What is a gift card expiration date?
Gift cards and store credit cards typically have expiration dates printed on them. This date indicates the last day you can use the card to make purchases. Once a gift card expires, the remaining balance is removed and the card is no longer valid for transactions.
Many retailers and restaurants issue gift cards that expire anywhere from 6 months to 2 years after the purchase date. However, some states have laws that prohibit gift cards from expiring or limit the expiration period.
It’s important to pay attention to the expiration date when you receive a gift card so you can use it in time. The expiration date is often printed on the front or back of the physical gift card. For electronic gift cards, you may need to log in to the retailer’s website to find your balance and see if there is an expiration date.
Why do gift cards expire?
Gift card expiration dates enable the retailer to stop accounting for unused balances at some point. From an accounting perspective, gift card liabilities represent revenue that has been collected but not yet earned through a product sale or service. By putting an expiration on gift cards, retailers can eventually recognize unused balances as revenue.
Additionally, expired gift card balances generate extra profit for retailers when consumers fail to use the full amounts before expiration. Millions of dollars go unspent each year because of forgotten or lost gift cards. The unused funds are Pure revenue for retailers after the cards expire.
Setting gift card expiration dates can motivate shoppers to redeem their cards sooner rather than letting them sit unused. This creates more sales volume for retailers within a specific timeframe. It also reduces the retailer’s outstanding gift card liabilities.
However, expiration dates have drawbacks for retailers as well. They can create negative customer experiences if a consumer tries to use an expired card. Customers may be less likely to shop with that retailer again if they lose money on an expired card.
What can I do if my gift card has expired?
Here are some steps to take if you discover you have an expired gift card:
Check your state’s laws
Some states prohibit gift cards from expiring for a certain number of years or require the card balance to be escheated (turned over) to the state after expiration. For example:
- California: Gift cards cannot expire until 5 years after activation
- Colorado: Gift cards cannot expire until 7 years after activation
- Connecticut: Gift cards cannot expire until 3 years after activation
Consult your state’s unclaimed property laws to determine if you still have a right to unused funds on an expired gift card based on where it was purchased.
Contact the retailer
Reach out to the retailer’s customer service department to ask about your expired gift card. Many major retailers have policies in place to make exceptions for expired cards and allow you to use the remaining balance. Be polite when talking to the customer service rep, and they may be willing to override the expiration date or issue a new card.
Some options that retailers may offer include:
- Reactivating your expired card so you can use the full remaining balance
- Issuing a replacement card with a new expiration date
- Allowing you to use the remaining funds towards purchases for a short grace period
If the retailer cannot help, ask about donating your expired card’s balance to charity. Some companies transfer expired card amounts to non-profit organizations.
Sell or exchange the card
If the retailer will not extend the expiration date, you may be able to sell or exchange your expired gift card to recover some of the remaining funds. Here are some options:
- Sell the card to a gift card exchange website at a discounted cash value
- Trade in the card on a gift card swap site for a gift card to another retailer
- List the card for sale on a classified ads site
- Donate the card to a charitable organization that may be able to use it
Be sure to compare sites to get the best cash offer or trade-in value for an expired card with a balance. Also look for any fees the site charges.
Use the card’s remaining balance
Some retailers will allow you to use the remaining funds on an expired gift card to make a purchase, even though the card is past its expiration date. The purchase is typically limited to the exact unused balance remaining on the card. So you would need to use the card’s full balance – you could not charge part of a purchase to the card and the remainder to another payment. But this does allow you to recover the unused funds on an expired card.
Can I get a refund on an expired gift card?
Unfortunately, you are unlikely to get a refund on the remaining balance of an expired gift card. Retailers consider unused gift card funds the same as forfeiting cash or store credit. Once the expiration date passes, they no longer have an obligation to honor the card or issue a refund.
Some exceptions where a refund may be possible:
- The card expired very shortly after purchase. For example, if it had a very short 1-month validity period. The retailer may refund as a goodwill gesture.
- You live in a state that requires gift card funds to be escheated to the state after expiration. You may be able to file a claim to recover the balance.
- The retailer issued the card and it expired before you had a chance to use it. For instance, if it was provided as a refund or exchange item. The retailer may refund the balance if you complain.
