The pros and cons of gift cards
There’s always a lot of fuss this time a year about gift cards. Some people love them, and some people hate them. I’m sort of in the middle.
- On the one hand, I continue to believe that anything a big company wants you to purchase is probably not in your best interest. That is, if a mega-corporation is all fired up to sell gift cards, you can bet they’re a profit center, which probably means they’re rigged against consumers.
- On the other hand, gift cards are convenient. They’re easy to give, and they’re generally easy to use. There are many circumstances in which gift cards make great gifts.
Related >> Discounted Gift Cards: The New Coupon
I like to receive gift cards for certain stores. Over the past year, for example, I’ve accumulated $185 in Land’s End gift cards, and I wouldn’t be surprised to receive more this Christmas. I haven’t used any of them yet, though I’ve checked to be sure I’m not going to get dinged because of it. Sometime this spring, after my birthday, I’m going to have an on-line shopping spree — and it won’t cost me a dime.
Still, the critics have some valid complaints.
The Problems With Gift Cards
Last week, my cousin reminded me of a gift card that Kris and I gave him a couple years ago. “It was a nice gesture,” he said, “and I know you meant well, but it’s not anything I’ll ever use. It’s been sitting on the kitchen counter for two years, and will probably be sitting there two years from now.”
That’s one problem with gift cards — here are some others:
- They expire. Some gift cards carry an expiration date. The recipient must use the card within a certain amount of time, or the card becomes unusable.
- They have fees. Some gift cards — especially those issued by banks — carry fees for various events. Some even charge to use the card. (In August, Tim shared how a gift card from Bank of America carried fees for checking the balance.)
- They can be difficult to use. Did you buy a CompUSA gift card for somebody this Christmas? Oops. CompUSA is going out of business — suddenly there’s a very real deadline to use that card. And what if you buy a gift card for somebody but the store doesn’t do business where the recipient lives? Not all gift cards are convenient.
- They carry an obligation. When you give a tie to your father, there’s nothing else he has to do use the gift. But when you give a gift card, your father must go to the store to use it. This often means that he has to spend additional money to find something he likes. Gift cards can force the recipient to spend money on his own gift!
Because of the potential problems, the U.S. Federal Trade Commission has issued a consumer alert on buying, giving, and using gift cards.
Using Gift Cards Wisely
Despite the naysayers, Americans love gift cards. They love to give them, and they love to receive them. According to the December 2007 issue of the Consumer Reports Money Advisor, last year gift cards were the second-most popular gift to give. They were also the gift that women most wanted to receive. (They were number three on the list for men.)
According to both FTC and Money Advisor, there are few simple steps that gift card recipients can take to minimize potential problems:
- Read the terms and conditions when you receive the card so that you understand your rights.
- Register your card if it instructs you to do so. This gives you protection if the card is lost or stolen.
- Use the card as soon as possible. Unless you know that the card has no hidden fees or expiration date, make it a priority to use it. If you wait, you may be in for a nasty surprise.
- Report problems either to the company that issued the card, or to the Federal Trade Commission, whichever is appropriate for your circumstance.
Related >> Picking the right high-yield savings
The FTC also notes:
If your card expires before you’ve had a chance to use it or exhaust its value, contact the issuer. They may extend the date, although they may charge a fee to do it. Some merchants have stopped charging inactivity fees or imposing expiration dates, so it pays to check with the issuer to make sure you’ve got the most up-to-date information.
When giving gift cards, always include a copy of the receipt. Some card issuers require a receipt to replace a lost or stolen card. Also, do your best to research possible hidden fees or other nuisances (such as expiration dates).
Further Reading
Blogger Lazy Man recently explained why he buys gift cards. He thinks it’s more acceptable to give a gift card than money, likes that recipients can pick their own gifts, and is happy that he can save a little cash when buying them. Jim at Blueprint for Financial Prosperity, on the other hand, doesn’t like them. Finally, Liz Pulliam Weston says that gift cards are not gifts.
Become A Money Boss And Join 15,000 Others
Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)
There are 69 comments to "The pros and cons of gift cards".
I don’t like the idea of tying up money with a certain gift card and a certain company, but for some reason gift cards seem to be more acceptable as a gift than cash. How did that happen?
Personally, I’d rather receive cash, but my family and friends at least know me well enough to give me a gift card for a store I go to regularly. That way I can use it quickly and it’s a nice little bonus.
Another problem with gift cards (and a reason I’m sure that retailers love them): what about that last $4.32 or whatever you have on the gift card after buying what you want? Not using it would be like throwing away money, but you’re never going to use up a gift card exactly, so you’ll end up spending more money.
I hate shopping, so I hate when someone gives me a gift card because I have to leave my house and deal with other people (ha ha). I have never received cash as a gift for Christmas. If someone is willing to get me a gift, they should know what I like. Most gift cards are wasted on me and I hate giving them. I would prefer someone regift something that I gave them, than buy junk that they don’t need because I forced them to go to a store and use a gift card.
