Gift card balances are covered, FDIC says

Gift card balances are covered, FDIC says
Tags: Payments, Stored Value/ Gift Cards
November 16, 2008

WASHINGTON, D.C. — The Federal Deposit Insurance Corp., the entity that guarantees bank deposits, has issued an opinion stating that funds on gift cards and other stored value cards qualify as deposits and will be covered under FDIC insurance if those funds have been placed at an insured depository institution.

Consumer groups have expressed concern that holders of gift cards would lose out if the retailer that issued the card went bankrupt.

According to the National Retail Federation, gift card sales totaled approximately $26.3 billion in 2007, up six percent compared with $24.8 billion in 2006. Nearly 55 percent of consumers say they would like to receive a gift card as a holiday present.