Aside from very specific situations, expect that an expired gift card balance is lost. Be sure to note the expiration date and use your gift cards while they are still valid.
How can I avoid losing money on expired gift cards?
To reduce your risk of letting gift cards expire with unused funds, follow these tips:
- Use gift cards promptly – don’t hold onto them
- Note the expiration date and set a reminder for yourself to use your cards before they expire
- Treat gift cards like cash, not a coupon, so you don’t end up forfeiting the value
- Ask for gift receipts when you receive gift cards and exchange unused ones for cash value
- Don’t stockpile gift cards – use them for purchases you would make anyway
- Set a monthly reminder to review your unused cards and their expiration dates
- Keep physical gift cards in your wallet so you don’t forget about them
- Buy gift cards only when you have a planned purchase, not just because they are on sale
- Spend your cards with the closest expiration dates first
- Avoid online gift card marketplaces that charge inactivity fees which reduce your balance
Being proactive about tracking and using gift cards prior to expiration is the best way to avoid losing the value. Also, lobby for state laws prohibiting or limiting gift card expiration dates in your area.
Can retailers set gift cards to expire?
Yes, retailers and merchants are legally allowed to set expiration dates on gift cards, as long as state laws don’t prohibit this. The Credit Card Accountability Responsibility and Disclosure Act of 2009 gave retailers more flexibility to set expiration dates within 5 years from the date of purchase.
Prior to 2010, many states restricted gift cards from expiring less than 5 years from issuance. This federal law now allows retailers to set much shorter expiration periods, as well as charge inactivity or dormancy fees if cards are unused for 12+ months.
However, states can still enact their own laws that create greater consumer protections regarding gift card expirations. For example:
State | Gift Card Expiration Law |
---|---|
California | Cards cannot expire until 5 years from activation |
Colorado | Cards cannot expire until 7 years from purchase |
Connecticut | Cards cannot expire until 3 years from activation |
Be sure to check whether any state laws provide protections against gift cards expiring for a certain period of time where you live or where the card was purchased. Otherwise, retailers can set their own expiration policies.
What’s the average gift card expiration window?
Most retailers that issue gift cards opt to set expiration dates between 6 months and 2 years from the date of purchase or activation. Here are some typical gift card expiration windows:
- Restaurant gift cards: 6 – 12 months
- Retail store gift cards: 12 – 24 months
- Visa/Mastercard gift cards: 12 – 24 months
- Online merchant gift cards: 12 – 18 months
- Gaming gift cards: 12 – 18 months
Gift cards that are connected to credit card companies, like American Express or Visa cards, typically have longer expiration periods of at least a year. Cards sold by smaller restaurants or retailers are more likely to have shorter 6-month expirations.
Some statistics on average gift card expiration timeframes:
- 59% of gift cards expire after 1 year
- 41% of gift cards expire after 2 years
- 6-12 months is the most common expiration period
- Only 11% of cards expire after more than 2 years
The shorter timeframes create urgency to shop with the card sooner and allow businesses to clear liabilities off their books quicker. Make sure to carefully check the expiration when you receive a gift card, since the window of validity may be shorter than you expect.
What happens when gift cards expire?
Here is what typically happens when the expiration date passes on a gift card:
- The card is no longer valid for purchases and is declined if you attempt to use it
- The unused balance remaining on the card no longer has any value
- The funds are forfeited and turned over to the retailer, usually as revenue
- The retailer eliminates the outstanding liability for unused gift card balances
- Consumers can no longer recover or redeem the expired balance
Essentially, the card immediately becomes worthless once the printed expiration date has passed. Unless the retailer makes an exception, you lose all unused funds associated with the expired card.
Retailers can then recognize unused gift card money as revenue on their books and remove the liabilities. Most retailers will not allow you to recover expired balances or exchange the cards for cash unless required by state law.
It’s important to redeem gift cards promptly before expiration. Otherwise, the retailer has no further obligation to honor the card or refund expired balances. The unused dollars return to the retailer when the card reaches its expiration date.
Can retailers take back unused gift card funds?