I have had many gift cards expire because of inactivity. They are a total crock.
Oh, I don’t know. Real gifts are the best, but if it’s between cash and a gift card, I’ll take a gift card any day. If you give me cash, I’ll feel obligated to spend it on bills or something practical; gift cards are more fun and thus more of a gift. Call me irresponsible. =)
I decided that I wasn’t going to be giving gift cards this year, so I told people on my list that they either had to give me some clues as to an actual item or I would be giving straight cash. I wonder if I’m more comfortable with this because I’m Chinese and used to getting cash for holidays like Chinese New Year…
Give me cash. Gift cards only limit my options. I can’t believe how stupid those things are. It really blows my mind that people buy those things. You have to be completely brainwashed by Christmas! Ugh.
I buy a lot of clothes from Land’s End myself, J.D., as their styles are classic and built to last. $20.00 is nothing for a polo shirt that will last 7 years and certainly not go out of style. And yes, they’re great for catalog shopping and online shopping, but don’t forget that Sears bought Land’s End several years ago. That’s why Sears always has a Land’s End section in their stores. And what’s really great is ANYTHING you order from Land’s End that doesn’t work out can be returned right away to Sears. If you like Land’s End, you’d also probably like my all-time fave clothing store — L.L. Bean. However, unlike Land’s End, the only kind of showroom for Bean’s stuff is in Freeport, Maine, so everything has to be ordred through a catalog or online, unless you’re making a trip back east.
I like giving gift cards, and I like receiving them. If I was given money in a card, I probably would use it for something boring. I need some new clothes, so if I get a gift card for my favourite store, I know I will spend that on clothes instead of say, groceries, or a cab ride (which I often need during the holidays if I’m travelling by bus).
I’ve never had any problems with the cards, and make sure to give them knowing they can be used.
I think at least part of the mega-corporation’s infatuation with gift cards is due to the decreased number of possible returns of unwanted gifts after the holidays. Although I’m sure they are also a cash cow for the reasons listed above, the corporations are not completely out to get us all with gift card sales.
One of the best uses for a gift card is as a thank you/recognition gift. Especially for teachers, bus drivers, and other people who touch your lives but aren’t close friends or family. I know several teachers who prefer gift cards to another coffee mug or pen set.
What about those hard to shop for people? A gift card to their favorite restaurant is a great solution.
While I wouldn’t use a gift card for a close friend or family member, sometimes you want to give a gift to someone you aren’t as close to. With so many people wanting (or needing) to declutter their homes, don’t buy something to add to the mess unless you know they will really love it or need it.
Gift cards are nice in some circumstances. For our wedding, we received a ton of Target gift cards. We were registered at Target, and I guess people figured we could use the cards to get things leftover on our registry.
We did. An added bonus, we got our new things after we moved to our new city–so we didn’t have to move the items.
For things like birthdays or Christmas, it’s nice getting gift cards to a store or restaurant that we’ll actually go to.
Some people are more offended by a gift of money than a gift card. I find that strange. I’d rather get the money.
Well, I don’t mind when I receive gift cards.
For me personally, they are a pain to use. I have a money clip, so I don’t carry arround excess giftcards, therefore I never remember to use them. (I normally forget about them after a month).
I end up giving them to my wife who IS able to use them and/or remember she has them.
But GIVING gift cards, ugh what a pain. Just this weekend we had a christmas party with family, my wife and i decided to get a giftcard for our teenage niece.
Being a smarty-pants, I decided we should get her an AMEX giftcard so she isn’t bound to just one store. We planned to give her $20. Well it turns out, they come in $25, $50, $100 increments (at least at publix and walgreens the two places we checked on our way to the party). So the $25 card was already increasing the price of the gift. When we get to the check out counter there’s a $3 activation fee. It’s now cost us $8 more than we planned to spend, and $3 of it isn’t going to our niece.
Add in an xmas card and it has now cost us $30 to give a gift we had planned to spend $20 on.
Now, not all of this is the gift card company’s fault. I could have given straight cash. I was in a rush. But they did profit from my lack of planning…
I’d rather have cash, or a check any day (or holiday) of the week.
I just wanted to let you know that you can frequently get 90-105% of the cash value of a gift card on ebay. For example, and here.
From what I’ve read, disabled people use these to shop online at their various websites.
Too bad there is such a stigma with giving gift cards and cash. They’re really the best gifts usually because the recipient gets to choose what he or she truly wants.
RIP CompUSA
-Raymond
I generally dislike gift cards as well, but think they can be a good gift in limited circumstances. Your example of giving a gift card to your father instead of a tie is a good example. My father hates to shop, so a gift card would be like a burden. But for a teenager who loves to shop and doesn’t have much spending money, a gift card is a great gift–you’re giving not just the items the teenager purchases, but the shopping experience itself. Similarly, if you know someone who loves to hang out at a coffeeshop, a gift card is a good way to give that experience.
