If you’re like many Canadians, you have received a gift card or two in recent years. These cards allow you to spend a certain dollar amount at a retail store. You can usually get them right in the store or online. You simply pay the retailer whatever the card is worth. You can use cash, a credit card or debit card.
The big difference between a prepaid credit card and gift card is that you can use a gift card only at the specific retailer whose name is on the card. You can use a prepaid credit card used anywhere that accepts credit cards. Read: What credit card choices do I have?
Gift card rules
There are rules in Ontario about expiry dates and fees on gift cards. These rules apply to most pre-paid gift cards, paper gift certificates and gift cards that can be reloaded. The cards must be bought in Ontario.
Did you know?
- Most gift cards and certificates that have a set dollar value cannot expire. Your gift card keeps its value until you use it, as long as the company that sold it to you is in business.
- The seller of the gift card must clearly disclose or display any conditions or limits on using the card before you buy it.
- Service fees are restricted. You may be charged a fee to customize a gift card or replace it. You cannot be charged an inactivity fee or a fee to reactivate your gift card.
Exceptions not covered under these rules
- Loyalty cards - such as those you use to collect points or rewards.
- Gift certificates for specific goods and services - including spa packages or lessons. These can have an expiry date.
- Free or discount cards - where a gift card is given away or sold at a discount.
- Prepaid phone cards - although companies that provide phone cards must disclose the card’s terms and conditions clearly, in a way that consumers can understand.
- Prepaid credit cards - although they work like gift cards, they are not covered under the same rules.
- Gift cards you buy or receive to support fund-raising - including cards from a charity or non-profit organization.
- Mall cards - which are accepted or may be redeemed at more than one unaffiliated store in a shopping centre. Special rules apply here, including: - Stores at shopping malls can charge dormancy fees on gift cards and other certificates that are redeemable at more than one unaffiliated store. - When purchasing mall gift cards, consumers will pay a maximum one-time activation fee of $1.50. They will enjoy the full value of these cards for up to 18 months. After that, a dormancy fee of up to $2.50 per month kicks in. This reduces the value of the card.
Remember: gift cards are not the same as cash.
Certain rules may apply. Be sure to find out if there are any limits attached to a particular gift card before you buy it.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.