Gift card laws in the United States can be confusing because there are only a few overarching federal regulations, leaving states to establish their own rules through local consumer advocates and legislatures. According to my research, only 14 states or territories have specific "cash out" laws that allow consumers to get small remaining balances for cash--ensuring you get the full value of every gift card redeemed.
Here's what you need to know about state gift card cash-out laws and a state-by-state breakdown of gift card cash-out laws to help you understand your rights and make informed decisions.
Understanding State Cash Out Laws
In the U.S., each state has the autonomy to establish its own regulations controlling the redemption of gift cards for cash. These laws typically come into play when a gift card's balance dips below a specified threshold, such as when a consumer uses most of the card's value on purchases and has only a tiny residual amount left—like $1.14 or $0.78.
Instead of the inconvenience of retaining a low-balance card for future use or leaving the leftover amount to the business (a phenomenon known as breakage), these laws enable consumers to redeem the remaining value in a more practical form, currently as cash.
I like these laws because they ensure that consumers can easily use the total value of their gift cards—the amount spent by the giver. However, it's worth noting that only 14 states have implemented such regulations, and the thresholds for cash redemption vary widely. (I don't like that part.)
From as little as $1 in Rhode Island to $10 in California, the range is vast, and so are the qualifiers. For example, in Massachusetts, consumers can cash out when either $5 or 10% or less of the original value remains on the gift card. For instance, a Massachusetts consumer could request cash back when the balance is $10 or less if the card initially held $100, or $2.50 or less if the card started with $25. However, since any remaining balance of $5 or less qualifies regardless of the initial amount, a consumer with a $25 gift card could also request cash back once the balance drops to $5 or less.
Previously, Connecticut's cash-out threshold was $3, and there was a significant caveat: consumers needed to provide a purchase receipt to cash out. Considering that gift cards are often received as gifts, it was unlikely that many recipients would have access to the original purchase receipt. However, a recent legislative update increased the cash-out threshold to $5 and eliminated the requirement for a purchase receipt, making it more convenient for consumers to redeem their gift cards. (Yay!)
In Maine, you can only request a cash-out in person, which must be implied with other states since I've never seen an online checkout process that allows you to cash out the small amount left on a gift card. Of course, the store can't hand you cash remotely, but even a bank card, ACH, or other refund solution would be complicated for the few pennies due. Even The Home Depot Gift Card Settlement in California only requires that the company update its cash-disbursing registers to automatically give cash back for gift cards with balances of less than ten dollars, but does not mention online shopping.
In any case, let's move on to the MOST important thing consumers need to know about gift card cash-out laws.
Your State Matters
Currently, only 14 states and territories in the U.S. have gift card cash-out laws. The good news is that you don't need to memorize all of them. You only need to know the rules for your state—or where the gift card recipient resides.
Below, is a list of the gift card cash-out laws for each state, along with a link to the specific regulations:
List of State Gift Card Cash-Out Laws
STATE | THRESHOLD | STATE GIFT CARD CASH-OUT LAW |
|---|---|---|
California | Less than $10 | You are entitled to cash back if your gift card balance is less than $10. This rule applies only to store-specific gift cards and not to bank-issued cards like Visa or Mastercard gift cards. |
Colorado | $5 or Less | In Colorado, any gift card with a remaining value of $5 or less may be cashed out, excluding prepaid phone cards, promotional cards, and bank-issued cards. |
Connecticut | Less than $5 | In Connecticut, consumers can request cash for gift cards if the balance is below $5, excluding general-use prepaid cards, promotional or loyalty cards, gift certificates donated or sold at a discount for charity, linked prepaid cards, and other specific exceptions. |
Maine | Less than $5 | In Maine, if a gift card is redeemed in person and less than $5 remains, the merchant must refund the balance in cash upon the consumer's request, except for prepaid telephone service cards, gift cards initially valued at $5 or less, promotional gift cards, and prefunded bank cards. |
Massachusetts | $5 or Less | In Massachusetts, consumers have the right to cash out gift certificates if they have been redeemed for at least 90% of their face value, or if the remaining balance is $5 or less, depending on whether the certificate allows for additional value to be added. |
Montana | Less than $5 | In Montana, gift cards originally purchased for more than $5 can be cashed out when the balance drops below $5, except for prepaid telecommunications and technology cards, and coupons from award, loyalty, or promotional programs without monetary exchange. |