I think a nice, heart felt, hand written note and some cash beats a gift card hands down, no questions asked, any day. It’s easier to use, it provides flexibility and it never expires. As long as you take the time you write a nice note to accompany it, I don’t think cash is too “cold” at all.
Just wanted to note about the cards that are charging fees and/or have expiration dates – you should check to see if this is illegal in your state.
In Maryland, card issuers are not allowed to charge inactive/late fees, and gift cards or certificates are never allowed to expire. Granted, this only works if the card was *purchased* in the state making those things illegal.
I also learned that it is better to buy a card directly from the issuer vice at the grocery store, because the issuer will have greater control over adding refunds directly to the card (if you or your recipient should need to do so). Shell accidentally charged me a 1 or 2 dollar inactive fee, but since my card had been purchased at Safeway, they could not add the balance directly back onto the card; I would have to write to them for a refund (in form of another gift card). At that point it just wasn’t worth it!
This might undermine the giving spirit a bit, but if you get a gift card you just don’t think you’ll use and you don’t want to re-gift it, there are places where you can buy, sell, and trade gift cards online. I’ve never used any of them, but here’s some links I found:
http://www.giftcardbuyback.com/
http://www.cardavenue.com/
I think I’m going to start asking for straight cash. I know that some people don’t think that’s a good gift, but it really is for me. Most of the things I really want are pretty expensive, and I have *zero* qualms about keeping that money set aside for fun stuff as opposed to paying bills, etc., but really, if I really needed some money to pay bills with, then I’d rather have that money available for that than be stuck with a bill I can’t pay and a gift card to some store.
For this Christmas (since we’re so close to it) I’ll just do normal presents, but starting with my b-day in the summer I’ll start asking for cash, with a promise to update my friends and family with what I spent the money they gave me on.
We’ll see how that goes over. I don’t really need more knick-knacky things, even though I know my mom loves to get that stuff for me.
Like a lot of others, I’d prefer cash to a gift card. In my opinion, it’s more personal because you’re saying that you trust the person enough to spend the money on something useful. I recently compiled a list of 9 great gift ideas for broke college students. The list may surprise you.
Although there are still loopholes (such as gift cards sold by shopping centres) the government of Ontario recently banned expiry dates on gift cards. It’s a start!
Thanks for mentioning the savings that I make. I really think this is one of the overlooked ways to get a discount on things that are normally not discounted. I’m not a member of Netflix, but I bought a gift card for my mother at a drug store and saved 5% with a cash back credit card (that I pay off each month). Some people spend a couple of hundred dollars a year on Netflix, and this is a good way to pocket $10-15 for yourself if you were going to buy it anyway.
When buying gift cards people should also remember that there is a big difference between a gift card and a gift certificate. Some places require that the gift certificate be spent all at once.
One of the most insulting things I saw in retail was when i guy walked into my store asked what the cheapest thing in the store was and then tried to buy a $2 salt shaker with a $100 gift certificate so he could pocket the difference. I tried to tell him he needed to spend more but he said ‘Well i need the money for gas and smokes’
I know most people think that a retail worker should do what the customer wants but i was really insulted on behalf of whoever bought that card. Someone cared enough about him to give him $100 that he could use at any store in the mall on a gift and he cheated the system to buy smokes. [We ended up doing the sale]
I prefer buying gifts most of the time, however, there are times when a gift card is clearly a better option. When that occurs, I buy VISA gift cards. The ones I purchase do have an expiration (12 months from date of activation) but do not have any fees or other odd terms for the recipient to worry about. (Google: IDT Gift2Go)
Since it is a VISA gift card, they can buy anything they want, practically anywhere they want. If the card had some odd amount left over after purchase, like $1.12 or something, they can always use it the next time they buy groceries or a cup of coffee.
I wouldn’t buy store specific gift cards unless you know that the person shops there regularly or uses their services. Gift certificates to a spa, for instance, are nice. Gift cards to a music store for someone who buys a CD a week or to a video rental source for a movie buff are other good choices.
Gift cards can be a gift and can be thoughtful just as a purchased gift can be thoughtless or pointless. Its all in how you do it and why you choose to buy the gift or card in the first place.
Gift cards are a hot subject in my family. The biggest complaint is that they are impersonal. They are just easy to get someone a BB gift cert. instead of figuring out what kind of music they like and buying them a CD or something. So, I’d add one con to your list. They are impersonal.
On the other hand, I am now at the maturity now to have reduced desire for stuff. So gift cards are good because I don’t get stuff that I wouldn’t buy for myself. A great reason to give gift cards is that if I don’t know the person well, and I need to get them a gift (because of the “tradition” of giving gift to everyone in my immediate family, even though I haven’t seen some of them since last christmas) then gift cards will reduce the amount of junk they have to take to good will next year.
In my original draft of this article, I mentioned that although I don’t mind receiving gift cards, I don’t like to give them. Something about them strikes me as tacky. As others have mentioned, they seem to imply a lack of thought on the part of the giver. On the other hand, I don’t mind receiving cash. Nor do I mind receiving the cards. I just don’t like to give them.
