Gift cards are referred to as gift certificates in North America or gift tokens in the UK. They are prepaid cards loaded with a specific amount of money, usually provided by a retail brand, financial institution, or bank, to serve as cash alternatives for purchases in certain stores. Gift cards are also utilized as gifts or rewards by employers and businesses to their staff.

Retailers and marketers also distribute gift cards as one of their promotion strategies. They do this to entice customers to visit or come back to the store. The cards may be regarded as cash cards.

Physical Gift Cards vs Digital Cards (E-codes)

Gift cards are available in two major forms – plastic and digital gift cards. According to PaymentDive, physical gift cards are still more preferred by customers despite the rise of digital cards. Upon purchase of digital gift cards, you will be assigned a unique gift code that you are to redeem online before you can make use of it to make purchases.

Retail brands like Target, Amazon, and Walmart sell physical cards as well as digital codes online to their customers.

Popular restaurant chains like Chipotle, Starbucks, and Chili also allow customers to buy physical and digital gift cards. These gift cards substitute cash payment for meals and drinks used on apps or an in-establishment card reader to fasten the checkout process.

There are also digital gift cards such as Google Play, Apple, and Amazon gift cards that come with a card number and code. You can use these e-codes to make purchases online by selecting the gift card as your payment method.

Uses of Gift Cards

The use of gift cards is generally a win-win situation. Different uses for the issuers and purchasers of gift cards.

Uses of Gift Cards to the Card Issuers

To promote sales: The seller’s inventory base is decreased as customers purchase gifts for one another. The same is true of gift cards; they are a long-term way for a business to boost product sales.

To increase customer patronage: There are quite a good number of gift cards that are accompanied by beautiful packages and features. Most gift cards do not have an expiration date and some come with discounts on online stores. Who doesn’t like goodies like this? Customers will stick around to enjoy such goodies.

To encourage cordial relationships and a sense of connection among customers: Gifting is one of the sweetest methods to get closer to loved ones. Purchasing a gift card for a colleague at work or a friend establishes closeness between them. Gift cards like Steam gift cards are ideal for friends who are game lovers while Sephora gift cards are perfect for female friends.

Uses of Gift cards to the Card Users

Gift giving

As humans, it can be quite brain-tasking to choose gifts for every occasion. Normally, getting gifts for people is about the thoughtfulness behind it, not the price. The recipient upon receiving the gift card gets to worry about which gift card is right for them on your behalf.

Money stash

Gift cards are great options to save funds since most of them do not expire. Keeping them in your regular checking account may tempt you to spend.

Buying items anonymously

If you are someone that doesn’t like being exposed, gift cards are perfect for you. Since it doesn’t require you to attach your identity, it’s a loose end. You get to purchase any gift card of your choice, activate and use them.

Advantages of Gift Cards

There are several advantages gift cards offer to users which include:

  • If you do not want to pay with cash or use a credit card, gift cards are a good substitute in such cases.
  • Gift cards are perfect gifts for special occasions and holidays.
  • You get to avoid bank overdrafts as gift cards can be used to control spending.
  • Gift cards are simple and convenient to use.
  • When you are confused about what gift to get your intended, gift cards are ideal as the recipient can use them to get whatever they prefer. However, there are limitations to purchase options for closed-loop gift cards compared to open-loop gift cards.
  • In a country like Nigeria, you can sell gift cards at best rates for instant cash in naira.

Disadvantages of Gift Cards

As you know that there is no good thing without its downsides, and gift cards also have theirs.

  • There are cases where you forget about the small balance on your gift card after making purchases. Such money goes to waste.
  • Closed-loop gift cards limit purchase options.
  • Misplacing a gift card can be a headache, especially if the card number isn’t kept somewhere.
  • Some charges come with not using a gift card i.e inactivity fee.


Do Gift Cards Expire?

Yes, gift cards expire. However, federal law stipulates that a gift card or prepaid card can not expire any earlier than five years from the date of activation but there may be inactivity fees.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), enacted regulations on how credits are issued and how certain credit card companies can charge their users. The regulations help promote the reduction in dormancy and inactivity fees on gift cards.

The rules passed on expiration dates, dormancy, and unforeseen charges are:

  • Dormancy fees are only legal to be charged if the gift card has not been used for a year and above.
  • After the first year, dormancy fees can only be charged once a month.
  • Gift card users must be aware of prominent reasons for fees.

Despite now familiar with the basic regulations guiding gift card expiration, you may realize that a gift card you gave out or bought has expired due to its loss either misplaced or stolen.

To be on the safe side, try to use your gift cards to make purchases as soon as you can. This will guarantee full use of the card’s value. Ensure to always read the terms and conditions that come with your gift cards to know whether there are fees and when they are applied.


Interestingly, federal laws have regulated expiration dates, inactivity, and dormant fees on all gift cards. All the same, ensure to always use your gift cards as you purchase them to get the best out of them.

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