A store gift card spends only at that retailer. A network-branded card can spend wherever its payment network is accepted, if the card's own terms allow it. Neither one is cash, and neither one is a safe way to pay someone who contacted you out of the blue.

If you're buying one in the United States, use an authorized seller. Look at the packaging before you pay. Keep the receipt. Check the balance on the issuer's own website, app, or printed phone number. Don't read the card number or PIN to anyone who reached you by phone, text, or email.

How gift cards work

The issuer records a dollar amount against a card number, barcode, account, or digital code. Activation ties that identifier to the loaded funds. At checkout, the merchant verifies the card and subtracts the purchase from what's left.

Use still depends on more than the face value:

• The retailer or payment network that issued it
• Whether it works in-store, online, or both
• Geographic, currency, account, or product limits
• Fees, expiration language, and replacement rules
• Whether the merchant will take split payments or leftover balances

A $50 store card usually covers eligible purchases at that store until the balance hits zero. A $50 network-branded prepaid card can travel farther, but it may carry an activation fee, refuse certain transaction types, or get declined at a merchant that doesn't like prepaid.

Gift card types

Store-specific cards, often called closed-loop, work at the retailer, restaurant, or affiliated businesses named on the card. Some also work on the merchant's website or app. They're a good fit when you already know where the recipient shops. Check country, brand, website, and franchise limits before you buy.

Need more flexibility? Cards with a payment network logo, such as Visa or Mastercard, are meant for participating merchants on that network. The logo is not a promise of "accepted everywhere." A charge can fail because of the card's terms, a merchant policy, a temporary authorization hold, or a country restriction. Recurring subscriptions, hotel or car-rental deposits, automated fuel-pump charges, ATM withdrawals, and transactions outside the country of issue are common weak spots. Read the issuer's terms rather than trusting the logo.

Digital cards arrive by email, text, app, or an online account. There's no shipping, which helps when you need the code quickly, but the email account or app becomes part of the security chain. After redemption, some digital cards lock to a specific account and can't be transferred. Treat the code like cash. Don't post it in a chat, screenshot, or social post unless you're sure both the recipient and the delivery channel are secure.

Plastic is useful when you want something to hand over. It can also be lost, stolen, or tampered with on the rack. Many physical cards still need activation at the register or through the issuer's site or phone system. Digital and physical versions can be the same product. Delivery format doesn't change the merchant's restrictions or the law that applies.

Choosing the right gift card

The cheapest-looking card isn't always the most useful. Fees or a narrow merchant list can leave the recipient with less spending power than the face value suggests.

How to buy a gift card safely

Buy directly from the retailer, a reputable store, or the issuer's official website. Resale marketplaces and unusually steep discounts deserve extra caution.

Don't buy a card if the protective covering is loose, the number is showing, or the PIN looks scratched or altered. The FDIC's consumer guidance recommends checking the card and reading its fine print.

Look for activation or purchase fees, expiration information, online or in-store limits, country restrictions, and lost-card procedures. Save the receipt, order confirmation, and delivery email until the balance is gone. Issuers often want proof of purchase when something goes wrong.

Confirm that the loaded value matches what you paid. For a digital card, check the recipient's email address before you send it. Never send the number and PIN to a person who calls, texts, or emails asking for payment.

If a card looks tampered with, don't try to "test" it by uncovering the PIN. Take it to the retailer's customer-service desk and ask how to report it.

How to activate, check, and redeem a gift card

Follow the instructions printed on the card or included with the digital delivery. Many physical cards activate at the register; some need an online or phone step. Digital cards may activate at purchase or when they're added to an eligible account.

Keep the purchase record with the amount and activation details. If the card fails, go back to the issuer or retailer through an official support channel, not a phone number from an unsolicited message.

For a balance check, use the issuer's website or app, the phone number printed on the card or official packaging, the retailer's customer-service desk, or checkout when that's offered. Don't search for a balance-check page and type the card number into the first result. Scammers clone retailer sites. Type the official address yourself or use the verified app.

Online, enter the card number or add the digital card to the merchant account as instructed. In a store, present the barcode or plastic at checkout. If the bill is larger than the remaining value, ask whether the merchant takes split tender. Some will combine a gift card with another payment method; others won't. Small leftover balances usually stay on the card. Don't assume they convert to cash.

Hold onto the card or digital record until the charge has cleared and any return window has closed.

Do gift cards expire in the United States?

Sometimes. For most covered gift cards sold in the U.S., federal rules generally keep the funds from expiring for at least five years after the card was issued or the funds were last loaded, whichever is later. That doesn't mean every card works forever, or that every prepaid product gets the same protection.

The plastic card or digital code is not the same thing as the underlying funds. The access device may still show an expiration date. If that date is close, contact the issuer and ask how any remaining balance can be accessed or replaced.

Promotional, loyalty, reward, and certain other prepaid products may fall outside the usual rules. Read the terms that came with the card instead of assuming the standard protections apply.

Fees and state rules

Some cards disclose purchase, replacement, or inactivity fees. Federal rules put conditions on certain fees for covered cards, but the details depend on the product and its disclosures.

States can add their own rules on expiration dates, inactivity fees, cash redemption of small balances, abandoned-balance reporting, and disclosures. There isn't one national three-year or five-year rule for every state issue. The NCSL overview of gift card statutes is a starting point for those variations.

