Avoiding Hidden Gift Card Fees

Avoiding Hidden Gift Card Fees

Kim Pinnelli

by Kim Pinnelli
Senior Contributing Writer

December 29, 2019
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Avoiding Hidden Gift Card Fees

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Don’t ignore the hidden fees charged on gift cards. The fees can eat away at your recipient’s gift or cost you more when you buy them.

Gift cards make great gifts - they are always the perfect size and color. But did you know that many gift cards incur fees both before and after you buy them? Many gift cards have activation fees and inactivity or service fees. Fortunately, no fee gift cards still exist.

Types of Gift Cards

You have two options when buying gift cards:

  • General purpose gift cards (Visa, AMEX, MasterCard)
  • Store gift cards (Target, Walmart, McDonald's, etc.)

Recipients can use general purpose gift cards just about anywhere in the US with the exception of a few places, such as online gambling or online purchases outside of the United States. Always read the fine print to know what’s allowed, but in general, they can be used anywhere that Visa, MasterCard, or AMEX is accepted.

Store gift cards may only be used at the specific store purchased. For example, a Target gift card may only be used at Target or a McDonald’s gift card may only be used at McDonald's.

Which Gift Cards Have Fees?

General purpose gift cards typically have fees, both when you buy the card and after the purchase. 

When you buy the gift card, such as a Visa or MasterCard gift card, you pay a MasterCard or Visa gift card activation fee. The amount depends on the gift card value - the more money you put on the card, the higher the fee. Visa and MasterCard gift cards cost between $2.95 - $6.95 and AMEX gift cards cost $3.95 no matter the balance.

After you pay the activation fee, the recipient may still be subject to fees if they don’t use the card. Only AMEX gift cards don’t carry an inactivity fee. MasterCard and Visa gift card fees add up if you don’t use the card for 12 consecutive months as they charge a monthly inactivity fee. This takes away from the card’s balance. Federal law only allows companies to charge one fee per month, either a service fee or inactivity fee, but not both. 

Store credit cards, rarely have fees and are the top choice for no fee gift cards. This includes activation and inactivity fees. The amount you put on the card is typically what the recipient can spend in the store.


The Credit Card Accountability Responsibility and Disclosure Card Act prohibits gift card expiration for the first five years after issuing it. If the card itself expires before your recipient uses the funds, the issuer must provide a replacement card free of charge. 

Preventing Lost Funds

The best way to prevent lost funds is to use the gift card at least once per year. If you have gift cards you won’t use, check out one of the many gift card trading sites online, allowing you to trade unused cards for those you may prefer.

Gift cards make a great gift, but you should always know what they entail before gifting them. AMEX gift cards have the fewest and lowest fees. They cost the buyer $3.95 for activation, but there are no applicable fees after purchase. AMEX gift cards also don’t expire. If you don’t use the full amount before the card itself is no longer valid, AMEX will issue a replacement card free of charge.