My husband did work at a friends house, tiling their bathroom and entryway. They just gave him a Thank you card with a gift card inside. Do we need to send them a thank you card for the gift card, or does this start the cycle of a thank you for a thank you?

I think perhaps a phone call would do the job,just to acknowledge the card and gift.

I would say that there is no need for such action. The transaction is complete at this time. Maybe keep them in mind during the holidays, but avoid fruitcake!

I agree with Red - give a call or send an email to acknowledge receipt of the gift card. This way they can be sure you got it.