Gift Card Frequently Asked Questions: 35 Questions Answered

A gift card is a form of prepaid stored-value money. It is issued by a retailer, bank, or other financial institution and contains a specific amount of money that can be used for purchases. Unlike credit cards, you do not borrow money; you pay for the value in advance.

An open-loop card is one that runs on a major payment network like Visa, Mastercard, or American Express. It can be used at almost any merchant that accepts those networks. A closed-loop card is retailer-specific (like a Starbucks or Amazon card) and can only be used at that specific business or its affiliates.

It depends on the card type. Most closed-loop cards are restricted to the country of purchase. Some open-loop cards (like Visa gift cards) can be used internationally, but they often require a foreign transaction fee and may be blocked in certain high-risk countries. Always check the terms on the back of the card.

Technically, no. While both involve prepaid funds, gift cards are usually intended for gifting and often have fewer protections. Prepaid debit cards are often reloadable, may require personal identification (KYC), and are designed for ongoing use as a bank account alternative.

Gift cards are issued by retailers (closed-loop) or by banks and financial institutions in partnership with payment networks (open-loop). For example, a Walmart gift card is issued by Walmart, while a "Vanilla Visa" card is issued by a bank like MetaBank or TBBK Bank.

Most standard gift cards are "single-load," meaning you cannot add more money once the balance is spent. However, some retailers and open-loop issuers offer "reloadable" versions. Check the card's packaging or terms to see if reloading is an option.

Treat your gift card like cash. If it is lost or stolen, you may lose the entire balance. However, if you have the original receipt and the card was registered, some issuers may be able to cancel the old card and issue a replacement for a fee.

Most cards are activated at the cash register when they are purchased. For online purchases, you may need to follow a link in an email or enter a code on a specific website. If a card is not activated properly, it will show a zero balance when you try to use it.

During the checkout process, look for a field labeled "Gift Card," "Gift Certificate," or "Promotional Code." Enter the card number and, if required, the security PIN. For open-loop cards (Visa/MC), you usually enter the details in the standard credit card fields.

Generally, no. Most gift cards do not allow for cash withdrawals at ATMs. This is a primary difference between a gift card and a reloadable prepaid debit card. Gift cards are strictly for purchasing goods or services.

This is called a "Split Payment." Most merchants allow you to use the remaining gift card balance first and then pay the difference with another method (cash, credit card, or another gift card). Note: some online retailers may not support split payments with two different credit/debit cards.

In-store, most retailers allow you to use as many gift cards as you want for a single transaction. Online, however, many systems limit you to 2 or 3 gift cards per order. Check the retailer's online policy for their specific limit.

The safest ways are: 1) The official website printed on the back of the card, 2) The toll-free phone number on the card, or 3) Asking a cashier at a physical store. Avoid third-party "balance checker" websites, as many are scams designed to steal your info.

Yes. A gift card is considered a "method of payment," not a discount. You can typically apply coupons, promo codes, or loyalty rewards to your order total and then use your gift card to pay the final balance.

Under U.S. federal law (the CARD Act), gift cards cannot expire for at least 5 years from the date of purchase. However, many states have stricter laws that prevent expiration entirely. Check the back of your card for an expiration date, but know that the funds may still be valid even if the physical card has expired.

An inactivity (or dormancy) fee is a monthly charge deducted from your card balance after a long period of non-use. Federal law prohibits these fees unless the card has been inactive for at least 12 consecutive months, and only one fee can be charged per month.

Fees can be charged at purchase (activation fee), after 12 months of inactivity (dormancy fee), or for card replacement. Most closed-loop (store) cards do not have any fees, while open-loop (Visa/MC) cards almost always have a purchase fee.

Yes, if the card is subject to inactivity fees and you don't use it for several years, the fees could eventually drain the entire balance to zero. This is why it's best to use gift cards as soon as possible after receiving them.

Store-specific gift cards (Amazon, Target, etc.) usually do not have a purchase fee. Open-loop cards (Visa, Mastercard, Amex) almost always have an "activation fee" or "purchase fee" ranging from $3.95 to $6.95, depending on the card's value.

Escheatment is the legal process where unclaimed property (including unused gift card balances) is turned over to the state government after a certain number of years. You can often reclaim these funds through your state's "Unclaimed Property" office.

In the U.S., the federal minimum is 5 years. In many states like California, New York, and Connecticut, gift cards are legally required to never expire. Check your local state consumer protection website for your specific rights.

Contact the issuer immediately using the number on their official website. If you have the card number and proof of purchase, they may be able to freeze the balance and issue a replacement. The faster you act, the better the chance of saving your funds.

This is called "Card Draining." Criminals go to stores, record the numbers and PINs of unsold cards, and then put them back on the shelf. They use software to monitor the cards and spend the balance as soon as someone buys and activates them. Tip: Always check that the silver PIN coating is intact before buying.

Buying from secondary "discount gift card" websites is risky. While some are legitimate, others sell cards that were purchased with stolen credit cards. If the card is canceled later, you lose your money. The safest way is to buy directly from the retailer or an authorized dealer.

Card draining refers to any method where a criminal steals the balance from a gift card before the legitimate owner can use it. This often happens via in-store tampering or by tricking the owner into sharing the card details over the phone.

NO. Treat your gift card number and PIN like your bank password. Never share it with someone over the phone, in a text, or on a website unless you are making a purchase at a known, legitimate store. No legitimate company or government agency will ever ask for your gift card info over the phone.

The most common are "Impersonation Scams" where someone claims to be from the IRS, tech support, or a family member in trouble and demands payment via gift cards. Remember: Gift cards are for gifts, not for payments to individuals or agencies.

1) Contact the gift card issuer immediately to see if the funds can be frozen. 2) Report the scam to the FTC at ReportFraud.ftc.gov. 3) If you provided other personal info, monitor your bank accounts and credit report for suspicious activity.

The primary federal law is the **Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009**. This law set the 5-year minimum expiration and the 12-month inactivity fee rules that protect consumers nationwide.

No. Federal law provides a "floor" of protection, but individual states can (and often do) provide much stronger protections. For example, some states ban all fees, while others require retailers to give you cash back for very small remaining balances.

Generally, a store must honor a valid, unexpired gift card. However, if a store goes bankrupt or out of business, they may stop accepting cards. If this happens, cardholders often become "unsecured creditors" and may lose their balance entirely.

NO. Credit cards have strong federal protections for fraud and disputed charges under the Fair Credit Billing Act. Gift cards have much weaker protections. If you buy a defective product with a gift card, you have significantly less leverage to get your money back compared to a credit card.

It is a landmark piece of U.S. consumer protection legislation. While primarily focused on credit cards, it included a section specifically for gift cards and other prepaid instruments, introducing the first federal standards for expiration and fees.

Usually, no. Gift cards are typically non-refundable. However, some states (like California) require retailers to provide a cash refund if the balance is very small (e.g., under $10). Check your state's specific "Cash Back" laws.

If a store files for bankruptcy, they usually stop honoring gift cards. You may be able to file a claim with the bankruptcy court as a creditor, but gift card holders are often at the bottom of the priority list and rarely receive the full value back.