Last December, you gave your nephew a $50 card for the sneaker store he loved. In March, it was still in his desk drawer. He isn’t unusual: 43% of US adults say they’re holding at least one unused gift card, voucher or store credit.[3]
So are gift cards a good gift? They’re either the laziest present or the smartest, depending on who you ask. The research is more useful than either view. A card can spare you the cost of a wrong guess, but only if it’s one the person will actually spend.
The people, card values and fees in this guide are original illustrations. Fees and terms vary by card, so check the packaging or the issuer’s terms for the one you’re buying.
Give a gift card when the person would rather choose for themselves and will spend it soon, at a place they already use. Check the fees and terms, and add a few words about why you chose it.
When a gift card beats a present.
In a well-known 1993 paper, economist Joel Waldfogel asked students to value the holiday gifts they’d received. He estimated that between a tenth and a third of the value of gifts was lost, because recipients valued many presents below what the givers had paid.[1] The study was small and its conclusions are still debated, but the mechanism is familiar: a wrong size, color or flavor costs money. A gift card hands the choice to the person who knows their own taste.
Which card matters too. Research presented by Mary Steffel and colleagues found that recipients take longer to redeem gift cards that can only be used at one retailer, and that givers tend to favor those specific cards anyway.[2] A card for “their” store feels more personal. A card they can use in more places is more likely to be spent.
Spending is the point. In Bankrate’s 2024 survey, the median unused amount among people holding cards, vouchers or store credit was $100.[3] A card that sits in a drawer is a gift that hasn’t arrived yet.
Three ways to give.
- 01 / A present
Shows you know them
Best when they’ve asked for something, or you know their taste well.
Check: the return window and a gift receipt.
- 02 / A store card
Their favorite place
Thoughtful when they already shop or eat there often.
Check: that it works online or near them, without fees.
- 03 / A versatile card
Their choice, anywhere
Usable in more places, so more likely to be spent.
Check: the purchase fee and how it’s activated.
Pick a card they’ll actually spend.
Start with the person. If they’ve asked for a specific item, give that; if they’ve asked for a gift card, take them at their word. If you’re unsure of their size or taste, a card avoids the guess. Then think about where they really spend: one favorite store, or all over.
A store card is only as useful as the store. Check that it works online or at a location near them, and that it covers what they’d buy there. A card for a café on the other side of the country is a souvenir, not a gift.
Card or present for them?
- Have they asked for anything?
- How well do you know their taste right now?
- Where do they spend their money?
- Would they use a card within a few months?
- How will you give it?
Think of one person.
Answer all five questions about the person you’re buying for to see whether a card or a present fits better.
Fees, expiry and the fine print.
In the US, federal rules protect most gift cards sold to the public. A covered card’s funds generally can’t expire until at least five years after it was issued or money was last loaded. Inactivity, dormancy or service fees are allowed only after a year with no activity, no more than one a month, and they must be disclosed clearly on the card or its packaging.[4]
| Rule | What it means for the card |
|---|---|
| Expiry | Funds last at least five years from issue or the last load |
| Inactivity fees | Only after 12 months with no activity |
| How often | No more than one fee in any calendar month |
| Disclosure | Fee amounts and timing stated clearly on the card or packaging |
| Not covered | Loyalty, award and promotional cards; reloadable cards not sold as gift cards |
The FDIC distinguishes two kinds. Store gift cards can be redeemed only at the stores and restaurants that sell them. Bank gift cards carry a payment network’s logo and can be used wherever that brand is accepted.[5] The network cards are more versatile, but they often charge a purchase fee at the register: money the recipient never gets to spend. Some states add protections of their own.
Here is how fees add up in an illustrative case. A $50 card with a $4.95 purchase fee costs you $54.95. If it also charged $2.50 a month after a year unused and sat in a drawer for 18 months, six fees would remove $15. That leaves $35 of the $54.95 you paid. Many store cards charge no fees at all; the point is to check.
What will they actually get to spend?
Enter the card’s value and the fees printed on its packaging or terms. Many store cards have no fees at all; set a fee to zero if the card doesn’t charge it.
