Gift Card Fees: A Complete Guide to Purchasing & Spending Gift Cards

Short answer: nope! You should not pay tax when you purchase a gift card. Gift cards are not considered a taxable good. If you buy taxable goods with a gift card, then tax is paid in that transaction, but gift cards themselves should not be taxed. On occasion, however, cashiers will tax gift cards on accident. Keep that in mind! Make sure to look at the bill to ensure there is no tax on the gift card. 

This article will cover everything you need to know about gift card fees. Tax is one, but prepaid gift cards have additional fees to keep in mind when purchasing those cards. We will also discuss the perfect times to purchase gift cards and how gift cards help businesses. Let’s get to it! 

Understanding gift card fees is essential to making smart purchases and gifts!

Everything You Need to Know About Gift Card Fees

The majority of gift cards do not have gift card fees, and you do not pay tax on gift cards. This is great news! It means that most of the time, you can add, for instance, a $25 gift card to your cart and pay exactly $25 for it. On websites like Gift Card Granny, you can even earn some cashback when you make purchases! 

The notable gift cards that have fees are prepaid Visa and Mastercard gift cards. These powerful prepaid gift cards are redeemable at any store throughout the country. The downside to these cards is the activation and inactivity fees. 

Visa and Mastercard Gift Cards

Prepaid gift cards have an activation fee that you, as the purchaser, should pay for. This is usually only a few dollars, but it does add up if you buy a lot. On top of the activation fee, both cards have dormancy fees that kick in after one year of inactivity. This rarely comes into play, as most people who have had a prepaid gift card for over a year have misplaced it or aren’t going to use it. 

The flexibility of Mastercard and Visa gift cards is what makes them such an amazing gift. If you have a friend or family member and are struggling to pick out a gift card for them, a Visa card can come in handy as they can spend it wherever they wish! The activation fee is only a few dollars, so while it is less efficient than giving them a retailer gift card, you do get to deliver an amazing gift that you know they will enjoy. You can use them in any store that accepts Visa or Mastercards, which is just about every store. You can check your balance whenever you need to and use whatever remains on the card to split a purchase, as long as you have another payment method on hand. 

One downside to these cards is that you cannot reload funds onto them, meaning you have to keep purchasing new cards (and pay the fees) if you use these every month. There is a different card called a Prepaid Mastercard, which lets you load money as you desire. The prepaid card is excellent for budgeting purposes, but prepaid gift cards are superior gifts. 

Gift Cards for Retailers

You do not pay tax on gift cards for specific retailers, and there are no fees associated with their purchase! Retailer gift cards are excellent ways to give fun gifts to friends while evading the stress of picking out a specific gift for the celebration. Gift-giving is hard! There are always people who seem to have everything they need, but a retailer gift card is always welcome! 

Gift cards make wonderful gifts for friends and family! 

When to Buy Gift Cards

Gift cards make wonderful gifts, and you can purchase them for yourself as well! They are excellent reminders to enjoy the goods or services from a particular location. In this section, we will cover the perfect time to purchase gift cards for yourself and when to purchase them for friends and family! 

When to Gift a Gift Card

Gift cards are versatile gifts that are usable in almost any situation. On Gift Card Granny, you can customize gift cards to hundreds of retailers to wish friends and family well and celebrate any situation. A monetary gift goes a long way for many who might not need specific items, especially Visa and Mastercard gift cards, which can be spent doing something fun or on something practical like groceries or gas. 

The holidays, for instance, are an unfortunate cause of stress for many people because of how hard it is to create a budget when considering all the gifts they need to purchase. If you give a gift card, it helps them alleviate the strain on their budget at the end of the year and lets them stay in a merry and festive mood!

Best Places to Buy a Gift Card

Gift cards are fantastic gifts, but it can be hard to narrow down the many options to pick out the right one for friends and family! In this section, we will outline some classic categories of gift cards to help you cultivate a list of retailers as you search for the perfect gift. 

A Gourmet Home-Cooked Meal

We will start this list off with a classic. Food! Buying a food-related gift card is a great way to spend it on something special. Cooks appreciate this category, and it is about giving them a little extra money on their grocery bill to go all out on their next grocery run. There are recipes out there that sound phenomenal, but a combination of ingredient cost and prep time take them out of the running for a normal week’s meal. The arrival of this gift card signals the time for a fun and exciting week of grocery shopping. 

If the recipient is not a cook, but you want to go the food route, this gift card could go towards snacks! You can get a gift card to their local grocery store or a Visa prepaid card. They have tons of options when it comes to finding the perfect place to pick up some snacks and treats. 

