Do Gift Cards Expire? Legal Frameworks and Consumer Choices 

Gift cards are like little tokens of kindness, easy to give and fun to get. But unlike cash, they don’t last forever. Many come with an expiration date, which can leave you wondering: do gift cards expire suddenly or over time?

Stores do this partly for their own accounting, they don’t want to carry your balance forever, and partly for security, to reduce fraud from old, forgotten cards.

The good news? Lots of gift cards don’t expire, thanks to laws in many places (especially in the U.S.) that force most store cards to stay valid for at least five years, sometimes much longer, or even never.

Some stores also choose to never expire their cards just to be nice. So always check the card itself or the store’s website to know for sure.

The bigger surprise for many people? Fees. If you leave a gift card unused for too long, say, a year or more, some stores will start quietly nibbling away at your balance with monthly or yearly “inactivity” or “service” fees.

These fees can slowly drain your card down to nothing, even if it doesn’t officially “expire.” It’s their way of covering the cost of keeping track of unused cards. This is why it’s smart to use your gift cards sooner rather than later.

Rules about expiration dates and fees aren’t the same everywhere. They change depending on where you live, different states or countries have different laws. Practically speaking, the exact rules for your card matter most, so read the fine print.

And if a card does expire or fees eat up the balance? That leftover money doesn’t always just vanish into the store’s pocket. Often, it ends up in government-run “unclaimed property” programs, kind of like a lost-and-found for money.

You might even be able to search online (like on your state’s treasury website) to see if any forgotten funds are waiting for you.

So in short: Gift cards are handy, but treat them like fresh milk, best used quickly! Check for expiration dates, watch out for sneaky fees, and spend them while you remember you have them. A quick look at the card’s terms can save you from losing your gift.

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 This article will elaborate on various details of gift card expiration, including:

• Gift card regulations focus on the Credit CARD Act 2009 and federal laws protecting consumers from undisclosed fees.
• Reasons for gift card expiration, examining accounting complexities, revenue recognition, and specific conditions allowing exemptions.
• The resources where money from expired gift cards goes, covering unclaimed property programs, retailer profits, and consumer options for using or reclaiming expired cards.

Pique your interest? Let’s get straight into it without further ado.

Expired Gift Cards-Facts & Figures 

You know that gift card buried in your drawer? It turns out that’s a massive issue. Every single year in the US alone, a staggering $3 billion worth of gift cards simply go unused. That’s a huge pile of intended presents and treats that never get enjoyed.

So, why does this happen? Mostly, we just forget about them. In fact, nearly half of us (46%) admit to letting gift cards sit unused, often until it’s too late. Because of this forgetfulness, about 3% of all gift cards in the US end up unused annually.

All these forgotten cards add up to an incredible total value – the unused gift card market was estimated to be worth $15.6 billion in 2021.

This isn’t just an American problem either. Our friends down under in Australia leave about AUD $70 million (roughly $51 million US) worth of gift cards unused every year.

The impact is really widespread. Think about this: back in 2018, over half of all Americans let at least one gift card expire, contributing to U.S. consumers leaving $2.5 billion unspent in gift cards that year.

These numbers are pretty eye-opening. They show just how important it is to be more aware of the gift cards we receive or give, and to make a point of using them.

A little attention can make sure that the kindness and value behind them don’t simply vanish.

How long does a gift card last?

Thanks to rules made back in 2009, most gift cards have to stay valid for at least five years – so stores can’t set an earlier expiration date. That’s the good news!

But there’s a catch:

Even though your card won’t expire during those five years, if you don’t use it for 12+ months, the company can start charging you a fee every month or year for ‘not using it.’ These ‘inactivity fees’ slowly eat away at your balance.

A few important things to remember:

• This 5-year rule is the minimum protection – some states have even better rules
• Always check your specific card’s terms (those little letters on the back or website) – rules can vary
• Use it within a year to avoid fees altogether

Why Do Gift Cards Expire? 

Gift cards can expire due to a lot of factors; some of them are mentioned below.

1. Big Companies vs. Small Shops Think Differently:

• Your local corner store (using “cash accounting”) just cares about cash in the register today. They don’t sweat gift cards sitting unused.
• Big chains (using “accrual accounting”) see every unused gift card as an IOU they owe you. It’s like a debt on their books until you spend it or it expires. Expiration dates help them clear these “phantom debts” for accurate financial reports.

2. Unused Cards are a Debt Burden:

• When you buy a gift card, the company gets your cash but owes you the value. It’s a liability (a debt) to them.
• They need to balance what they own (assets) with what they owe (liabilities). Tons of unused gift cards mean a big pile of unsettled debt. Expiration dates help wipe that slate clean after a while.

3. They Can’t Claim the Money Until You Spend (or Lose) It:

• This is the big headache for companies. They have your cash, but accounting rules say they can’t officially count it as their revenue until you either spend the card or it expires/gets drained by fees.
• Expiration dates cut through this red tape. They provide a clear end point, letting the company finally say, “Okay, this money is officially ours now,” simplifying their financial reporting.