Yes, once a gift card expires, retailers can legally take back the unused balance remaining on the card. This allows them to convert outstanding liabilities for unredeemed gift cards into recognized revenue.
When consumers purchase gift cards, the retailer records the sale as a liability until the customer spends down the card’s balance. The funds are essentially on loan until the recipient uses the card.
When the card expires after the printed date, the legal agreement stated on the gift card ends. The consumer no longer has a valid claim on the unused dollars.
The business can then remove the associated liability from their books and classify unused card balances as revenue. This expired card revenue boosts profits for retailers when customers fail to redeem gift card funds within the validity period.
However, if state gift card laws require balances to be escheated to the state after expiration, retailers must turn over the funds. They cannot recognize expired balances as revenue if the state is owed the unredeemed dollars.
Is it legal for gift cards to expire?
Yes, gift card expiration dates are legal as long as they comply with state laws. The federal Credit CARD Act of 2009 gave retailers the right to set expiration timeframes shorter than 5 years and charge dormancy fees if permitted in their state.
Most states now allow gift cards to expire within 6-24 months. However, several states impose limits by prohibiting cards from expiring for a set number of years:
- California – 5 years
- Colorado – 7 years
- Connecticut – 3 years
Additionally, a few states require unused gift card funds to be turned over to the state as unclaimed property after expiration:
- California
- Colorado
- Maine
- New York
So retailers must follow any state laws that restrict expirations or impose escheatment requirements. As long as those laws are observed, setting gift card expiration dates is legal across the United States.
How much money is lost on expired gift cards each year?
Billions of dollars in gift cards go unredeemed each year and are lost when the cards eventually expire. Most recipients fail to use all funds prior to expiration, providing a big revenue boost for retailers.
According to research from Mercator Advisory Group:
- U.S. consumers lost $3.4 billion in unused gift card funds in 2021 due to expirations
- Projected to grow to $4 billion in expired card losses in 2023
- $21 billion in unused gift card balances will expire between 2022-2026
- 1 in 4 gift cards are never fully redeemed prior to expiration
Additionally, over $3 billion in unused gift card money reverts back to retailers annually rather than being escheated to states per unclaimed property laws.
The huge amount of money lost each year shows the importance of tracking expiration dates and redeeming balances promptly. Set reminders so you don’t contribute to the billions forfeited when cards expire.
Do some retailers eliminate expiration dates on gift cards?
While most major retailers use expiration dates on physical and digital gift cards, some brands have chosen to issue gift cards with no expiration dates:
Retailers with No Gift Card Expirations |
---|
Amazon |
Nordstrom |
Starbucks |
Walmart |
Home Depot |
Bloomingdale’s |
Belk |
Macy’s |
Gift cards from these retailers can be used until the full balance is depleted, no matter how long that takes. The cards do not expire over time.
This creates a better customer experience by putting no pressure on recipients to redeem balances within a short validity period.
Retailers that don’t use expirations forfeit some revenue from unused balances. But they benefit from increased customer satisfaction and loyalty over the long run.
What’s the best way to make sure I use gift cards before expiration?
Follow these tips to avoid losing gift card balances due to expirations:
- Record the expiration date immediately after receiving a gift card
- Set reminders on your calendar to use your cards prior to expiration
- Use gift cards soon as possible after you get them
- Spend down balances with shortest expirations first
- Keep gift cards in your wallet so you have them when shopping
- Ask for gift receipts and exchange unused cards for cash value
- Avoid stockpiling gift cards since unused ones may expire
- Shop for necessities with your gift cards to ensure use prior to expiration
- Never pay fees to extend gift cards – spend them sooner instead
Staying organized and vigilant about expiration dates is key. Redeem balances quickly, don’t let cards sit unused, and set reminders to shop with gift cards before their validity period ends.
Conclusion
Gift card expirations allow retailers to clear liabilities off their books and eventually recognize unused balances as revenue. Make sure you carefully check expiration dates when receiving gift cards and set reminders on your calendar. Redeem balances promptly to get the full value – don’t contribute to the billions of dollars forfeited on expired cards each year. Spend your cards wisely and don’t allow money to be taken back by retailers due to missed expiration dates.