11

Gift Cards Are Bad Gifts And A Waste Of Money

by The Happy Rock on December 18, 2008

stack-of-gift-cardsHarsh?  I don’t think so.   An estimated $97 billion dollars were spent on gift cards in 2007 and companies were able to keep almost $8 billion dollars in breakage, fees or unused money.   It is one of the first things they teach you when opening a business, sell gift cards.   Any unused money is pure profit and even if they use it they are forced to use you service or store.   Brilliant business, but not good personal finance.

The real brilliance in the gift card business came when they were able to convince us that the gift of cash was taboo.  We all cringe at giving cash.  It is too insensitive and effortless, right? So instead we trade hard earned flexible cash that can be spent anywhere on anything for an inflexible form of currency that can ‘break’. You can lose it, only spend part of it, or get a card for something you won’t use.    Yet, we keep on giving them.

My solution is to either admit that the gift is just formality and decide not to have two people swap cash for a much less worthwhile form of currency, or just give cash.   If that sounds to socially unacceptable, then you probably want to go a step further and examine why you are giving the gift in the first place.

For those that do get stuck with cards you could consider selling them on eBay or on sites like Plastic Jungle.  The fees usually end up eating 10% or more, but its a better option than wasting it.  On the flip side you can get great deals when buying cards if you decide you still want to go that route.

So, skip the cards!  What do you think?