This is a BIG deal! The FDIC today issued an opinion stating that funds on gift cards and other stored value cards are FDIC insured if they are issued by an FDIC insured bank. (article) To my knowledge, there haven’t been any bank failures that have resulted in gift card holders being left out in the cold, but that seems a very likely scenario given the way things are going.

The FDIC further clarified this order (on 11/25/08) after an NPR news story that said the FDIC backing applies to all gift cards. It doesn’t, just to prepaid cards issued by FDIC backed banks.