Next to this is, of course, restaurants! Going out to eat, perhaps to the Cheesecake Factory, is a common and fun pastime, and you can recommend a new restaurant or get them a gift card for one of their favorites. 

Clothes Shopping

Clothes are expensive. Clothes shopping can quickly turn into a chore whenever you need something new, made doubly worse if an old staple either gets ruined or gets a bit too well-worn to justify wearing it more. A gift card to Old Navy, Banana Republic, or a similar store is a great way to send some morale support as they get some new gear. If you aren’t sure about their favorite place, a Visa gift card works at every single one of those stores. Sometimes, you need to shop around at a few different places before finding the right item. 

The flexibility of a prepaid Visa gift card is second to none. Since Visa gift cards work anywhere, you can rest easy knowing that you can shop to your heart’s content at any place you desire and pick out some nice items there. 


Going out for drinks with friends (alcoholic or non-alcoholic) gets expensive pretty quickly. People who go to Starbucks every day spend around $20 a week. That expense adds up. Because of this expense, there are a lot of people who shy away from exciting coffee drinks at local cafes. 

A gift card for a cafe is a great way to enjoy a special treat alone or with friends. We love gift cards for something slightly unusual that makes any day special. This also applies to going out for a drink with friends on the weekends or after work. Happy hour drinks are even happier when you use a gift card on them. 

Gift cards are an excellent way to support local businesses. Grab a gift card to your favorite places to show your friends! 

Are Gift Cards Good for Businesses? 

Yes! Although we wouldn’t blame you for not thinking of gift cards beyond a simple gift. Gift cards help businesses count on expenses, as they are expenses now with the promise of a future purchase. And, alas, there are a lot of gift cards purchased that never get spent. People misplace or forget about the cards, which, while unfortunate for the customer, is great for the business. 

Corporations and retailers generate a lot of profit from gift card purchases, and gift cards can be just as important for the success of small businesses as well. It’s easy to go with big-name brands by default when shopping for gift cards, but local small businesses benefit much more with gift card purchases, as it helps them figure out earnings and revenue in advance. This section will break down how gift cards help businesses and why they are great gifts for friends and family! 

They Generate Revenue 

All companies must generate revenue to continue long-term operations. Offering gift cards is an excellent way for businesses to generate additional revenue, as customers can purchase gift cards to give as gifts or spend themselves.  

Draw in New Customers

Growing a customer base is an incredibly challenging task. Gift cards provide a wonderful way to get the word out about your business and draw in new customers. Gift cards of any amount gifted to friends and family provide a great incentive for them to try out the new place. 

Increase Brand Loyalty 

Purchasing gift cards are often a sign that the customer really likes the business. When they purchase a gift card, it means they like it a lot — enough to send someone else in! Since most gift cards are locked to specific retailers, a gift card purchase guarantees more sales in the future, which is something all businesses love to see. 

Repeat customers are integral parts of running a successful business. Returning customers make up a majority of sales for many businesses, and it is more expensive to attract a brand-new customer than it is to keep a preexisting one. A gift card reward can be just the thing to make customers feel appreciated while increasing sales at a business. 

We hope that this article has helped you understand gift card fees and inspired you to find some awesome gift cards for friends, family, and yourself! 

Earn Cash Back On Gift Cards with Gift Card Granny

As a quick reminder, we’ve pointed out all of the retailers on this list that you can find on Gift Card Granny as of this writing. Gift Card Granny makes it easy to buy and send customized gift cards online and earn cash back while you do. Gift Card Granny carries thousands of local and national brands, including Visa gift cards, Mastercard gift cards, and gift cards for many of the awesome spots on this list.

Text eGift Cards on GiftYa

Another popular gift-giving site is GiftYa, which also offers customizable eGift cards! GiftYa lets you add custom photos or videos to all your gifts in the form of a virtual gift wrapper. A GiftYa can be sent by text or email, so the gift is always delivered within minutes. You can also schedule the gift to be sent on a specific date, such as a birthday or holiday. With over 16,000 local merchants and 280 national merchants usable at over 230k locations across the US, you can find the perfect gift for anyone!

All You Need to Know About Gift Card Fees

We hope this article has answered all your questions about gift card fees! To sum it up, gift cards to retailers do not have fees, and you do not pay tax on gift cards. Prepaid Visa and Mastercard gift cards, however, have an activation fee that comes along with the card, which you should pay before you gift it to friends and family!