I think gift cards can be great given the situation. We live cross country from family and gift cards are one way to save on shipping. We’ve at different times made gifts and had to pay more for the shipping, an outrageous amount more like when we made birdhouses (okay,l could have planned that better and I don’t give gift cards all the time). Also, I have an elderly aunt who would hate to get cash because she’s so afraid of someone stealing it, but a gift card to a grocery store she really appreciates.
My husband’s company for holidays such as Thanksgiving will give everyone a gift card and that’s much appreciated. It’s in the form of a VISA giftcard so it can be used anywhere, has no fees and doesn’t expire.
On the other hand, like with any gift, it should come from the heart and be something the giver thinks the givee would really like/appreciate.
But I did use a gift card yesterday at Target and had a penny left over. The cashier asked me if I wanted to just have him toss it. People were sort of chuckling but I took it back. A penny saved is a penny earned!
Sharon
I spent some time working at Best Buy. During the holidays (well, and any time, really) they really harped on selling gift cards. Best Buy tracks a lot of statistics about transactions.
I can’t remember the exact number, but customers who used a gift card in their transaction end up spending more (even after you take the gift card out of the equation) than customers who don’t use a gift card.
So for example you might go to best buy to buy a DVD, so you spend $20.
Or, if you have a $50 gift card, you might go in to buy a DVD, but there is a great chance that you’ll walk out of the store spending over $70 based on the psychology of free money and impulse buying.
You will just flat-out spend more money.
And that’s what retailers (even the ones who don’t cheat you via fees or expiration dates) are counting on.
Gift cards are a mixed blessing.
I’ve gotten cards from places like Best Buy and Macy’s for the holidays before, and they always feel like a cop-out gift.
But I’ve also gotten gift cards/certificates from yarn stores, and that means a lot to me. Knitting is my main leisure activity, and I spent a lot of time and money on my hobby. Someone who isn’t a knitter will have a hard time figuring out what to get, and I understand that — unless you’re a knitter yourself, there’s just no way a lot of the things I have lying around my house will make sense to you. So a gift cert. to a good yarn store tells me that you’re both smart enough to recognize my hobby, and smart enough to recognize that I don’t expect you to go nuts trying to figure out which yarn I might want.
If it’s a thoughtful gift, it’s a thoughtful gift. In the end, that’s what matters.
don’t forget the possibility of the store going out of business. With CompUSA Closing right now, I get lots of calls with people who have gift cards ranging from 20 dollars they received as gifts to 2000 dollars from when they returned a product for store credit. The stores will all be closed down by February. Luckily, compusa is offering refunds on cards, but its going to be a pain for those who aren’t near a store anymore.
i work for a company that designs gift cards. i have been here for four years. our program charges no fees, has no expiration, and only requires that whatever merchant you have purchased the card from will be the only place (or network of locations if the merchant has chosen to set up accordingly) that the person you give the card to can spend it at.
my only advice is that if you have a buck fifty left on the card, use it… else it is called “breakage” meaning it is money in limbo that cannot be claimed by the bank. after two years of time, i believe the merchant can claim it, but unless it is clearly stated in legal verbiage on the card backer that after a certain time of inactivity on the card it is void, the merchant must allow the customer to use that ‘credit’ legally.
now sometimes spending that last buck fifty is tough if the products or services the merchant has are well over the dollar amount you have on the card. this is the way a merchant wants it to work. they want your repeat business. thats kind of the way that a bank rep/sales person leads with a gift card sale in fact. it is a way to increase revenue and generate repeat sales. for the banks, they hope that this is a way to generate more transactional business (credit card/gift card swipes) which makes more cents each time they do so.
the worst part of the gift part of it is that the person can put a dollar amount on your thoughtfulness. twenty bucks to walmart pays for tax in a trip in my book. 150 bucks a best buy goes further than 150 at ultimate electronics. theres a fine line between thoughtful and cheapskate however depending on where you pick to get it.
personally, because i make gift cards, i kind of hate them for gifts. i feel like a jerk for thinking about giving them unless its something innovative or new and tech savvy. such as an mp3 gift card, a bath salt gift card, a pedometer gift card… you know gift cards that are something else also. target has wood gift cards. stupid design with a beaver on it, but very cool in terms of being different. target is actually the best in the industry for gift card innovation and if you can’t come up with a good gift… think about all the practical crap you can buy there from food and toilet paper down to office supplies. what kind of a gift is that though? thoughtful? not really.
one last thing… other bank affiliates and Gift Cards like AmEx, STAR and Visa branded gift cards have FEES on them. fees to buy them. fees if you dont use them quickly and basically, even though you can use them universally, they degrade in value from the moment you purchase them AND they must be purchased with cash. you cannot buy them with credit.
so… a $100 card actually costs you something like $106. (losing six bucks there) and if a person does not use it for two months… there are inactivity fees of probably around two dollars a month. not real cool but easy for johnny to CHOOSE where he wants to spend the dough. convenience costs.
