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New federal reserve rule extends expiration of gift cards

Beginning on August 22nd, a new set of rules governing gift cards established by the Federal Reserve will take effect.  Under the new guidelines, gift cards will be valid for a full five years from the date of purchase or the last addition of funds.  Prior to these new guidelines, rules governing the expiration varied from state to state and from company to company.

In the state of Connecticut, gift cards and gift certificates purchased by shoppers in Connecticut cannot have an expiration date or incur inactivity fees.  In New Jersey, the laws are much less favorable.  Gift cards can expire in 24 months and dormancy fees of up to $2 a month can be charged by card issuers.

While the new Federal Reserve rules will extend the life of gift cards, it does not limit fees.  It does, however, require gift card issuers to provide clear disclosures on dormancy fees.  And some companies may use unsavory tactics to circumvent the rules.

On the website of the Office of the Connecticut State Treasury, a consumer advisory prominently points out two companies utilizing loopholes in Connecticut's gift card policy.  The advisory states:

"Currently, two Connecticut mall owners, Simon Property Group and The Macerich Company, owners of Crystal Mall, Clinton Crossing Premium Outlets and Danbury Fair Mall, are circumventing state law by having their mall gift cards issued and administered by a federally chartered bank."

If this particular loophole is not closed, other gift card issuers may follow suit.  And, as anyone who has gift cards from Linens and Things knows, owning a gift card from a company with financial problems can make your gift cards worthless, regardless of any Federal Regulations.

About the Author: Jeffrey Weber is Editor-in-Chief of, an online credit card comparison site featuring consumer credit tips and reviews of online credit card applications.


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