Gift card companies have new rules when it comes to the gift cards they promote, thanks to the Federal Reserve Bank rules for August 2010, so here is the breakdown.
The cards covered
This includes retail gift cards, gift certificates and general use prepaid cards for network branded cards. This doesn't cover re-loadable cards or gift cards received through a loyalty program.
Restrictions on inactivity and service fees
This part is the best. There is no worrying about a monthly fee. You can get a gift card for the holidays and toss it into the desk drawer until your birthday to use it and not have to worry about losing value while it sits there.
But if you go more than a year - there is a fee. You can findout the amount on the card. If there is no fee stated on the card than that card is fee-free
You have 5 years to use the balance of the card before it expires, if you haven't used it by then, you probably lost it or aren't interested in using it. If the card you have is re-loadable, it would be 5 years from the time you last reloaded it.
End of the year fees
No fee if it takes you 11 months to use the card, but once the year is over when it sat unused, there are no restrictions to the amount of fees they can charge you - up to the value of the card.
The card can still expire
The balance has a 5 year expiration date but some cards may not and will expire before that, like Visa/AmEx cards that have an expiration date for the card. Now if you still have money on the card, the packaging or the card itself should have information on how to get a new card with the balance transferred onto it. And they can't charge you for replacing that type of card.
After the 5 years, the gift card company can do what they want with the card - they can deactivate it or just confiscate it or take the balance down to $0.
Other Notes on the Gift Cards
Obviously there are still expiration date and fees on some of these cards and you have a better chance of dealing with fees and expiration dates on the Visa/AmEx cards that you would with a retail store card. So if you do get the general use cards, rank them as a higher priority to use than a retail store one.
If you live in a state that has stronger laws on the books than the federal rules, they will trump the rules set up by the FRB. 32 of 50 states have some laws on the books that are stronger.
Now that you are up to date, go on and get yourself a few gift cards for birthdays without worry.