One of the most popular gifts around the holidays is gift cards. There are a lot of reasons people give gift cards – convenience, not knowing what to buy someone, and saving money are a few examples. I know I have resorted to giving gift cards at the last moment. But even though gift cards are convenient, they aren’t always the best gifts. And this year with many stores closing down, some of them may be worthless.
Advantages of giving gift cards
Convenience. Gift cards are great for people who are difficult to shop for or who have specific needs. College students are another group of people that gift cards are good for because they often have limited storage space for bulky items. Gift cards allow them to choose how they spend their money.
Low shipping costs. Shipping is expensive, especially for large items! On the other hand, shipping a gift card costs the price of a first class stamp, or even less because some gift cards can be sent electronically.
Save money. You can save money on gift cards if you know where to buy them. Some gift card retailers offer 5-10% discounts on certain stores. I recommend shopping at Gifts.com and GiftCertificates.com for deals on a wide range of gift cards.
Avoid giving unwanted gifts. Let’s face it, some people are notoriously difficult to shop for, and some people just don’t put a lot of thought into gift giving. Gift cards let the person receiving the gift choose what to buy.
Why you shouldn’t give gift cards for Christmas
Gift cards are impersonal. You don’t need to put a lot of thought into a gift card; just swipe your credit card and it’s done.
Interest free loan to the company. When you buy a gift card, the company takes your money right away and you don’t get any value in return – just the promise of future value. The company can then use your money for business activities while you hold an IOU. Your money is better off earning interest in a high yield savings account instead of being tied up in an IOU.
Not guaranteed. Gift cards are considered an unsecured loan to the company, so if the company files bankruptcy, gift card holders are low on the list to get paid (meaning repayment may never happen). Likewise, if you lose most gift cards, you are also out the money.
You may spend more money. Even though you can save money on gift cards, you could end up spending more money buying gift cards than you would if you bought a gift. Why? Because you won’t be able to take advantage of sales. Giving a gift card for less than $20 may be considered a waste of time (or even cheap), but giving an inexpensive gift shows thought, and quite honestly, most people won’t know how muchyou spent on an item.
Fees. Some gift cards charge upfront costs or ongoing maintenance fees if the card is not used within a certain time frame.
Expiration dates. Some gift cards are good forever, and others expire within a certain time frame (generally 12 months). Always read the fine print before buying gift cards.
Verdict: Are Gift Cards a good Christmas gift?
Gift cards definitely have their place. I buy discounted gift cards for myself to stores where I shop regularly (for example, Home Depot and Best Buy). But I try not to give gift cards as gifts unless they are requested because I prefer to put some thought and creativity into the gifts I give. If you decide to give gifts cards this Christmas or at any other time of year, be sure to read the fine print to avoid any possible fees and try to avoid stores that may be restructuring, closing, or filing for bankruptcy.
{ 5 comments… read them below or add one }
I know everyone says gift cards are impersonal, but I don’t think they are in certain situations. For instance, I will be giving my parents a gift card to a restaurant they like to go to. They like to meet their friends for Happy Hour there. My dad lost his job in August, so money is a little tight for them right now and they’ve had to cut back on going out with their friends. Instead of giving them more “stuff,” I can give them a gift card that will allow them to enjoy a few Happy Hours with their friends without having to worry about money.
A gift card is certainly a bad idea if you don’t know what stores or restaurants the recipient likes, but they can be a good gift. At least I think so …
Very true, Kristen. This is a nice gift for your parents, and I hope they enjoy it! More importantly, I hope your Dad can find a new job soon.
I agree with Kristen, gift cards can be impersonal, but they make sense in most situations. I always give gift cards. I hate trying to figure out what someone actually would want as a gift, within a reasonable price range. I’d rather just give them a gift card to somewhere it can be useful for them. At the same point, I’d rather receive a gift card. I know I can use it anywhere. I do see the negative though like you describe where you end up spending more. That has happened to me where I would want an item and it’s more than my gift card.
I love holiday shopping, but there are a few people who I have absolutely no clue what to get. What do you get for the friend who has everything? Your picky aunt you see once a year? I’d rather buy someone a less personal gift then a gift they hate. For the most part, though, I try to find personal gifts for friends and family.
I think gift cards are impersonal, but way better than giving money. Gift cards require a little thought. Especially if its say a gift card to a restaurant that you know a person likes.