4. Wall Street Doesn’t Like Loose Ends:

• Investors and stock analysts look closely at a company’s debts (liabilities). A huge mountain of unredeemed gift cards looks like a potential future cost or uncertainty.
• This can make the company look less financially healthy, potentially hurting its stock price or executive bonuses. Expiration dates help manage this perception by limiting how big that “unused card debt” pile can grow.

5. Fees Are the Slow-Motion Expiration Tool:

• Straight expiration dates can annoy customers. So, many companies use inactivity fees instead.
• Charging a small fee every month/year the card sits unused does two things:
• Eventually, it drains the card’s value to zero, achieving the same goal as expiration (the company keeps the money) but over a longer period.
  • It slowly reduces the “debt” (liability) on their books.
  • Eventually, it drains the card’s value to zero, achieving the same goal as expiration (the company keeps the money) but over a longer period.

While customers hate these fees, they are a legal accounting strategy to recognize that revenue without a hard expiration date cliff.

Which Gift Cards Do Not Expire?

The following exemptions provide specific conditions for gift cards to avoid the general rule against expiration dates.

1. Promotional Programs

Gift certificates or cards distributed without charge under awards, loyalty, or promotional programs are exempt from expiration rules.

2. Volume Discounts for Fundraising

If the expiration date is 30 days or less after the sale, gift certificates or cards can be donated or sold below face value at a volume discount to employers, nonprofits, or charitable organizations for fundraising purposes.

3. Perishable Food Products 

Gift certificates or cards issued for perishable food products are exempt from the expiration rules.

What are Inactivity and Service Fees?

After being unused for more than a year, the gift card may eventually start deducting monthly, and often hidden, fees (dormancy fees).

However, according to the laws of most jurisdictions, it is the seller’s duty to inform you about these fees prior to your purchase, whether in person, online, or over the phone.

Notably, federal law prohibits most retail sellers from imposing an expiration date or service fee on gift certificates or gift cards for use with an affiliate.

Importantly, gift cards that are usable with multiple unaffiliated sellers may have an expiration date printed on them.

Is it legal for Gift Cards to Expire?

Yes, gift cards can expire – but you’ve got solid backup from the law.

Most store cards (like for Target or Starbucks) must last at least 5 years from when you buy or reload them.

During those 5 years:

• They can’t slap on fees for not using it
• They can’t set an expiration date within that window

But heads up: This mainly covers cards for one store or its family of brands.

Watch out for the fine print:

Some cards play by different rules. Mall gift cards (good at many unconnected stores) can expire – if the date’s clearly printed.
Bank-issued cards (Visa/Mastercard) often have shorter lives and fees.
And here’s a sneaky one: If your balance drops to $5 or less, they can nibble away with a $1/month “dormancy fee”.

Your state might spoil you:

Federal rules are the bare minimum. Your state might give you extra armor – like banning expiration entirely or extending deadlines. Always check your local laws!

Which states don’t allow gift cards to expire?

While the feds guarantee 5 years, some states go further to protect your plastic cash.

Tough-love states like California, Colorado, Maine, and Montana often:

• Ban expiration dates completely for certain cards
• Demand longer use periods (well beyond 5 years)
• Restrict fees more aggressively

Why this patchwork?

Gift card rules change depending on where you live and where the card’s from. Businesses scramble to follow each state’s quirks.

Your move:

Peek at your card’s terms and Google “[Your State] gift card laws.” Knowing both helps you:
→ Squeeze every dollar from your gift
→ Avoid nasty surprises

Where Does Expired Gift Card Money Go?

When a gift card expires with money still on it, that cash doesn’t just vanish. It typically goes to one of four places:

1. Unclaimed Property Programs

In many states (like Delaware), expired gift card money is treated like lost property. Stores work with state programs that try to return these unspent funds to the rightful owners – you. Think of it like a giant lost-and-found for forgotten money, where states actively try to match cash with people.

2. Retailers’ “Found Money” (Breakage)

Stores actually plan on some gift cards never being fully used. They call this “breakage” – the leftover cash they never have to provide goods or services for.

This becomes pure profit for them. For example, Starbucks made over $212 million in 2022 alone from unused gift cards and rewards. That forgotten $25 card? It quietly boosts their bottom line.

Can You Still Use Expired Gift Cards?

Yes, often you can! Don’t throw it away. Call the store or company that gave you the card, or check their website.

Ask them if they can give you more time to use it or turn it back on. Many places will help you out so you can spend the money left on the card. Just remember, every company has different rules, so asking them directly is your best bet.

Where Can You Find Gift Cards You Won’t Forget to Use?

Want gift cards that are easy to buy and hard to forget? Places like Send Credit sell lots of different gift cards at good prices. They make it simple and safe to buy a card and for the person to use it.

This helps avoid scams and makes gift-giving less stressful. If you want giving a gift card to be smooth and happy, try services like this.

Final Thoughts

Gift cards are useful, but here’s what really matters:

1. They last at least 5 years because of a good law (thank you, 2009!).
2. Use them within a year – it avoids fees and forgetting.
3. Expired card money? It might:
   • Be waiting for you (look up your name on your state’s unclaimed money website).
   • Become profit for the store.
   • Help pay for schools or parks in your community.
4. Always check the date & fees on the card.

Knowing this helps you give and get gift cards without worry. Focus on the nice thought behind the gift, not the small print!