I personally hate gift cards but to me cash is just an unacceptible alternative. To give cash is just the most impersonal thing you can possibly do. As for receiving it, like some others on the board I have a hard time putting cash towards anything non-essential when there are bills to pay and savings accounts to top up.
I give Christmas gifts to as few people as possible though, I don’t like to give gifts to casual acquaintences nor do I like to receive them. A phone call or note just to say Merry Christmas is plenty for me or maybe buy me a drink or something depending on the relationship. That way instead of buying some cheap piece of junk for all my casual friends and receiving one in return we can all put that money we would have spent on each other into our savings and we all win. Less junk, higher bank balance, Merrier Christmas. Where I work people go crazy buying little gifts (or gift cards frequently) for everyone in the office on top of their own family and friends and I do kick in for the group gift to our managers and the family that we adopt each year but I don’t have the funds or the desire to give something to someone I don’t really know outside of work.
The whole idea of letting the person buy anything they want is silly to me anyways. When I give (or recieve) a gift it’s a symbol of our relationship, not just an excuse to get the exact camera or phone or whatever junk that you want. Rarely have I ever received anything that I really had zero use for and I don’t think I’ve given anything like that either. Clothes get exchanged if they don’t fit, anything else I keep. That said, I make sure to know roughly what people are looking for before I buy anything but I have friends who tell each other precisely what they want and that makes little sense to me. If i say buy me this exact CD and you say buy me that exact DVD why don’t we just buy what we want for ourself and save the cost of wrapping paper? I enjoy the social aspect of exchanging gifts but it’s the act that is fullfilling not what is actually exchanged.
My basic rule of thumb is that if I don’t know you well enough to get you something you will probably like then I don’t need to get you anything at all. Exceptions would be the paperboy or mailman who get a small cash tip for services rendered.
That’s just me though, your mileage may vary.
Cash is pretty tacky to ask for, I think, though it’s nice to receive…but I don’t really want $20 from a friend, I’d rather have a gift or a phone call, or nothing at all.
I’m a little surprised any retailer would require that a gift card be spent on merchandise. I think the last card I got, ten years ago for Home Despot, was spent and they gave me the under $5 balance in cash as change. Maybe that was in the days before “swipeable” cards.
I am, in general,not a huge fan of gift cards, unless they are given with a specific purchase in mind. For example, last year a family member had been mentioning that they wanted to purchase a flat screen HD TV but weren’t entirely sure they could swing the whole cost. Everyone in my family purchased gift cards to his favorite electronics store, in the amount they wanted to spend, with a note attached that it was to go towards his TV. We thought about pooling together and buying the TV, but we were about $400 short. Instead, we did the gift cards, and he was able to get his $1700 TV and only shell out $400 of his own money. He was thrilled.
That said, it was for a specific gift. I think that it’s impersonal to give a close friend/family member a gift card to a random store for a small amount of money with no thought in mind as to what to put it towards. As someone already mentioned, they are only really useful for the appreciation gift for someone you do not know very well.
I enjoy giving and getting gift cards to places like restaurants, museums, movies, etc.
Those type of “experiences” don’t fit well into our regular month-to-month budget. So when someone gives us a gift card to a restaurant or the movies, they’re giving us the gift of that experience.
I’m not a real big fan of gift cards either. However, in our family we have some picky teenagers who ask for gc’s to places like Target, Starbucks, Hollister, etc. I’d rather give them a small gc to a store they asked for than waste my hard earned money on something they’ll never use and roll their eyes at anyway.
In the end, I like to buy a well thought gift for family & friends. We’ve reduced our giving by so much that this is finally possible. I found when you weed out the “obligation gifts” and “dirty santa” type party gifts, you can spend some money on NICE things (be they expensive or cheap, doesn’t matter) that people will actually enjoy.
As with everything else in life, it boils down to RELATIONSHIPS. Even if I get my 80 year old grandma something she’ll never use, she loves it because it is a gift from me, her beloved granddaughter. Its the relationship factor.
Some of our favorite gift cards have been for restaurants – one of the best wedding presents we had and also some favorite holiday presents – introducing us to new restaurants or helping us go somewhere usually above our budget, but again, it helps to have come from a friend who knows us well enough to pick restaurants we would enjoy. Another good one I haven’t seen mentioned is movie gift passes – they usually have a fairly long expiration date, and it’s a lot of fun to go to a movie for free.
One nice gift for new parents (especially when they are returning to work with little sleep – it’s a good one for the dad especially) is a giftcard to a coffee shop – again, it’s particularly nice if you know the person well enough to get something for someplace local to them, rather than just Starbucks. And when my son was born we hoarded giftcards to Babies-R-Us or Target for all the things we realized we needed or wanted after he was born (for example, you usually don’t know which kind of bottle you might use (some kids are picky about nipple shape,etc), or for nursing if you’ll need certain accessories, etc, until you actually have the child. And cash was kind of tight so it was so great not to be spending money on some of those things right away.
