Purchase and Activation Fees

A purchase fee (sometimes called an activation fee) is a one-time charge paid at the time you buy the gift card. This fee is almost universal for open-loop cards (Visa, Mastercard, etc.). These fees typically range from $2.95 to $6.95 depending on the value of the card.

Educational Note: Most closed-loop cards (store-specific cards like Starbucks or Best Buy) do not have purchase fees. A $25 store card costs exactly $25. If a retailer tries to charge you an activation fee for their own store-branded card, it is highly unusual.

Inactivity and Dormancy Fees

An inactivity fee (or dormancy fee) is a monthly charge that is deducted from your card's balance after you haven't used the card for a long period. Under the US Credit CARD Act of 2009, issuers are prohibited from charging inactivity fees until the card has been unused for at least 12 consecutive months.

Once those 12 months have passed, the issuer can deduct a fee every month. This is why many people find an old gift card only to discover that the balance has reached zero over time. Caution: Even one small purchase resets that 12-month clock, so using your card at least once a year is the best way to avoid these charges.

Monthly Service Fees

Some "prepaid cards" that are marketed as gift cards may charge a monthly service fee from the moment the card is activated. These are more common with reloadable cards than with standard non-reloadable gift cards. Like inactivity fees, these must be clearly disclosed on the card's packaging.

Miscellaneous Fees to Watch For

While less common, some cards may charge for specific actions:

  • Replacement Fees: If you lose your card and have the receipt, the company may charge $5 to $15 to issue a new one with the remaining balance.
  • Declined Transaction Fees: Some open-loop cards charge a small fee (e.g., $0.50) every time you try to spend more than the card's remaining balance.
  • Balance Inquiry Fees: While rare today, some older cards charged a fee just to check your balance over the phone with a live agent. (Automated checks are almost always free).
  • Paper Statement Fees: If you request a printed list of transactions for a reloadable gift card, you may be charged.

As detailed in our Laws & Regulations guide, several US states have banned inactivity fees entirely. In California, New York, and Florida, most gift cards cannot be charged dormancy fees regardless of how long they sit in your drawer. If you live in one of these states and see a fee on your card, you may be entitled to a refund from the issuer.

How to Avoid Gift Card Fees

Follow these best practices to ensure you keep 100% of the value on your card:

  1. Buy Store Cards: If you know exactly where the person likes to shop, a store-specific card is usually the "cheapest" option because it lacks activation fees.
  2. Use it Quickly: The best way to avoid inactivity fees is to spend the balance within the first year.
  3. Read the Back: Before you buy a card, turn it over and look for the word "FEES." If the list is long, consider a different brand.
  4. Register Your Card: For open-loop cards, registering your name and address on the issuer's website can sometimes help you avoid certain "unverified user" fees and makes it easier to replace the card if lost.