Does Store Credit Expire? State Laws for 2026

Every membership launch reaches the same slide. Someone proposes that unused store credit should expire after 90 days, “to keep members active.” Someone else asks whether that is even legal. Nobody in the room knows.

So, does store credit expire? The honest answer is that it depends on two things: what kind of credit you are issuing, and where your members live. Federal law sets a floor for gift cards. Several states go further. And paid membership credit sits in a gray zone that most guides do not address at all.

This article lays out what the rules say, where membership credit fits, and the policy choices we see brands make. It is a briefing for your legal counsel, not a substitute for one.

Does store credit expire under federal law?

The federal CARD Act of 2009 says a store gift card cannot expire sooner than five years after it was issued or last loaded, and any expiration date must be clearly disclosed. Loyalty, award and promotional cards are explicitly excluded from that five-year minimum.

Nolo’s summary of gift card law confirms the five-year rule and the requirement for a clear and conspicuous disclosure of any expiration term. A 2026 state-by-state guide from Purchy adds the detail that matters most for membership brands: the CARD Act carves out loyalty, award and promotional cards.

That carve-out is where operators get confused. Free credit you hand out as a reward usually falls on the promotional side. Credit a customer paid cash for looks a lot more like a gift card. A paid membership fee that returns as store credit is, economically, cash paid in advance for future purchases.

Whether a court or regulator would treat membership credit as a gift card is not settled in any source we could find. Assume the stricter reading until your counsel tells you otherwise.

Which states have the strictest store credit expiration laws?

California is the strictest. Its Civil Code section 1749.5 makes it unlawful to sell a gift certificate with an expiration date, bans most service and dormancy fees, and requires cash redemption for balances under $10. Montana and Maine are also cited among the strongest protections.

The statute is short and worth reading in full on the California Legislative Information site. A gift certificate sold without an expiration date is valid until redeemed or replaced. LegalClarity’s overview of California gift card law walks through the fee ban and the cash-back rule.

California does allow expiration in narrow cases. Berliner Cohen’s summary lists them, including certificates given for free as part of an awards, loyalty or promotional program. That exception is written for free credit. A member who paid $39 for $39 of credit did not receive anything for free.

Beyond California, the picture varies. The Purchy guide counts fourteen states with gift card rules that go further than the federal floor, and LegallyExplained names California, Montana and Maine as the strongest. State statutes change, so any state-by-state table should be rechecked before you rely on it.

Does membership store credit count as a gift card?

Nobody can give you a universal yes or no. Membership credit is paid for with cash, like a gift card, but it is tied to one customer’s account and governed by membership terms, like store credit. Treat paid credit with gift card caution, and keep free promotional credit clearly separate.

We laid out this distinction from the accounting side in gift card vs. store credit on Shopify. The legal side follows the same line. The more your credit looks like money the customer bought, the more likely gift card rules apply.

Three practical consequences:

1. Do not mix paid membership credit and free bonus credit in one balance. If they are separate, you can apply a shorter expiry to the free portion with far less risk.

2. Write the expiration and inactivity rules into your membership terms and show them at signup, not only in a footer.

3. Check where your members actually are. A brand with 30% of its members in California cannot design its policy around the other 70%.

Writing your membership terms now? Book 30 minutes with our CEO and bring the draft; we will share what other programs chose.

What happens to credit that expires anyway?

In many states it does not simply become your money. Unclaimed property laws can require you to remit dormant prepaid balances to the state after a dormancy period, and in California even an expired, purchased gift certificate can be subject to escheat rather than kept by the retailer.

PwC’s accounting guide flags that escheat obligations vary by jurisdiction and override any breakage estimate. The Law Advocate Group notes that in California, when purchased certificates are rendered valueless, the money reverts to the state rather than the merchant.

That changes the business case for aggressive expiry. If expired credit may end up with the state anyway, a short expiry gives you the customer frustration without the revenue. We explain the accounting consequences in our guide to paid membership store credit accounting.

How should you set a store credit expiration policy for a paid membership?

A 12-month expiry on paid credit is a common choice among the programs we run, usually paired with reminders before anything lapses and sometimes with an inactivity rule that cancels the membership after a long gap. Some brands go further and stop expiring paid credit altogether.

What we see across Subscribfy programs:

• Twelve months is a common expiry on paid credit.

• Inactivity rules are used alongside it, for example cancelling a membership after 12 to 14 months without activity, so dormant members stop being billed.

• Reminders go out before credit lapses. We have written about why expiring credit without a reminder costs more than it saves.

Remember why credit exists in the first place: members treat it as money they own, because they paid for it. An expiry that feels like a trap undoes that.

Subscribfy’s paid membership platform lets you configure credit expiration and inactivity limits per program, and sync credit expiry events to Klaviyo so reminders go out automatically. The legal decision stays with you and your counsel. The tooling should not force one.

If you are writing membership terms right now, book 30 minutes with our CEO and we will walk through what other brands chose and why.

Frequently asked questions

Can store credit expire in California?

Purchased gift certificates generally cannot carry an expiration date under Civil Code section 1749.5. Free promotional or loyalty credit falls under narrower exceptions. Paid membership credit is not clearly addressed, so get a legal opinion before setting an expiry for California members.

Does the CARD Act apply to store credit?

The CARD Act covers gift certificates, store gift cards and general-use prepaid cards, with a five-year minimum before expiration. It excludes loyalty, award and promotional cards. Whether paid membership credit falls inside it depends on how the credit is structured.

Can I charge an inactivity fee on unused store credit?

Federal and state rules restrict dormancy fees on gift cards, and California bans them in most cases. Pausing or cancelling an inactive membership is a different mechanism from charging a fee on the credit balance.

Is 12 months a safe expiration period for membership credit?

It is a common choice among the programs we run, but “common” is not the same as compliant in every state. Your counsel should confirm it against the states where your members live.

Do I have to give cash back for small store credit balances?

California requires cash redemption for gift certificate balances under $10. If your membership credit is treated as a gift certificate, that rule could apply to California members.

This article is general information, not legal advice.