In order to keep from losing and forgetting about gift cards, I started a folder in my filing cabinet, where I slip them into an envelope, along with our membership cards to museums, and any particularly good coupons I get in the mail (ones like 20% off)
To me, it’s the thought that counts. Which means that if you know someone would really love to shop a particular shop, but you don’t know exactly what they want, then a gift card is a great gift. Otherwise, not so much.
Generally I hate giving gift cards. I was quite happy we were given some at a baby shower for our first, since it allowed us to fill in the gaps of what we were missing. I’d never given one, until last year. Last year, we gave my parents a gift plus a gift card for a nice restaurant. They saved it all year and used it on their anniversary. This year, we’re giving my dad a couple small gifts plus a gift card for his favourite coffee place.
Generally I think Liz Pulliam Weston is closest, but I do think small gift cards have more of a place beside some complementary gift. The gift card we received that we liked clearly had thought put into it, as did the gift cards we’ve given.
I think the main problem with giving cash is that you want the person to use the money to buy something for themselves. If you just give cash, it’ll probably go in their wallet and end up as gas or food, instead of the intended shirt, cd or other more “fun” gift. Gift cards force them to buy something like this for themselves. I think the better alternative is for the AMEX or VISA gift card, though as others have said there are sometimes fees attached.
As others have said, Visa gift cards are a good deal. They have no fees, and in my experience the card balance gets automatically printed on your receipt. Handy!
I love getting gift cards! And I’m a big fan of the Visa gift cards for my oldest three kids (ages 18 to 22). They love music, games, clothes etc, but don’t really want their fogey mom picking their stuff out for them (and come on, you have to admit you probably feel the same!). Visa cards have been a huge hit at my house, and they take all the stress out of holiday shopping for me. I get a card for each kid, plus a few modest gifts each so they have things to unwrap (usually clearance items). I tuck each kid’s card in with one of their gifts. All three kids had their cards spent within a week of Christmas last year.
In some instances, I like giving gift cards. For instance, my admin assistant loves Starbucks, so I will give her Starbucks gift cards for Christmas and such since I know it is something she likes. However, for someone who is family or you are extremely close with, giving someone a gift card just sends the message you were too lazy to think of a real gift that they would like.
I don’t mind getting gift cards, however I get annoyed when someone gives us a card to a place we never shop. For instance, I somehow end up getting at least one of those Starbucks gift cards every year. Good idea, except that I am Mormon and Mormons don’t drink coffee. I don’t expect everyone around me to know the most intimate details of my personal life, but this one is kind of a no-brainer (has anyone ever seen me drink coffee before?). Of course the previously mentioned admin assistant is quite thankful! =)
I love getting gift cards. I sometimes get them to places I don’t normally shop (Cost Plus for example) but I like shopping and having a budget amount makes it kind of an adventure.
I have gotten gift cards from the usual sources, Target, Starbucks, Barnes and Noble–and the not so unusual, a grocery store, a local restaurant, home depot, trader joe’s, jamba juice etc . . .–but I always use them.
In California, gift cards never expire. Also for 2008, a bill was signed (in California only again) that if you have a gift card with under $10 on it, you can exchange the gift card for cash.
BillyOceansEleven, I went through a stage where I stopped drinking coffee but still used my Starbucks gift cards. Most starbucks carry juices/noncaffeine teas, even non-coffee frappuccinos (strawberry mmm) as well as sandwiches (these are pretty good), cookies, salads, yogurt, nuts etc . . .yummy
I love getting gift cards to stores or restaurants that I frequent (or wish I could frequent) regularly. If you give me $100 in a cheque, I’ll stick it in my savings account or send it towards a bill. Practical, but not fun. If you give me a $100 Chapters (bookstore) card, I’m going to enjoy some new books.
Just remember to think about the type of card you’re sending to your recipient. It needs to be appropriate. I don’t drink coffee, so I don’t think much of any Starbucks card given to me, whereas Hubby the caffeine addict would love one. I’m with BillyOceansEleven up there. If you’ve never seen me doing an activity, don’t buy me a gift card for it.
One of my friends sends me a giftcard to a presumably very nice store every year…which doesn’t exist in Canada and doesn’t ship internationally. I can’t seem to get her to stop wasting her money.
All in all, I think a well-thought-out physical gift is better and more fun, but gift cards can be appropriate if you do them right. I prefer one that I’ll use to cash since I won’t feel obligated to do the responsible (read: unfun) thing.
My family and friends exchange wish lists every year. This year, one of the things I asked for was herbs and spices for my kitchen. I would much rather open a package on Christmas morning and find a $2 container of cinnamon than open an envelope and find a $20 Amazon.com gift card.
The gift-card (and money-gift) mentality makes holiday gift-giving into a sanitized version of financial assistance. The point of gift-giving is not to get me stuff. That’s what work and savings and budgeting is for. Gift-giving is about strengthening social ties and expressing care for the other person. It’s not about me getting what I want – it’s about my friends and family guessing what I want and picking out things I would never have thought to get myself. That’s what makes it exciting and fun for me. Gift cards just don’t cut it.