New Jersey | $5 or Less | In New Jersey, consumers can redeem for cash any remaining balance on a gift card if it's $5 or less. However, this rule does not apply to bank-issued gift cards that can be used at multiple retailers or ATMs. |
New York | Less than $5 | In New York, consumers can redeem gift cards and certificates for cash if the remaining balance is less than $5, except for promotional gift cards and certificates or those subject to other specific exclusions. |
Oregon | Less than $5 | In Oregon, consumers can redeem gift cards for cash if the remaining balance is less than $5 and the card has been used for at least one purchase. This rule does not apply to promotional or donated gift cards, those issued by telecommunications services, or cards redeemed to an online account." |
Puerto Rico | $5 or Less | In Puerto Rico, consumers can claim cash for gift card balances of $5 or less. This rule does not apply to paper certificates, prepaid telecommunication cards, open circuit gift cards, rechargeable cards not marketed as gift cards, promotional program cards, or gift cards issued or administered by a bank. |
Rhode Island | Less than $1 | In Rhode Island, consumers can redeem gift cards for cash if the remaining balance is less than $1. This rule does not apply to promotional gift cards, prepaid wireless telephone cards, or gift cards issued by financial institutions or third-party issuers usable at multiple, unaffiliated merchants. |
Texas | Less than $2.50 | In Texas, consumers can request cash for gift cards if the remaining balance is less than $2.50 and the card is redeemed in person. This rule does not apply to gift cards issued by financial institutions, prepaid calling cards, promotional cards, cards with an initial value of $5 or less, or cards issued as a refund for merchandise returned without a receipt. |
Vermont | Less than $1 | In Vermont, consumers can redeem the remaining balance of a gift certificate for cash if it is less than $1. This rule does not apply to loyalty, award, or promotional gift certificates, prepaid calling cards, seasonal passes, or payroll cards. |
Washington | Less than $5 | In Washington, if the remaining balance of a gift certificate is less than $5 after a purchase, the gift certificate must be redeemable in cash upon the bearer's request. |
Let's Harmonize and SAVE!
Here's an idea.
Navigating gift card laws requires knowledge of the specific regulations in your state. Having lived in California for many years, I noticed that while many cashiers know the cash-out law, they often need managerial help to process these transactions. The lack of training suggests that cash-out requests are infrequent and that retailers don't expect customers to assert this right. But as The Home Depot lawsuit settlement shows, that can't be the norm going forward--the company must now program its point-of-sale system to automatically cash out gift cards that fall below the California threshold of $10. Will other retailers have to do the same? At what cost?
So, I have to ask the question (again).
Why must each state grapple with these issues independently? The legal and financial burdens of addressing gift card laws state by state are substantial, involving costly lawsuits and legislative efforts. A uniform national policy on gift card cash-outs could streamline this process, reducing legal costs and providing clarity for consumers and retailers.
Moreover, a positive gift card experience goes beyond the transactional value. When consumers use gift cards happily and without hassle, their overall satisfaction can lead to more consumer engagements with the merchant.
It is my firm belief—and one I will continue to champion—that the long-term benefits of enhancing the consumer's gift card experience far outweigh the short-term gains from retaining small balances. A uniform cash-out threshold, applicable across all states, could simplify the system, benefit consumers, and ultimately be more advantageous for retailers.
As a former California girl, I vote for a $10 threshold nationwide.
Wrapping It Up: Keep it Simple
As I conclude, I want to highlight that this discussion falls under the "easy to use" pillar of my three core principles for gift card reform. The current state-by-state legal landscape clearly shows that not only consumers but also many businesses—and perhaps even legislators—struggle to keep up with the nuances of gift card laws until issues are forcibly brought to attention.
The fragmented nature of these regulations leads to consumer confusion and, ultimately, to gift cards that go unused or underused, representing lost opportunities for both consumers and businesses.
That's why I am calling for the gift card industry to come together to forge a consumer-first approach. We need a consistent, nationwide gift card program that exceeds the current legal requirements and truly prioritizes consumer needs. Such an initiative would not only simplify the use of gift cards but also enhance the consumer experience, ensuring that gift cards are truly beneficial for everyone involved. As we move towards clarity, simplicity, and reliability in how we manage and use gift cards, we can ensure the gift card industry serves the best interests of consumers and businesses nationwide.
Are you with me?
Happy gifting!
Shelley Hunter, Consumer Guide to Gift Cards
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