Unclaimed-property rules are separate from expiration. After a stretch of inactivity, an issuer may have to report or transfer certain balances to a state. That doesn't always mean the money is gone for good. Check the relevant state's unclaimed-property program; the TreasuryDirect unclaimed money guidance explains how those programs fit into a search.

If an issuer says a balance has expired, ask for the specific term, the date it applied, and any replacement or claim process. Keep that response with your purchase records if you need to take the issue to a state consumer-protection or unclaimed-property office.

What to do if a gift card is lost or stolen

Contact the issuer immediately through its official website or the number printed on the card. Have the card number, receipt, purchase date, and remaining balance ready if you still have them.

Ask whether the issuer can freeze what's left, replace the card or digital code, review unauthorized charges, return some or all remaining value, and explain any replacement fee or paperwork. Recovery isn't guaranteed. The FDIC advises consumers to report lost or stolen cards because an issuer may still return some or all of the remaining money, sometimes with a fee.

If you bought the card with a credit or debit account, notify that payment provider too. That review is separate from the gift card issuer's process, and reporting the purchase doesn't guarantee a refund.

Gift card scams and warning signs

A gift card pays the merchant named on it. It isn't a normal way to pay a government agency, utility, employer, law-enforcement officer, or stranger.

Scam messages arrive by phone, text, email, or social media. The story changes: unpaid taxes, a utility bill, a fine, an emergency, a relative in trouble, a prize that needs a fee first, a computer or bank account at risk, a buyer or employer who needs the numbers to finish a deal.

Urgency is usually the tell. The scammer names a retailer, a denomination, and a deadline, then wants you to read the number and PIN or send a photo of the card. The FTC's gift card scam guidance explains why that request is a scam.

If you already bought or shared the card

Stop communicating with the scammer. Don't buy more cards, and don't pay anyone who promises to recover the money.

Contact the gift card issuer immediately and ask whether it can freeze the balance or open a fraud review. Provide the receipt, card number, transaction details, messages, phone numbers, email addresses, and any screenshots they request.

Notify the bank, credit union, or card provider you used to buy the gift card. Report the incident using the FTC's instructions in its guidance for people who have been scammed. If a digital account or email was exposed, change those passwords and watch related accounts.

The funds may already be gone. Fast reporting still gives the issuer the best chance to stop whatever hasn't been spent.

Are gift cards taxable?

It depends on who gives the card and why.

A card from one private individual to another is generally a personal gift, not wages or payment for services. It shouldn't be handled like an employee reward or contractor payment.

For federal tax purposes, an employer-provided gift card is generally a cash equivalent. It usually does not qualify for the IRS de minimis fringe-benefit exclusion, even when the amount is small. The IRS guidance on de minimis fringe benefits distinguishes cash and cash equivalents from occasional noncash benefits.

When the card is taxable, the value generally belongs in the employee's wages and may be subject to withholding and reporting on Form W-2. There is no general $100 safe harbor that makes an employee gift card tax-free. Employers should confirm treatment with their payroll provider or tax adviser, especially when a card is labeled as an award, incentive, or recognition payment.

Buying gift cards for employees or groups

If you're handing cards to a team, club, or event attendees, use an authorized business purchasing channel. Record the purchase date, denomination, card numbers, and recipient list securely. Confirm delivery addresses and account requirements before sending digital cards. Give recipients the issuer's terms and support information, and check whether fees, geographic limits, or expiration terms make the card impractical.

Ask payroll or a tax adviser about employee reporting before you distribute anything. Bulk buying doesn't remove the need to protect card codes or chase a failed delivery. Treat the card list as sensitive financial information.

Using a U.S. gift card abroad

A U.S.-issued card may not work in another country, even with a widely accepted payment-network logo. Currency conversion, merchant location, account region, online-store settings, and issuer terms can all block a charge.

Before you buy for someone overseas, confirm the card is sold for the recipient's country or currency, the merchant's website takes orders from that location, the recipient can use it without a local account, foreign-transaction or conversion terms are disclosed, and customer support can handle a cross-border problem.

The legal information above is U.S.-focused. A card purchased or issued outside the United States may follow different consumer and tax rules.

Common questions

Can I use a store gift card anywhere?

Usually not. A store-specific card normally works only at the named retailer, restaurant, or affiliated locations. A network-branded card may travel farther, but the card's terms and the merchant's payment system still decide.

Can I turn a gift card into cash?

Not automatically. Cash redemption, small-balance refunds, and buyback options depend on the issuer, merchant policy, and sometimes state law. Ask before you buy if cash access matters.

What should I do if a card's PIN was exposed?

Don't use or share it. Contact the retailer or issuer immediately, keep the packaging and receipt, and ask whether the card can be canceled or replaced.

Is a gift card under $100 tax-free for an employee?

Generally, no. Gift cards are usually cash equivalents for employee tax purposes, so the amount may be taxable even when it's small.

What is the first step after a scammer receives the code?

Call the gift card issuer immediately through an official channel and request a fraud review. Then notify the payment provider and report the scam to the FTC. Keep every receipt and message.

If the card is still unspent, check the balance on the issuer's official site or the number printed on the card, and keep the purchase record with it until the last of the value is used.