DEFINITION of 'Gift Card'

A prepaid payment card that contains a specific amount of money and that anyone can purchase and use, regardless of their credit score. Gift cards can be used for many of the same purposes as credit cards, but because they do not involve taking on debt, they do not require a credit check. Gift cards fill the role that paper gift certificates used to play, but with additional features thanks to improved technology.


There are several types of gift cards. Some can only be used with a single merchant, such as Target or Amazon. Some can be used at any of several stores owned by the same company, such as Gap, Banana Republic, Old Navy and Athleta. Others contain a major credit card company’s logo (e.g., Visa, MasterCard, American Express or Discover) and can be used at any store that accepts these credit cards. Such cards sometimes have activation fees of $5 or so, payable at the time the gift card is purchased, whereas the other two categories of gift cards do not have activation fees. Most gift cards can be used both online and in person.

Some gift cards are reloadable, meaning that additional funds can be added later. Others are not reloadable, so once the balance is spent, they have no further use. Gift cards usually have a minimum and maximum initial loading amount. A common minimum is $10 and a common maximum is $500.

A gift card can be used in several ways. You can use it to pay for part of a purchase. Suppose you want to buy a $50 pair of shoes and you have a $20 gift card. You can put the entire $20 gift card balance toward the total $50 purchase price, then pay the $30 balance with cash, debit or credit. You can also use a gift card to make multiple purchases of less than the gift card amount until you use up the balance. For example, you might use a $30 Amazon gift card to purchase one book for $10, another book for $12, and as partial payment of $8 toward a third book costing $15, where you pay the $7 balance by credit card.

Gift cards are functionally equivalent to cash, and if you lose a gift card or have it stolen, you can lose the entire value of the gift card. However, some gift cards can be registered online and reported lost or stolen, allowing the remaining balance to be frozen and transferred to a new card. In this way, some gift cards are safer than cash.

  1. Open Loop Card

    A credit card, debit card or gift card that a consumer can use ...
  2. Gift

    Property, money or assets that one person transfers to another ...
  3. Gift In Trust

    An indirect bequest of assets to a beneficiary by means of a ...
  4. Credit Card Encryption

    Security measures used to reduce the likelihood of a credit or ...
  5. Annual Exclusion

    The amount of money that may be transferred by gift from one ...
  6. Carding Forum

    A website dedicated to the sharing of stolen credit card numbers. ...
Related Articles
  1. Insights

    3 Best And Worst Gift Cards For 2012

    Here are the gift cards that offer the best deals and those that aren't worth your money.
  2. Investing

    How Safe Are Discounted Gift Card Websites?

    Could you buy a gift card online and find out it's worthless? Here's how to protect yourself (and whether you need to).
  3. Personal Finance

    Top Websites For Discounted Gift Cards

    Gift cards can cost less when you buy them through a discount website. Just do the math before you cough up the cash.
  4. Insights

    Why Retailers Love Gift Cards

    Gift cards have many benefits for retailers compared to cash sales. We'll look at a few of them.
  5. Personal Finance

    Why You Suddenly Can’t Buy Gift Cards

    Fraud liability falls on the party ill-equipped to handle consumers’ chip-and-pin cards. Merchants are scaling back gift card sales to protect themselves.
  6. Personal Finance

    Yes, They Have Gift Cards for 529 Plans

    Gift cards for 529 plans are available online and in some retail locations. They involve fees whereas direct giving does not, but are much more convenient.
  7. Taxes

    What Are Gift Taxes?

    If you're not sure what gift taxes are, read on and we'll explain.
  8. Personal Finance

    Credit, Debit And Charge: Sizing Up The Cards In Your Wallet

    Not all plastic is equal! Learn the difference between the three kinds, and how each can affect your finances.
  9. Personal Finance

    10 Reasons to Use Your Credit Card

    Charging purchases is not always a no-no. In fact, there are some very sound reasons for choosing this option.
  10. Personal Finance

    How Many Credit Cards Should You Have?

    Having several credit cards provides many benefits. Here are a few factors to consider when you’re deciding how many credit cards you need.
  1. What are the pros and cons of digital gift cards (e-gift cards)?

    Examine the pros and cons of gift cards. Learn about protection in case of loss, monitoring spending by teens and wasted ... Read Answer >>
  2. What is the difference between a prepaid credit card and a gift card?

    Although prepaid and gift cards are used in the same manner, a prepaid credit card can be used repeatedly, while a gift card ... Read Answer >>
Trading Center