Watch Out For Fees With Gift Cards

Like candy canes and drunken family dinners, gift cards have become a Christmas staple. Bankrate has reviewed a wide number of them and published the results to help you pick the best one for your needs. To avoid fees, you should stick with “closed-loop” cards—that is, a card issued by a specific retailer for use only with that retailer. Almost all retailers now offer cards that don’t expire and don’t charge maintenance fees, with the notable exceptions of Macy’s and Bloomingdales, whose cards both expire two years after purchase. However, several retailers—CVS, for example—still charge “dormancy” fees on cards that have been inactive for anywhere from 6 to 24 months, so be sure to check the fine print to see how this is addressed.

“Open loop” cards that you can use everywhere—usually issued by credit card companies or national mall chains—tend to be the ones that will cost money, both in activation and maintenance fees. However, if you find a discount program (like American Express’s “Especially for…” cards), you can bundle some potential savings on particular items that the recipient is likely to purchase. (That’s a lot of ifs, but the opportunity for savings is there.) The fees can change year by year, so don’t go by past experience if you’re a returning customer—for example, Discover Card used to ship its gift cards free, but in 2006 added a shipping and handling charge of between $3-7.

Online cards are frequently restricted to online purchases, in case you’re thinking of buying one for someone who doesn’t shop online.

The following states have laws that forbid expiration dates on gift cards, but since banks fall under federal jurisdiction, they may be able to override any state laws and still restrict the gift cards they issue. Again, be sure you check the fine print if you’re worried that the recipient might take a long time to redeem the card.

For example, in California, Florida, Maryland, Massachusetts and Nevada, cards cannot expire. Other states put limits on expiration; for example, cards can’t expire within the first two years of issuance. To find out how your state treats gift cards, check with your state’s consumer protection department.

Bankrate says that in general, cards with no fees, expiration dates, or maintenance costs tend to disclose these facts very clearly, since it’s the sort of information consumers like to see. That means if you can’t clearly find this information in the literature, the odds are good there’s a fee and the business is intentionally trying to obfuscate it to avoid driving off wary shoppers.

Here’s a detailed chart of many retailer cards available, along with details on fees and expiration dates. There’s also tabs on the chart to switch to views of credit cards and malls. Or check out this chart for information on what various retailers are offering in the way of e-cards this year.

“2007 Gift Card Study: Tops for holidays” [Bankrate]
(Photo: Getty)


Edit Your Comment

  1. missdona says:

    The person who gives you a CVS gift card for Christmas must really hate you.

  2. wring says:

    And as always, cash is king. No fees, you can use it at any store you please, and you have the choice of not spending it all in one place!

  3. Antediluvian says:

    That’s one of the great things about Mass. consumer protection laws: non-expiring gift cards and gift certificates.

    If you live nearby, consider buying your gift cards in one of those states where they can’t expire or charge fees. Your recipients can still use them in any state, they just won’t expire or get drawn down by fees.

  4. ColoradoShark says:

    My father, when giving a check as a gift, would refer to it as a “universal gift card”.

  5. newlywed says:

    cash never expires. as someome who just survived a huge wedding and currently is sitting on 4K of gift cards to various pottery barns, pier ones macys, and worse, stores that don’t exist anywhere near me, but who has no space to put ANYTHING else in her new home (our registry was also completely finished) i SO hate the gift card industry for making my guests think that cash is not king.

  6. newlywed says:

    though i’m pretty sure that a lot of the reason people give gift cards is because they can buy them on their credit cards, sigh…

  7. DeeJayQueue says:

    in extreme examples, like Newlywed’s, gift cards can be a burden. And yes, cash spends everywhere, doesn’t have fees or hidden rules or anything else. However, if that were the case why do people give gifts in the first place? Gift cards are for people who think they know where you’d like to shop, but don’t know you well enough to pick out something you’d like. Cash is the most convenient, but also the most tacky, and that’s why gift cards are a moneymaking industry.

  8. Serenefengshui says:

    Hey newlywed, go ahead and sell those gift cards. You can use ebay or I think there’s a special gift card sell & exchange site. Trade ’em in for something you’ll use–Safeway, Starbucks, Sears (tires? battery for the car?).

    Washington state also has ‘no expire’ gift card laws, for which I am thankful since I tend to tuck them in my wallet and forget about them…:-(

  9. dasunst3r says:

    Allow me to introduce you to the Universal Gift Card, featuring your favorite Presidents: Washington, Jefferson, Benjamin, Lincoln, or Hamilton! You could also have it directly withdraw from your bank account using a “personalized check,” featuring the exact dollar amount and your signature!

  10. MercuryPDX says:

    @newlywed: Try sites like:


    Keep in mind some of these places charge a fee for the service.

  11. FLConsumer says:

    @wring: Cash, cash, cash! I agree! Don’t give me those damn gift cards, just throw the cash in an envelope and I’ll be quite happy, even if it’s just a $5 bill. The hassle of dealing with gift cards isn’t worth it to me.

