However, the Credit Card Accountability, Responsibility & Disclosure Act, known as the CARD Act, has improved matters for consumers.

The new protective rules apply to "closed loop" gift cards (those from retail stores, restaurants and merchants) and to "open loop" cards (from American Express, MasterCard, Visa and the like).

The good news:

(1) Cards cannot expire in less than 5 years. And, any additional money loaded onto a card is also good for at least 5 years from the date it was added.

(2) Issuers cannot charge an inactivity fee unless the card has not been used for at least 12 consecutive months. (Previously, many issuers deducted inactivity fees from the balance if the card was dormant for a mere 30 days!)

(3) If your card expires and there is still unspent money on it, you can ask for a replacement card at no charge.

(4) Issuers may no longer slap on a fee to replace a card that has been lost or stolen.

Other points to keep in mind:

(5) When a card has been inactive for a year, as stated above, the issuer can legally subtract an inactivity fee from its value. This fee is typically $2.50 per month.

(6) If you purchase a gift card from a credit card issuer or a bank, you probably will be required to pay a purchase fee. In other words, you will wind up shelling out more than the card's face value. Purchase fees range from approximately $3.95 to $6.95.

(7) Retailers and restaurants rarely charge purchase fees, although they legally may do so.

(8) If you give (or receive) a paper gift card or a paper certificate or coupon, say from a local clothing shop, toy store, wine merchant or hair salon, the new CARD Act rules do not apply. So, be sure to read the fine print to find out when it expires. Many expire within months.

Caution...

The CARD Act will not protect you if you purchase or receive a card from a company that goes bankrupt. Unless the company had money in a contingency fund to cover its gift cards (which is highly unlikely), you will not get your money back.

It's more likely that a local restaurant or small shop will fail than a major company, although back in 2008, two very popular firms that specialized in gifts, Sharper Image and Lillian Vernon, went out of business.