Innovations and Payment Systems

7 things you need to know about gift cards


Some things have changed about gift cards over the years. Here’s what to know about the No. 1 requested present

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Who doesn’t love a gift that puts you in the driver’s seat? No surprise then that gift cards are the No. 1 requested present 9 years in a row, according to research from the National Retail Federation. “Consumers love them,” says Jennifer Tramontana, director of communications for the National Branded Prepaid Card Association. But how well do you know your gift cards? From tips for protecting cards to accessing them via a phone and replacing bum cards that don’t work, if you buy or use gift cards, here are seven things you need to know:

1. Retailers want you to use that card.

You may have suspected retailers don’t want you to use their card so they can keep its entire value. Definitely false, says Timm Walsh, board chairman of the Retail Gift Card Association and vice president of sales for Regal Entertainment Group. “The truth of the matter is we prefer they be spent,” he says. “We actually make more if they’re spent at the retailer.”

When consumers redeem a gift card, 65 percent spend an average of 38 percent more than the card’s value, according to 2014 statistics from CEB TowerGroup. “When you get a gift card, you tend to think of it as free money, and you splurge a little bit,” says Walsh.

2. Storing gift cards on a phone is becoming more common.

“More and more gift cards are being redeemed through mobile technology,” says Walsh. It’s “a lot easier to store your gift card” on your phone. Some apps allow shoppers to “take a picture of the front of the card and store it,” along with the recorded balance, says Kendal Perez, spokeswoman for, who recently test-drove the Gyft app. It’s “helpful because I’m a visual person, and I could glance quickly and see what I have,” says Perez.

3. You can shield some gift cards from theft and loss.

In the past, gift card issuers would declare that cards were as easy to spend as cash. Unfortunately for some consumers, cards were also like cash in another way: If lost or stolen, they were gone permanently. These days, with bank-branded cards, you can register the cards with the issuer to get protection from loss or theft. “The funds will be replaced if it’s lost or stolen,” says Tramontana.

It works for some retail gift cards, too. “There are some retailers that are going to the registration model,” says Walsh. To register a gift card, call the toll-free number or visit the website listed on the back of the card. You’ll supply the card number, and likely the PIN and expiration date of the card, along with your name and address. “It’s real simple and takes about five minutes,” says Tramontana.

4. There is a remedy for cards that don’t work.

Once in a while you step up to the register and pull out a gift card, only to be told the card’s no good or it’s worth much less than promised. Now what? You need the activation receipt, says Hillary Mendelsohn, author of “The Purple Book: The Definitive Guide to Exceptional Online Shopping.” Hopefully, the person who bought the card kept it — even if that person was you. Every once in a while, “they just don’t activate them correctly,” she says. With that slip of paper, a gift card giver can at least prove the card was activated, she says. “And they can take it back.” Returning a malfunctioning gift card? Deal with the company that issued it, Mendelsohn advises. That means if it’s a store gift card, take it back to the store. And if it’s a bank-branded gift card, call the toll-free number on the back of the card, she says.

5. There are two kinds of cards and (generally) two menus of fees.

With cards that carry a credit card brand name, you often pay a purchase fee, says Christina Tetreault, staff attorney for Consumers Union. In return, you can use them any place that accepts that card brand. Buy a gift card at or for a particular retailer, and you pay only the face value of the card. But you can only use it at that specified retailer, and sometimes at affiliated businesses. The majority of retailer gift cards don’t have expiration dates, activation fees or dormancy fees, says Walsh. Under the federal Credit CARD Act of 2009, gift cards have to be good for at least five years from the purchase date. The act’s rules on gift cards also limited dormancy fees, banning them in the first year. After the first year, dormancy fees can be charged once per month, but such charges must be clearly disclosed. “The advice that I give people, and take myself, is to spend them as soon as possible,” says Tetreault. “Spend them right away.”

6. You can stretch more out of cards.

When is a $50 gift card worth more than $50? When you use it online to score a discount or free shipping, says Mendelsohn. If you’re making a purchase with a gift card, shop both the brick-and-mortar location and the store’s website to see if one of them will offer a discount, free delivery or free shipping, says Mendelsohn. “Most retailers have moved to this digital-and-physical environment,” says Tramontana.

Want to boost the value of that gift card you just received? Snag a coupon to go with it. With a few minutes of searching, you could increase your gift-buying power by 10 or 20 percent.

7. You have to treat them gently.

Plastic gift cards still use magnetic stripes, like pre-chip credit cards. Those stripes can occasionally get demagnetized by other things that you routinely carry in your pockets or purse. Some gift cards include a scratch-off panel. If you’re too zealous or use something too sharp you can accidently remove the numbers underneath, says Mendelsohn.  “Then it’s no good to you.” Some gift “cards” are made of paper or thin cardboard. Yet another reason to put them in a separate envelope, she says. “You have to be super careful.”

See related:  How to squeeze the last dollar out of gift cards, 9 tips for using mobile gift cards safely  

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Innovations and Payment Systems

Accepting international payments with Square

For small business owners who use Square to accept credit cards, selling to overseas customers is allowed. But there are a few things you should know to make it easier on your customers and yourself.

See more stories
Credit Card Rate Report
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more