Also, gift cards detach the gift from the giver. It’s one thing to say, “These are the bowls my grandmother gave me,” and quite another to say, “I bought these bowls with a gift certificate my grandmother gave me.” It’s just… not a gift, at that point.
I’m not a huge fan of gift cards, but under the right circumstances, they can be a good gift. A couple of years ago, my brother knew that I’d really like to have a movie that came out on DVD the week after Christmas so he got me a gift card and a note explaining what he had wanted to do. It was sweet and thoughtful. Like many of the other posters, if I get cash, I feel compelled to save it, whereas a gift card encourages a little frivolity.
This year, I’m considering getting him a generous gift certificate to the local cinema. He has enough money that he’s been buying pretty much everything he wants that’s reasonably priced, but I know he’ll go to the movies at least a couple of times a month.
I like gift cards to restaurants and services… places where you can’t buy something physical and put it in the box. If someone gets me a gift card/cert to my favourite restaurant, that’d make me pretty happy. A gift card to Zellers/Wal-Mart? Not so much.
I’ve landed on both sides of the fortune coin with receiving gift cards – I had one for a nice restaurant that I used easily and happily.
I’ve also received one that I could never use, because after 4 hours of trying to activate the card, and being shuffled around by real people, literally passing the buck again and again, I finally gave up in frustration. When I got back around to trying again a couple of months later (we were moving at the time), the card company got to keep my $100 dollar gift because it had expired. Nice scam.
I recommend against giving them to kids. It forces the parents to take the kids to a store, a time-consuming hassle. And as you point out, the item you pick often costs a different amount than the gift certificate. So either you’ve got a gift certificate with a few dollars left on it which clutters up your life, or you have to make up the difference.
My sisters, brothers-in-law and I have no problems with the giftcards we give each other because we purposefully tell each other where we plan to be shopping for items within a month or two of Christmas.
Most gifts cards are lame..
They force people to shop at a particular store… it’s almost impossible to use the exact amount on a card… So, you either have to spend a little more than was on the card, or a little less… EITHER WAY, the gift card company wins!!!
The only time this isn’t true would be a gas card or one of those x-box points cards, type deals…
NCN
I love gift cards for two types of people: someone with a similar Starbucks addiction as I do and teachers. A $5 Borders gift card seems to be very appreciated by teachers. I do encourage my kids to make gifts for their teachers — usually a Christmas tree ornament that only clutters up their life for a few weeks a year — but a $5 gift card is a nice thanks, especially for teachers the kids don’t see that often (like the gym teacher) but want to say thanks to.
Very nicely put, Sarah.
While I would prefer to pick out a gift, my kids, nieces and nephews would prefer gift cards. One in college has asked for a gift card to Trader Joe’sor Crate & Barrel, another wants one from a local upscale mall. I’ve got to admit, it took a lot less time to fulfill those requests, but it wasn’t as much fun.
Just popping in to say something, no time to read ALL the comments, so sorry if this has been addressed:
No matter how you feel about GETTING a gift card, if the person has ASKED for it, feel free to give it. It’s their gift. You’d get them product X if they had asked for it; this time x = gift card.
Also, there is nothing wrong with giving gift cards as long as they are NOT a cop-out. The $5 gift card to Burger King that i never go to, is a cop-out gift from my relatives; but a $30 gift card to the local grocery store i go to from my ma is NOT, because i need food! She knows i love to cook, and I’ve always preferred USEFUL gifts over frivolous ones. I really hate giving/getting consumables as a gift, always feels like it’s a waste of money; but food is something you’d have to buy anyways.
In addition, if you know someone is tight on money, a gift card is a way to help out that person without having to make a big public statement about giving them money to help them out. When i was living pay-check to pay-check after my accident, the gift cards to Target i got let me buy the toilet paper and soap that i needed, without having to acknowledge to all of my relatives how little money i had right then.
Please, just get off your high-horses, people. Gift cards are often the best choice for a gift.
Allen, I don’t think most people here would disagree with your sentiments. Gift cards to places where the recipient shops regularly are basically the equivalent of cash. Gift cards to places where he doesn’t shop are a white elephant.
After struggling to use some Discover gift cards we got at a mall promotion and fighting with the split transaction issue, I would tell people to avoid gift cards with credit cards like Visa, MC, and Discover. If I go to Borders with a $20 gift card, and the total comes to $21.50, I can pay for it with the gift card and cash (or even a credit card). But with a Visa/MC/Discover gift card, the transaction is denied due to an over limit.
So, since I had 5 of these gift cards, I have now 5 cards that I have managed to get down to less than a dollar, but that little bit left over will go back to the credit card company since most merchants won’t do split transactions.
I have read a lot about picky teenagers and why you give gift cards in the comments. I am sorry, I think giving them a gift card is a cop out. Kids should learn to accept gifts nicely. If you always give them cash they won’t learn how to accept a gift. Then you end up with people like my sister-in-law in your family, making piles in front of you to take back to the store because she wants the cash instead. Needless to say no one likes buying her a gift anymore. I understand this is an extreme case, but you can see how parents giving into picky teens can lead to this.
