosure and Accountability Act (CARD) [gpo.gov/fdsys/pkg/PLAW-111publ24/pdf/PLAW-111publ24.pdf] it became federal law. The law covers a lot of ground around protecting credit card holders, but it also created some federal standards for gift card issuers that are meant to protect consumers. These include requiring that cards, with some exceptions, expire no less than five years after issuance and that inactivity fees can only be charged after one year of inactivity and only if these fees are fully disclosed to consumers. Under the CARD Act, stores can start charging inactivity fees, that is, a charge to keep the card active when it hasn’t been used after a certain period of time, after one year of inactivity, and no more one charge per month. Eventually, these charges may deplete the value of the card. This is a major way stores and major card issuers like American Express make money. However, some states have introduced additional, and sometimes conflicting, legislation around gift card law.
For example, New York law allows stores to start charging monthly inactivity fees after only one year of inactivity. It’s also legal for stores to charge a replacement fee for lost cards, and they don’t require stores to return cash for small card balances. Also, after five years, the cards are considered “abandoned” and the balance on the card is forfeited by the state. Other states, such as New Jersey, establish abandonment after only two years of inactivity. (In the case of New Jersey, this policy has been deemed unconstitutional, thus leaving the state toggle between enforcing the overturned state rule and the federal rule.) Such provisions, which remove profits from card sellers who come with unused cards, issuers like American Express to withdraw from grocery and convenience stores in some states.
By way of comparison, California provides gift card users with protection beyond the federal standard. Cards can never expire, even after five years, and inactivity fees can only be charged after two years of inactivity and only if the card balance is less than $5.
You can find a good resource for finding the specific laws in your state here. Because not all card issuers or states comply with federal law, consumers should be aware of reading the terms of the card. In general, it’s smart to try to spend cards as soon as possible to avoid forgetting them and use the full balance on the card.
What happens if there is only a little money left on my card?
You may be able to get your balance in cash. Under the CARD Act, most businesses must provide cash for the remaining balance on a card if the balance is less than $5. (In some states, this minimum value is higher.) Of course, companies often don’t train their front-line staff on this law, so you may have to work your way up the ranks to find someone truly knowledgeable about the law. .
What should I know about online gift cards?
Online “gift certificate” sites offering deals like Groupon and LivingSocial fall into a somewhat gray area of the law. They’re generally treated like coupons rather than gift cards, meaning you can generally set your own terms when it comes to expiration dates and redemption policies. Groupon, for example, requires stores to honor the value a customer paid for a deal after the deal has expired, but only as store credit.
Virtual cards, like the popular Amazon or iTunes cards that are often sent via email, do not usually expire. Sometimes they can only be redeemed online and not in physical stores, so read the terms of the card carefully. Otherwise, they are subject to the same laws as tangible cards; for example, Amazon includes required language to indicate that cash refunds are only available when “required by applicable state law,” though it doesn’t provide information on how to claim small cash balances.