New Gift Card Rules for Expiration and Service Fees
When you give or receive a gift card, the last thing you want is the balance to disappear because the issuer has deducted fees slowly. In the past, gift card recipients had the awful experience of having their gift card balances drained even though the cards had been in their wallets for months.
Gift card issuers would charge service and inactivity fees on gift cards that weren't used within a certain period. Some gift cards were even canceled. Thankfully, the Federal Reserve enacted rules to prevent this from happening to gift card recipients.
Expiration and Fees
Part of the Credit CARD Act of 2009 required the Federal Reserve to come up with rules for gift cards to keep consumers from losing their gift card funds. After receiving feedback from consumers, consumer groups, card issuers, industry commenters, and even a state attorney general, the Federal Reserve proposed these rules:
- Gift cards can only expire five years after the date the card was purchased or the date money was last loaded onto the card. If the card and the underlying money expire at different times, the card issuer should make it known which date applies. You should not be charged a fee to replace your card if it expires before the underlying funds expire (less than five years).
- Issuers can only charge an inactivity fee on a gift card if the card hasn’t been used in one year. Only one service charge* or inactivity fee can be charged per calendar month.
- Finally, consumers must be made aware of all gift card fees. The expiration and fee information needs to be displayed on the card and the cashier selling the card should explain the disclosures before selling the card.
*Service fees may include fees for certain transactions like a balance inquiry; balance reload fee, or ATM withdrawal fee.
These rules apply to retail gift cards and Visa, MasterCard, American Express, and Discover gift cards. It does not include reloadable phone cards, cards given instead of an admission ticket, business gift cards, or gift cards purchased for business use.
The Federal Reserve says that some states already have rules that limit fees on gift cards and restrictions on gift card expiry. However, most of these laws only apply to store-branded gift cards and not those bank gift cards like those from American Express and Visa. The state law is effective when it provides greater protection than the federal law.
How to Keep From Losing Your Funds
The easiest way to keep your gift card funds is to use your gift card, at least once a year is ideal. Keep your cards together so you're constantly reminded which you may need to use. You can sell or trade gift cards you don't think you'll use on a site like CardPool.com. Make sure you confirm the balance before selling your gift card.
Govinfo. "Federal Register: Part II Federal Reserve System 12 CFR Part 205 Electronic Fund Transfers; Final Rule," Pages 16581-16583. Accessed Sept. 29, 2020.