Traditionally offered by businesses, gift cards serve as an alternative form of payment that enables customers to buy a specific dollar amount of good or services, in accordance with the pre-paid fund total already on the card. Sold in varying increments – typically no less than $5 – gift cards function similarly to credit cards, but do not require repayment. Once the balance has been exhausted, it’s generally no longer accepted by the merchant that originally distributed it. Additionally, gift cards may be accepted by multiple retailers, depending upon the type and terms and agreements that may or may not be listed on the back of the card.
In 2009, President Barack Obama signed into federal law a bill passed by Congress, called the Credit Card Accountability Responsibility and Disclosure Act, or CARD. The legislation stipulates that gift cards must be honored for no less than five years after they were initially sold or activated. Many merchants, however, place no limit on the length of time in which gift cards are redeemable.