Inactivity fees start only after 12 months without activity, at most one a month, as federal rules require for covered gift cards. State laws can be stricter. Nothing is sent or saved.
$35.00 of the $54.95 you paid, or 64%. The purchase fee takes $4.95 before the card is even given. After 18 months unused, 6 monthly fees have removed $15.00.
Gift cards are for gifts, not payments.
The FTC is blunt: no real business or government agency will ever tell you to buy a gift card to pay them. Anyone who asks you to buy cards and share the numbers is running a scam.[6]
Cards on a rack can be tampered with before you buy them. The FTC advises checking that the protective stickers are intact and that the PIN on the back isn’t showing; if anything looks wrong, choose another card and show the damaged one to a cashier. Keep the receipt and the card details. If a card is drained or you’ve paid a scammer, contact the card company right away and report it at ReportFraud.ftc.gov.[6]
Make it feel like a gift.
A few words do most of the work. “For the ramen place you keep talking about” turns a card into a plan. Pair it with something small if you like, and hand over what they need to use it: the receipt, any terms, and a note of the value if it isn’t printed on the card.
If you’re still choosing between a card and something else, our guides to a physical gift or an experience and buying gifts early cover the other routes.
Five gift card checks
Keep rewards and gift cards apart
Rewards programs don’t always work like gift cards. InScape’s Campaign Credits, for example, have no cash value, can’t be redeemed for cash, can’t be transferred unless InScape expressly allows it, and can be used only for eligible Campaigns. Partner Offers are generally fulfilled by the Partner, on that Partner’s terms.[7]
Browse relevant Partner Offers for gift ideas, then check the terms and the complete cost with the Partner.
Card smart?
Under federal rules, how long must a covered gift card’s funds last at minimum?
Gift card questions, answered.
Are gift cards a good Christmas gift?
They can be, when the card is one the person will actually spend. Choose a store or brand they already use, or a more versatile card, and check the fees and terms. If they’ve asked for a specific item, or you know their taste well, a present may land better.
Is it rude to give a gift card?
No. Many people are happy to choose for themselves, and research suggests the more widely a card can be used, the sooner it tends to be spent. A short note about why you chose that card, or what you hope they’ll use it for, keeps it personal.
Do gift cards expire?
Under federal rules, a covered gift card’s funds generally can’t expire until at least five years after the card was issued or money was last loaded. Inactivity fees are allowed only after a year with no activity, at most one a month, and must be disclosed. Promotional and reward cards are excluded, and some states give more protection.
Which is better, a store gift card or a Visa gift card?
A network-branded card, such as Visa or Mastercard, can be used almost anywhere the brand is accepted but often carries a purchase fee. A store card usually has no purchase fee but works only with that retailer. Pick the one that matches where the person really spends.
Sources and research notes.
Research checked October 31, 2026. Studies are summarized for their main findings and describe averages in specific groups, not any one person. Regulations are summarized for consumers; this article doesn’t interpret the law, and state rules can differ. Reference numbers in the article link directly to the relevant source.
- 01American Economic ReviewWaldfogel, “The Deadweight Loss of Christmas” (1993)(opens in a new tab)
- 02Society for Personality and Social Psychology, via ScienceDailyThe psychology of gift-giving and receiving (December 2014)(opens in a new tab)
- 03BankrateGift cards survey: 43% of Americans have unused gift cards (September 2024)(opens in a new tab)
- 04Consumer Financial Protection BureauRegulation E, 12 CFR § 1005.20: Requirements for gift cards and gift certificates(opens in a new tab)
- 05FDICWhat You Should Know About Gift Cards (December 2024)(opens in a new tab)
- 06Federal Trade CommissionAvoiding and Reporting Gift Card Scams(opens in a new tab)
- 07InScapeTerms & Conditions: Campaign Credits and Partner Offers
Research method
Card values, fees and scenarios are original illustrations, not any issuer’s current terms or a live InScape offer. The fit check is a prompt for your own judgment, and neither tool sends or stores your answers.
The cover is a conceptual image created with AI.
