Gift cards are popular gifts to give for a special occasions. Not only are they the preferred gift for the receiver, but they are also practical and pose fewer issues than buying a specific gift. Despite this, many laws surround these cards that cannot be ignored. These laws regard expiration dates, fees, and redemption. If an individual can educate themselves about these laws, especially in the state they reside, they’ll have no issues with the card after the purchase.
Because of the Credit Card Accountability Responsibility and Disclosure Act (CARD), gift cards cannot expire for five years. This rule is a federal law that applies to every state in the country. However, some states have enforced specific circumstances to this rule that the receiver must follow. In Alaska, Illinois, Nebraska, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Washington the state can collect the balance of a gift card that has an expiration date after 3-5 years of inactivity.
In Colorado, Delaware, Georgia, Hawaii, Idaho, Iowa, Louisiana, Maine, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Oklahoma, South Dakota, West Virginia, and Wyoming the state can collect the balance in 3-5 years regardless of the gift card having an expiration date.
When it comes to fees, each state has different laws regarding the charges someone can have during a transaction. Federally, there must be a disclosure of any fees either on the card or on the packaging of the card; if states allow post-sale fees, then these fees cannot apply until after one year of inactivity, and there shouldn't be more than one post-sale fee per month.
Many states expand this fee-free period. Arkansas, Kansas, Maryland, Nevada, New Jersey, New York, North Carolina, Ohio, and Tennessee all increase the fee-free period by 1-4 years. In California, Oklahoma, and Washington, fees do not begin for three years and are limited to $1 per month.
Sometimes when people haven’t used their gift cards entirely, they can cash in the remaining amount. However, this does come with some conditions and rules, especially in different states. In California, any balance less than $10 can be redeemed. Colorado, Maine, Montana, New Jersey, Oregon, and Washington allow cash redemption for balances less than $5. Rhode Island and Vermont will redeem balances less than $1 for cash while Massachusetts will redeem a gift card for cash once 10% of the original value remains.