Federal law requires that funds loaded onto most gift cards and gift certificates remain valid for at least five years from the date of purchase or the date funds were last added, under Regulation E, 12 CFR 1005.20, which implements the 2009 Credit Card Accountability Responsibility and Disclosure Act's amendment to the Electronic Fund Transfer Act. Dormancy fees are separately restricted, and several common card types are excluded from the rule entirely.
What does the five-year expiration floor actually require?
Under 12 CFR 1005.20, the regulation issued by the Consumer Financial Protection Bureau under Regulation E, the underlying funds on a covered card must stay usable until at least five years after the card was issued or, for a reloadable card, five years after money was last added to it, whichever date is later. The card itself may carry an earlier printed expiration, but the issuer must still honor and refund the underlying balance through the five-year mark. Issuers are also required to maintain policies giving consumers a reasonable opportunity to buy a card with at least five years of validity remaining, so a card sitting on a store rack cannot already be near its expiration window at the point of sale.
The rule covers three defined categories: a gift certificate, a store gift card, and a general-use prepaid card. A gift certificate or store gift card is redeemable at a single merchant or an affiliated group of merchants; a general-use prepaid card is redeemable at multiple, unaffiliated merchants or usable at ATMs. All three are subject to the same five-year funds-validity floor once they meet the regulation's definitions.
When can a retailer charge a dormancy or inactivity fee?
The Credit Card Accountability Responsibility and Disclosure Act, enacted May 22, 2009 and effective for its gift-card provisions 15 months later, in 2010, bars dormancy, inactivity, or service fees on a covered card unless a specific condition is met first: the card must have gone a full year with no activity before any such fee can be imposed, according to the enacted statutory text published by the Government Publishing Office. Even once that one-year inactivity threshold is crossed, an issuer may not charge more than one dormancy, inactivity, or service fee in any single calendar month. Fees cannot be stacked to recover multiple missed months at once, and every fee an issuer intends to charge must be disclosed to the buyer before the fee is imposed, not just at the point of sale.
Which cards fall outside these protections?
The five-year and fee rules do not apply automatically to every prepaid product sold at a retail counter. Excluded categories include cards usable solely for telephone services, reloadable cards that are not marketed or labeled as a gift card or gift certificate, loyalty and promotional or reward program cards, cards not marketed to the general public, paper-only certificates, and cards redeemable solely for admission to a particular event or venue. A retailer's own branded reward-points card, for instance, is not a "gift card" under the regulation's definitions even though it functions like store credit, so it does not carry the same five-year funds guarantee.
What must a gift card disclose before it is sold?
Before a purchase is completed, and printed on the card or certificate itself, an issuer must state the amount of any dormancy, inactivity, or service fee, how often that fee may be assessed, and that the fee may be charged specifically for inactivity. The card or its packaging must also carry a toll-free telephone number, and a website if the issuer maintains one, that a buyer can use to check the balance or ask about fees, according to the Consumer Financial Protection Bureau's published regulation text. The expiration date for both the physical card and the underlying funds must also be disclosed before the sale, not discovered later when the card is presented for payment.
How does the seven-year safe harbor change what is printed on a card?
A separate provision lets issuers of non-reloadable cards skip certain expiration disclosures if the card itself carries a printed expiration date of at least seven years from the card's manufacture date. The underlying five-year funds-validity requirement still applies regardless of what date is printed on the card; the seven-year threshold only affects which disclosures the issuer must display. That distinction is why a card can show one date on its face while the money behind it legally remains redeemable on a different, later schedule.
| Card category | Minimum funds validity | Dormancy fee allowed after |
|---|---|---|
| Store gift card or gift certificate | 5 years from purchase or last reload | 12 months of no activity, capped at one fee per month |
| General-use prepaid card | 5 years from purchase or last reload | 12 months of no activity, capped at one fee per month |
| Loyalty, promotional, or reward card | Not covered by the rule | Not covered by the rule |
Frequently asked questions
Can a store gift card legally expire before five years?
The card's printed expiration date can be earlier, but the issuer must still make the underlying funds available for at least five years from purchase or the last reload, under 12 CFR 1005.20.
Can a retailer charge a fee the first year a card goes unused?
No. A dormancy, inactivity, or service fee cannot be imposed until a full year has passed with no activity on the card, and only one such fee is allowed per calendar month after that.
Are store loyalty or reward cards covered by these rules?
No. Loyalty, promotional, and reward program cards are excluded from the gift card definitions in the regulation, so the five-year funds rule and fee limits do not apply to them.
Does adding money to a reloadable card reset the five-year clock?
Yes. The five-year minimum runs from whichever is later: the original issue date or the date funds were most recently loaded onto the card.
What agency wrote the current gift card rule?
The Consumer Financial Protection Bureau administers Regulation E, 12 CFR 1005.20, which implements the gift card provisions Congress enacted in the 2009 Credit Card Accountability Responsibility and Disclosure Act.
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