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Know Your Gift Card Rules

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Learn the hidden rules behind your gift card -- and you could end up with more cash in your pocket.

woman using a gift card

Recession Mama Michele Ashamalla: Chances are, most of us have recently given or received a gift card of some type, and also probably have a fair number of them around the house. To protect consumers, some recent federal legislation was enacted. The Credit Card Act of 2009 prohibits gift cards (store- or bank-issued) from expiring before five years from the date of purchase, or when money was last loaded onto a card, and prohibits fees for the first 12 months. It will go into effect next summer. Some state laws are much stronger, however, and in the case of stronger state laws, the state laws are what businesses must follow. Check out other state laws governing gift cards.

You might be surprised at some of your state's protections. In California, not only can gift cards never expire, but any gift card in an amount under $10 can be redeemed for cash! Let me tell you that retailers are often unaware of state laws. When I found out about the under $10 law, I traded three gift cards that had been cluttering up my wallet for cash. Two of the three stores had never heard of the year-old law, but I handed them a copy I printed off the Internet. Retailers need to be aware of current laws, though, because states are really cracking down. In August, 2009, Starbucks paid $225,000 in settlement of a lawsuit for failing to comply with California law. Check out your state laws and make the most of those gift cards!

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2 comments so far | Post a comment now
b January 5, 2010, 5:50 AM

how does this work with cards purchased in one state and then mailed as a gift to a person in another? is it determined by the state in which you actually shop or by the state in which you buy the card?

Recession Mama January 6, 2010, 12:33 AM

I believe that the laws of the state where you are using the card would apply. For instance, I have purchased movie passes that give an expiration date, but also say “No expiration in CA.” So even if those passes were purchased in another state, if I use them in CA, CA rules apply, and they cannot expire.

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