This year, I banned myself from giving any gift cards and it was hard. I learned I needed to get to know some of my in-laws a bit better. On the plus side, I stayed well under my budget. Since a dollar amount isn’t on the gift and the gifts are all nice, thoughtful and not cheap looking, people don’t know my budget for them was $25 or less.
Giving cash on mutual gift-giving holidays like Christmas is tacky because you’re counting on the other person *not* to give you cash. If you give your brother $50 and he gives you $50, that’s just the same as if you hadn’t exchanged gifts at all, and where’s the fun in that? By giving cash, you’re assuming that he’ll put more thought into his gift than you did into yours, and that’s kind of a rude assumption to make.
On the other hand, cash can be an appropriate and appreciated gift for occasions like graduations or children’s birthdays, where the recipient isn’t going to be giving you something in return.
As others have mentioned, gift cards for experiences like restaurant meals, that can’t be wrapped up and put in a box, can be good gifts. And if the recipient had to travel to visit you, it can be better to give a gift card than to give a bulky, heavy, or fragile gift that they can easily get at a store near where they live.
And surely my family isn’t the only one that does a “grab bag” gift exchange, where you’re not shopping for a specific person. Gift cards are good choices for those too.
Interesting how many commenters here complain that “giftcards are so impersonal.” I’m not disagreeing, exactly. But there’s something about requiring everyone to exchange gifts on a certain day of the year that makes it challenging (to put it lightly) to come up with something “personal” for everyone. Maybe gift cards are just a symptom of how annoying “OMG XMAS!!!11” is getting. We all feel obligated not to “forget” anyone on our list, but that means a lot of work doing something that many of us both do a lot and hate a lot — shopping. If I could have one perfect gift for Christmas, it would be someone else doing all the damn (grocery, cleaning supplies, household goods, grocery, socks and underwear, school clothes, and did I mention grocery?) shopping for me for the next 6 months.
To follow on Fecundity’s and AHT’s comments, an appropriate gift card can be really cool. If you know a friend is saving for a specialty item (riding boots, say, or a prom dress) then cash or a gift card for the appropriate store with a note (“This is for your new tires”) can be really helpful.
I also use gift certificates for local small businesses I want to support. I’ve given certs for a massage at the local spa or for $20 at the local metaphysical bookstore. Naturally I only give these to locals who will want to make use of them!
Love gift cards. Love cash too. My aunt always gets a book store gift card from her business partner for Christmas, and she gives it to me, still in the insert that says to J… from S… (their names). I just find that amusing, and I am really grateful that she passes them on to me. I have used a generic american express type gift card when buying something for my brother — he wanted some kind of electronic something or other, and since I live outside a small town far away from any electronic stores, and I didn’t even really understand what the thing he wanted was, let alone try to pick out an appropriate one, I just got the card and told him to buy the item, which was very satisfactory for both of us (FAR better than my driving to the city and buying something and then him having to return it because I didn’t know what I was doing). I have used gift cards for baby showers where I didn’t know what things the person had or was going to receive, and where I knew what store they liked to shop at. I have used them for my husbands nieces and nephews whom I do not know very well. Last year, I asked them whether they would rather get presents, gift cards, or cash. They all said cash. Hey, I remember being a teenager and getting excited when someone put five bucks in a birthdat card. So this year, cash it is.
Saved for a big screen TV.
After finding out my banks savings account rate was less than 1%…..I decided to load $20.00 a week( every Saturday ) on a WalMart reloadable giftcard.
After a year…I had enough to buy my TV.
I figured if my circumstances had changed during that year…I could always purchase food, clothing and gas to live on if need be.
Just a suggestion…
It worked for me;-)
Great article. Gift cards are a $90 billion a year reality now, so we have to learn to live with them. We will all get one or more at some point.
I was so annoyed at not being able to get the last 5 bucks from my Visa gift card (no merchants would allow me to use the card with another form of payment) that I created a service (www.cashfromcards.com) specifically geared towards allowing people to drain the remaining bucks from their cards. Sorry for the self-promotion, but I created this service because I felt passionate about leveling the playing field and want people to know about their options.
You really got the bullseye with this here.
Thank you for the article, J.D. You have made some wonderful points on why gift cards could be both wonderful and burdensome. I like that you point out that it could cause the gift card receiver to spend extra money, which is what the business loves. They can do so by purchasing something more expansive than their gift card amount, but also just to get to the store. Luckily, purchasing your goods online with gift cards has become just as easy as purchasing with a credit card. Thanks again!
What I hate is: Someone giving me a gift card to a restaurant that is not local in my area. Giving me a gift card that’s already expired. Giving me a gift card that doesn’t work when I try to use it, because the funds have been depleted already by a thief.
And really, giving people gift cards just because you get airline mileage points when you buy them is the penultimate in tacky gift giving. If you do this you are NOT A REAL FRIEND.