A gift card that goes unused for a full year can start losing money to fees, but federal rules put tight limits on how that happens. A seller may charge a dormancy, inactivity or service fee only after twelve straight months with no activity on the card. Even then, no more than one such fee can be charged in any calendar month.

The limits are in Regulation E, section 1005.20, the Consumer Financial Protection Bureau’s rule for store gift cards and general-use prepaid cards. They apply to cards bought for personal, family or household use. Plenty of shoppers stash a card, forget it, and later find the balance smaller than the amount printed on the sleeve.

What counts as a year with no use

The rule says a fee is allowed only if there has been no activity on the card “in the one-year period ending on the date on which the fee is imposed,” according to the CFPB’s posted text of the rule. The year is counted backward from the day the fee is charged. A card used in month eleven does not qualify for a fee in month thirteen.

Activity means any action that changes the funds on the card, such as a purchase or a reload. Fees, error corrections, reversals and balance inquiries do not count. That matters for anyone who checks a balance online every few months and assumes it keeps the card alive.

So the question for a person holding an idle card is simple. Has money been spent from it or added to it in the past twelve months? If the answer is no, a fee is possible. If the answer is yes, the clock has been reset and the seller cannot charge a dormancy fee yet.

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One fee a month, and it has to be on the card

The rule sets a second limit. Not more than one dormancy, inactivity or service fee can be imposed in any given calendar month. Commentary to the rule adds that a seller cannot pile up fees across several periods and charge them together to get around that limit.

The fee also has to be spelled out. The card must clearly disclose the amount of the fee, how often it may be charged, and that it may be charged for inactivity. Other fees tied to the card must be described by type, amount or method of calculation, and when they apply. The card must show a toll-free number and, if one exists, a website for fee information.

The federal code carries the same conditions. The Electronic Code of Federal Regulations entry for section 1005.20 lists dormancy, inactivity and service fees among the conditions a seller has to meet. A fee that skips any of them breaks the rule.

Timing deserves a closer look. Say a card was last used in March of one year. A fee cannot be charged until the one-year period ending on the date of the fee has passed with no activity, so the earliest possible charge falls after the following March. Any purchase or reload in between pushes that date back by another full year.

The one-fee-a-month limit works the same way for the buyer’s benefit. Once a seller starts charging, the rule still caps the damage at one fee per calendar month, and each fee must follow the amount and frequency printed on the card. A seller cannot charge a larger or more frequent fee than the card disclosed.

Cards that fall outside the fee limits

Several kinds of card are excluded from the rule. They include cards usable only for telephone services, reloadable cards that are not marketed or labeled as gift cards, loyalty, award or promotional cards, cards not marketed to the general public, paper-only certificates, and cards good only for admission to events at one location.

The reloadable-card exclusion catches many people. A prepaid card bought for everyday spending is not necessarily a gift card in the rule’s eyes. The CFPB’s guide, Unwrapping Gift Cards, published in December 2020, says reloadable prepaid cards follow different rules and may have monthly service fees.

What the CFPB says to do if a fee looks wrong

The guide says federal rules bar inactivity or service charges for 12 months and that after that, fees can reduce the card’s value. It also says a person’s state may offer additional protections. Anyone who believes a seller broke the rules can file a complaint through the CFPB’s online complaint form, or look up answers on its Ask CFPB pages.

Record keeping helps. The guide advises writing down the card number, the security code and the customer service number, and registering the card when possible. A receipt or a screenshot of the balance on a given date makes it easier to show when the last activity happened.

The five-year expiration rule is a separate protection, and it does not stop fees. A card whose money cannot expire for five years can still lose value to a permitted fee after a quiet year. The open question for any idle card is how much is left, and the toll-free number on the back is where that answer starts.

Is a card with a balance sitting in a drawer?

An idle card can lose value one fee at a time, and the same goes for savings nobody asks about. Many seniors pay full price on things that carry a discount for anyone who asks.

Senior Discounts Worth Asking For is a 12-page guide that lists them with who qualifies, what to bring and the exact words to use, including utility rates for seniors, low incomes and medical needs. It adds a savings log to track what asking is worth each year.

Get the senior discounts guide and savings log for costs beyond the idle card →

This article was produced with AI assistance and edited for accuracy against the sources linked above.