Gift Card Law: Which Card You're Holding Decides Whether It Can Expire

A gift card feels like cash that happens to be made of plastic. Legally it's closer to a promise — the issuer took your money now in exchange for goods later — and the rules for how long that promise must be kept depend on what kind of card it is, who sold it, and which state you're in. Two cards that look identical in a holiday envelope can sit under completely different rules.

This piece is built as a sorting exercise. First, which category the card falls into. Then what federal law guarantees for that category, what several states add on top, and what happens in the three situations where gift card money actually gets lost: fees and expiration, a store that closes, and a card that was a scam from the start. It explains how the rules work; it doesn't assess any particular card or claim.

Step one: sort the card

Federal gift card rules come from the Credit CARD Act of 2009 and live in Regulation E at 12 CFR 1005.20. The regulation protects three kinds of card:

• A store gift card — bought for a set amount and redeemable at a single merchant or an affiliated group of merchants, reloadable or not. A coffee chain's card is the model.
• A gift certificate — the same thing, but it can't be reloaded.
• A general-use prepaid card — redeemable at many unaffiliated merchants or usable at ATMs. The network-branded cards sold on racks at the pharmacy are the model.

Then it lists six kinds of card it doesn't cover at all. Under section 1005.20(b), the rule excludes cards that are usable solely for telephone services; reloadable cards not marketed or labeled as gift cards or gift certificates; loyalty, award, or promotional gift cards; cards not marketed to the general public; cards issued in paper form only; and cards redeemable solely for admission to events or venues.

The card people misfile: the bonus card

The trade-off the regulation makes is disclosure. To qualify for the exclusion, a promotional card has to state on its front that it's issued for loyalty, award, or promotional purposes, and show on its front the expiration date for the money on it. It must also disclose any fees and a toll-free number or website for fee information. So a bonus card that expires at the end of the following month is doing exactly what the rule allows — provided the front says so. The same logic covers rebate cards and "reward" cards from a bank or retailer program.

What the protected cards get

For store gift cards, gift certificates, and general-use prepaid cards, section 1005.20 sets three rules.

The money lasts at least five years. Funds can't expire before the later of five years after the card was issued — or, for a reloadable card, five years after money was last loaded — or the card's own printed expiration date. The plastic itself can expire sooner, but then the card must disclose that the money doesn't expire with it, tell you how to get a replacement, and the issuer may not charge for the replacement unless the card was lost or stolen.

Fees wait a year. A dormancy, inactivity or service fee is allowed only if there's been no activity on the card in the one-year period ending on the day the fee is charged. After that, no more than one such fee in any calendar month. And the fee has to be disclosed on the card itself, not only on the rack.

Disclosures must be clear and kept. The terms have to be clear and conspicuous and given in a form you can keep.

What federal law does not require is just as useful to know. It doesn't require the merchant to give you cash for a leftover balance. It doesn't require a refund if you change your mind about the card. And it doesn't cap the purchase fee on a general-use prepaid card — the few dollars charged at the register for a network-branded card aren't a dormancy or service fee.

Step two: check your state

The federal rule is a floor, and it defers to state laws that protect cardholders more. Several states have used that room.

The practical consequence of the table: a card that the federal rule would let expire in five years can't expire at all in California or Washington, and the small leftover balance that's stuck on a card in most states is cash on request in all three.

When the store closes

Here the rules above stop helping, because they govern the terms of the card, not the solvency of the company behind it. A gift card is an unsecured promise, so when a retailer files for bankruptcy its cardholders are creditors — usually unsecured ones, near the back of the line.

What usually happens next is procedural. A retailer entering Chapter 11 often asks the bankruptcy court early in the case for permission to keep honoring gift cards, because refusing them would drive customers away; a 2009 Federal Reserve Bank of Boston analysis traces that pattern back to Kmart's 2002 case, and also describes the "limbo" when the request comes later or not at all. Stores in liquidation commonly announce a cutoff date after which cards stop being accepted. Once cards are no longer honored, the remaining route is filing a proof of claim in the bankruptcy case, which the same analysis calls cumbersome, with a payout that depends on what's left.

One Bankruptcy Code provision is worth knowing. 11 U.S.C. 507(a)(7) gives individuals a priority for deposits of money toward goods or services for personal use that were never delivered — up to $3,800 per person since the inflation adjustment of April 1, 2025. Whether a particular gift card balance counts as such a "deposit" is decided in the specific case, so it's a possibility rather than a promise. What the calendar teaches is simpler: a card from a retailer in trouble is worth the most on the day before the cutoff.

When the card was the scam

That route is about recovery, not a legal right. Once a gift card's balance is spent, neither the Regulation E error rules nor the credit card dispute rules reach it — the machinery described in the piece on disputing a card charge applies to the card you used to buy the gift card, not to what happened to its balance afterward. Which agency takes which complaint is set out in this guide to the FTC, CFPB and state attorneys general.

The short version