A gift card is difficult to overlook while giving or receiving gifts. Gift cards allow the recipient to select an item at their leisure or can be used to defray the expense of an enjoyable experience. They are a little more imaginative than cash, but not as difficult to choose as an on-trend sweater.
There’s a catch, though. Gift cards are simple to misplace or leave unattended for a long enough period of time that they start to lose value and some may even expire. According to a report, while 70% of gift cards are used within 180 days of purchase in 2018, around 30% are left unused.
According to recent information from Mercator Advisory Group, Inc., an estimated $3.5 billion in gift cards are not used annually.
What steps can you take to ensure that the gift cards you give or get don’t expire or go unused? Get some advice on how to get the most value out of gift cards after learning what the federal government and state regulations say regarding inactivity fees and gift card expiration.
When you don’t want to offer cash and don’t want to go shopping for a specific item, gift cards are a common present choice.
Gift cards are not allowed to expire for at least five years under federal law, and state laws may provide cardholders an additional year.
After a specific amount of time, businesses are legally allowed to levy inactivity fees, however the time frame differs from state to state.
Use your cards promptly, or load the value into an account or app, to prevent them from expiring, losing value, or becoming misplaced (if applicable).
When Do Gift Cards Expire?
Thanks to the Credit Card Accountability Responsibility and Disclosure (Credit CARD), also known as the 2009 CARD Act, gift cards have an expiration date of at least five years. Additionally, you might potentially have more time than that in some states, or perhaps expiration is completely prohibited. Retailers are not permitted to deactivate a gift card that is less than five years old, and there are restrictions on how inactivity fees may be applied, according to the law. This implies that as a gift card user, you have some options to fight back if a company tries to claim that a card is invalid because it’s a few years old.
Gift Cards Can Lose Value If Not Used
Although it is against the law for cards to expire for at least five years, they may begin to lose some of their value earlier. This is so that businesses may, under certain conditions and depending on the state, charge a fee for inactivity after a particular amount of time.
To do so, however, the CARD Act stipulates that three requirements must be satisfied:
- Only if there was no card activity the year before can fees be assessed.
- There can be just one monthly price.
- If any fees are levied at the time of the sale, the business must disclose them.
Despite the federal regulation, certain states have their own rules regarding gift card fees and expiration. One of the states with the strongest gift card laws is California, which forbids the sale of gift cards with service fees or expiration dates.
Similarly, a gift card bought in Florida cannot expire or be charged, but there is an exemption granted if the gift card is given away by the company. Then, if the information is disclosed, it can have an expiration date as long as it is disclosed that is at least three years after the issue date.
Starting in 2021, the third Saturday in January will be recognized as “National Use Your Gift Card Day” to encourage consumers to use their gift cards. It is hoped that it will operate in a manner similar to Black Friday and Cyber Monday, helping both shops and customers.
There are no costs associated with items like gift cards that may be used anywhere and are issued by Visa, Mastercard, or American Express (beyond the initial purchase fee).
How to Maximize the Use of Gift Cards
Making sure that your gift card is utilized promptly will make it easier to avoid any misunderstandings over expiration dates or charges.
When You Receive a Gift Card to Give
- Put it in a location you’ll remember. Find a more noticeable location, such as the organizer on top of your desk, if you usually lose gift cards at the back of your desk drawer. Alternatively, you can set a reminder for the location on your electronic device so that you always know where it is.
- Plan to utilize it this month. Make an appointment or a reservation as soon as possible if the gift card is for an experience, such as one for a restaurant, spa, or museum, so you can take use of it.
- Don’t let it sit unused for longer than a year. Yes, you should have five years (at least) before you face sanctions, but if the retailer closes its nearest location or goes out of business, it won’t mean much.
- Incorporate it into an app, if appropriate. You may redeem gift cards from stores like Dunkin’ Donuts, Uber, Apple, or Amazon to get credit that you can use whenever you like. In this manner, you won’t have to be concerned about losing the physical card or having it unavailable when you need it.
Gift Cards: When to Use Them
- Make sure you are aware of their preferences. Giving someone a gift card for a business or service that they just don’t need or want will probably result in the card being unused. When in doubt, choose a store with a wide selection of goods, like Target.
- Get them something that will be easy for them to use. While memberships to museums or gift cards to amusement parks can be quite popular, if your recipient lives far from the destination, they may never use it. Likewise, avoid giving gift cards that might force the recipient to go over their spending limit. For instance, a $25 gift card to a high-end restaurant or a retailer of designer handbags won’t get you very far.
- Think about an e-gift card. Sending a gift card directly to someone’s email or text for simple loading enables them to connect the funds to their digital wallets and applications, which is especially useful for people who are digital natives.
If you artistically package an e-gift card with a note that reads “Check your email” at the time the card is supposed to arrive, you may still offer the receiver something to open.
A practical and well-liked present to give and receive are gift cards. This is especially true for those who are challenging to buy for, and choosing a thoughtful gift card rather than a large cash donation demonstrates your thoughtfulness. Finding something that your recipient will use fast, before they lose track of it, fees start to accrue, or an expiration date approaches, is the key. And if you’re fortunate enough to receive a gift card, take the initiative to use it.
Questions and Answers (FAQs)
How are gift cards operated?
Gift cards work the same way as cash. The gift card is purchased with a specified amount loaded onto it, and the receiver can use that card to make purchases. Although they are frequently linked to particular businesses, certain credit card providers also provide gift cards that function similarly to debit cards.
Do some gift cards have an expiration date?
Gift cards may never expire in some states. Additionally, monies on gift cards from Mastercard and American Express never expire. The actual card itself, however, might have to be changed by a specific time. All you need to do to get a new card is to phone the number on the back of the old one.
Qui purchases gift cards?
If you find yourself having gift cards that you know you won’t use, you can sell them to businesses that purchase and sell gift cards for cash. Gift Card Granny, CardCash, and Raise are a few of the more notable choices.