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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?

{ 10 comments… read them below or add one }

Peter December 18, 2008 at 12:35 pm

I actually like getting gift cards – and always use them. I know for some people it doesn’t make sense because they just throw them in a drawer and let them rot. For me, they work great for my wife and I to have a date night, buy a special gift that we don’t have to feel guilty about, or just buy something for no reason. I like them – as long as you use them!

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The Happy Rock December 18, 2008 at 12:52 pm

@Pete – I don’t mind getting them, but cash is better. Gift cards are OK, if it is someplace you want, they don’t expire, they don’t have fees, the company doesn’t go out of business, you don’t lose them, you actually spend it and spend it all. That is a lot gotchas. Cash has no catch.

I don’t think cash is any more impersonal than gift cards, it says about the same thing to me.

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Double Eagle December 18, 2008 at 12:55 pm

I love gift cards. My family and friends pretty much know the places I normally shop, so the cards never go to waste. Is cash more flexible? Obviously. But a gift card says to me, “hey, I know you wanted to get something from Best Buy so here’s something to help with that.”

Gift cards may be somewhat impersonal, but cash is totally impersonal.

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Peter December 18, 2008 at 2:31 pm

Yeah, i agree to some degree that gift cards are impersonal – but to a lot of people i think they’re slightly more personal than cash.

With a gift card they at least know you had to go out of the house and buy it, put some effort into it, as opposed to just opening your wallet.

Does it make sense? probably not.

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Teri Llach December 18, 2008 at 4:37 pm

As a leader in the space, we at Blackhawk Network (largest third party distributor of gift cards and creator of Gift Card Mall) want to set the record straight. Gift cards will continue to be the preferred gift this holiday. In our study, over 70% feel that gift cards are a useful gift since the recipient can get what he/she wants and 58% of consumers still plan on buying gift cards this season. Deloitte’s Holiday Survey also found for the fifth straight year that gift cards are expected to be the top gift purchase. Regardless of the state of the economy, they provide benefits such as convenience, personal budgeting and fraud protection when buying online. In addition, the reports of the vast amount of retailers not accepting gift cards has been completely overstated and not true. They want to keep their customers during this crucial financial time.

Teri Llach, Group Vice President of Blackhawk Network

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John @ Curious Cat Investing Blog December 18, 2008 at 8:18 pm

I agree if you want to give a gift – give one. If you want to give the opportunity to buy a gift give cash. also most people should just focus less on the obligation to spend money to impress someone that you care for them and do something more personal to show you care for them.

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Debt Destroyer December 19, 2008 at 2:33 am

I guess I don’t really have a problem with gift cards. In fact, I love getting iTunes gift cards.

But there’s a regional grocery store’s commercial that shows a lady buying a whole bunch of gift cards for different stores. This got me & the Mrs talking, and we decided we’d not like receiving a whole bunch of them.

But it you only get one, they are fun!

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RC@Thinkyourwaytowealth December 20, 2008 at 10:08 pm

I think gift cards can be good for some people, especially if they are hard to shop for(like my brother!) But I think when you start making gift cards the default for your Xmas shopping, there is a good potential the person may not use it and the money might get wasted. I don’t mind giving cash either- but I only feel comfortable doing that with someone younger than me-like a niece or nephew-but not someone older, like a parent.

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Jessica W December 22, 2008 at 5:28 am

Gift is a gift and you must take it and like it whenever you get it. Same apply with gift cards also. It is just up to you if you are going to use them or not…

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jen @ soy candles by Caterpillars December 27, 2008 at 10:08 am

I don’t ever give gift cards – they’re way too impersonal. Nothing says I love you, merry christmas! like a hard piece of plastic :)

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