Gift cards: Learn the details before giving


"Believe it or not, it's estimated that $1.8 billion worth of gift cards purchased last year are gathering dust and are likely never to be redeemed," said Anthony Giorgianni, Consumer Reports.

Unlike many states, California protects consumers by banning expiration dates on most purchased gift cards, with a few exceptions.

For instance, gift cards that can be redeemed through multiple, unaffiliated retailers, like stores for a particular mall, can have an expiration date.

Additionally, gift cards can't charge a service or non-activity fee unless they meet all of the following criteria:

  • The value remaining on the gift card is $5 or less
  • The card has been inactive for 24 consecutive months
  • Users can reload or add value to the card to bring the balance over $5
  • The card must clearly state in 10-point font or larger that a fee is triggered by inactivity, and must also state at what point a fee will be charged
  • The inactivity fee must be $1 or less

"Lost cards are another headache," said Giorgianni. "Several big retailers such as Abercrombie and Fitch, Puma and Aeropostale say they won't replace them. Other retailers may charge you a hefty fee."

Bank-affiliated gift cards like those from American Express or Visa can be used at a wide variety of stores, but there is often an activation fee or purchase charge, usually around $4 to $6, and those fees are allowed in California.

For instance, with the Visa card you can get at Simon Malls, you'll shell out $15 to replace a lost or stolen card.

"One more drawback: Don't expect the same fraud protections you get with traditional credit cards," said Giorgianni.

Both Consumer Reports and the California Department of Consumer Affairs recommend using gift cards as soon as possible, especially if the card is issued by a stand-alone store or a restaurant not part of a big chain.

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