    Does anyone know if the states which don’t allow expiration of gift cards allow them to charge monthly fees on the cards (so ultimately the points expire via fees)?

  12. wring says:

    @FLConsumer: I used to have a Mimi’s Cafe gift card that apparently charges a monthly fee on the card after a year BUT they put the credit right back when you use it. Or at least that’s my understanding of it.

  13. gruffydd says:

    @newlywed: Put the Pottery Barn G/C’s on eBay. They usually get 90% of their value back.

  14. CumaeanSibyl says:

    @newlywed: Anything you can’t sell, you can always regift. Think of it this way: you’ve got $4K of free Christmas presents!

  15. Mary says:

    I VASTLY prefer gift cards over cash as a present! If you give me cash, I put it in the bank and just end up using it for bills and other mundane crap. With my budget concious life, I don’t get anything out of it in the end. If you wanted to pay my bills for a month, then give me cash.

    If you want to get me something nice, or enable me to get myself a PRESENT of something I wouldn’t normally buy, then a gift card is perfect. My family and friends know the stores I shop at, and this gives me an excuse to go buy a book, a dvd, or something special that I wouldn’t normally be buying. Last birthday, all I asked for were gift cards to movie theatres because I kept talking myself out of going to the movies.

    I love it when somebody gives me a gift card to a restaurant because eating out isn’t in my budget at all. If I got cash, I wouldn’t use it for eating out, I’d convince myself not to spend it.

    And for the record, if you don’t want to spend over the card amount, some stores will “cash out” card balances under a certain amount. I know where I used to work it was informally $3 and at the manager’s discretion, but if you asked it was possible.

  16. Mary says:

    @newlywed: When I got married, we got a lot of gift cards to a particular store that was too long a drive and we knew we wouldn’t shop at much. We picked one large thing we wanted (a Playstation 2) and used up the cards on that, getting one fantastic and large thing. The cash all went to paying off debt, which was nice but not exactly romantic.

    You can ebay the cards for a little less than face value, or exchange them. I’ve heard craigslist is fantastic for that. I also did regift at least one gift card because I knew I wouldn’t use it and had a birthday crop up when I wasn’t prepared.

  17. mrmaxmouse says:

    @newlywed: eBay those cards! I used to do this with my Amex points: You could exchange 20,000 points for a $100 cash reward, or 10,000 points for a $100 gift card to various retailers. Get the gift cards, and then eBay them!

    On your typical $100 gift card, I got about $95. All I had to do was pay the ebay fees, and a stamp…All in all, cost me about $5 to sell it…$100 gift card turns in to $90 cash.

  18. FLConsumer says:

    @meiran: That’s precisely why I want the cash — to invest and make more cash and pay for my lifestyle. So what if it goes towards keeping the lights on? That’s fine by me. It’s still spending power.

  19. Daniel-Bham says:

    I received a Wachovia Bank gift card for Christmas last year. It was slated to expire at the first of this month, and I hadn’t used it the entire year.

    I decided I should use it before it expires, and found out that the $50 gift card was now worth only $10 due to various ‘fees’ that had been levied by the bank.

    Now… I had gone to the website to activate the card so that I could choose a PIN number. It told me an account had already been created. I could therefore not use it in the store.

    I called to request a PIN and to provide information about myself (driver license, address, phone, etc.) and they refused to provide me a PIN, but told me to just tell a merchant to use it as a credit card and I could get my $10 that way.

    The card was almost impossible to use, and I ended up charging it on Amazon to create a ‘real’ gift certificate prior to the expiration.

    I quit banking with Wachovia a couple of years ago because of the ‘glorious’ 0.002% interest you gained in savings, and the variable minimums they kept jacking up.

    One month, the minimum amount would jump from $100 to $200, and if you didn’t raise your balance to $200.00 by the end of the period you were docked $25 as a ‘convenience’ fee. I of course upped my balance to $200, only to have it jump to $300 minimum a few months later.

    Wachovia Bank is a scam.

  20. bostonguy says:

    @Antediluvian: Not all gift cards & certs have a “no expire” date:

    Mass. Office of Consumer Affairs. Very brief explanation of gift certificate law: “Gift certificates must remain valid for at least seven years and are not subject to any fees. Once you have used 90% of the certificate’s value, you may choose to take the remaining value in cash, or continue with the gift certificate. Gift certificates not clearly marked with an expiration date, and issuance date, shall come with those dates clearly printed on the sales receipt, or available on line. If the gift certificate expiration dates are not provided, the gift certificate shall be good forever. Dormancy fees (fees charged for not using your gift certificate in a timely manner) are not allowed in Massachusetts.”

    Mass. also changed the definition to include gift cards. More here: []

  21. mac-phisto says:

    connecticut – no fees, no expiration date (though i do not believe it applies to bank-issued prepaid credit cards): []