12 Reasons why gift cards kinda suck

August 11, 2010 · 14 comments

Today’s guest post is brought to us by the Car Negotiation Coach. If you get a chance, check out his strategy to systematically reduce the price of a new car and other helpful car buying advice.

Don’t tell our friends and family, but my wife and I have a drawer filled with gift cards in various states of worthlessness. I say they’re worthless because once they make it to the drawer, most of these gift cards will never be heard from again. They either have a small balance of $2.48, or $.79, or belong to a store where we never shop. And when the holidays roll around it’s always a bit of a disappointment to open another Christmas card with a $25 gift card to Pottery Barn.

So why am I so sour on gift cards? Here are a dozen reasons why they are an asset to Retail, and a liability to you!

  1. There’s usually a remaining balance. It’s difficult to plan a purchase to meet the exact amount on a card. Invariably, you’ll end up with some weird small dollar amount (the $2.48 or $.79 mentioned above) that doesn’t warrant the gas money to drive back to the store to spend it.
  2. When the price exceeds the balance you end up spending more. Someone gave you a gift but it doesn’t cover the price of what you want to buy. If you were going to buy that set of steak knives anyway, then no harm no foul. But if you bought them solely because you got a gift card, the gift is causing you to spend more money!
  3. If you lose the card, you lose the money. If you lose a credit card, they’ll just send you another. But if you lose a gift card, you’re screwed.
  4. Sometimes there’s extra fees when purchasing. Some cards come with additional charges for the ìluxuryî of purchasing money. And some Retailers even charge you excessive shipping fees to mail the card if you buy online.
  5. You’re stuck spending at a single store. What if you don’t like the store where you got the card (like my Pottery Barn example above)? Or maybe you buy all your stuff on the cheap at Target and don’t want to waste $40 on 2 wine glasses at William Sonoma? If you’re a comparison shopper like me, this makes it impossible to shop around for the best price.
  6. Expiration dates. Could you imagine if dollar bills had expiration dates and they evaporated after one year?
  7. Maintenance or inactivity fees. Similar to expiration dates, can you imagine if you had a stack of dollar bills, and once a month, a dollar bill evaporated until they were eventually all gone?
  8. No interest. I want to earn money on my money. Even with today’s horrible money market rates, investing cash and making a few pennies is better than nothing. Those gift cards in my drawer don’t earn anything.
  9. Activation is a pain. Some cards make you go online and sign up for an account just to use the card. You don’t have to sign up to use cash.
  10. Tracking your balance. How do you keep track of your remaining balance? I wish someone would invent a digital display on the card that would show you how much was left. At Home Depot they actually take a big magic marker and write it on the back of the card. That’s at least better than having to save a receipt or login online again.
  11. Unlike traditional “gifts”, the recipient then has to go out to buy their own gift. Maybe it’s just me, but I don’t like other people adding to my already long to-do list.
  12. They’re less personal than a real gift. From an “it’s the thought that counts” perspective, gift cards are just slightly better than giving someone cash.  You’re basically saying “I didn’t know what to get you, so…”

Thanks for listening to my rant. I’ll sleep better tonight.

ñthe Car Negotiation Coach

{ 13 comments }

1 Heather

I’m lucky because in NH there are no expiration dates or inactivity-fees allowed. (Also because there’s no income or sales tax.) Also, if the card or certificate says $25 and not “up to $25″ it needs to retain the balance. A restaurant once gave me a $50 gift certificate for moving tables for some big wig that wanted to sit where I was sitting, and when we tried to use it for a few drinks and an appetizer, they told us the rest of the money was going to just evaporate. The Better Business Bureau disagreed.

Personally, I prefer gift cards for presents because I’m super picky, but only to places where I shop all the time (*cough*Express*cough*) so it’s okay when the item costs more than the gc. But I can see they could be a pain in other parts of the country, or if I got one to somewhere I wouldn’t use– it’s just never been the case for me, I guess.

2 Steph/seenonflickr

I use a gift card to purchase something I wouldn’t necessarily buy for myself normally. Or to offset the cost of a large purchase.

I do admit to giving gift cards – usually to the book store or the liquor store. (I can’t assume what books people like/own, or what kind of wine they like to drink.) I also give them for weddings if people are registered at a particular store – it avoids gift duplication.

And most (if not all) provinces in Canada have passed legislation to make expiry dates on gift cards illegal.

But to each their own!!

3 Ella

I disagree! I love getting gift cards. This means I get the pleasure of going to a store and picking something up that I normally would not have. If I am not a wine drinker, wine glasses from William Sonoma is not a very good gift. And as for the point about no interest, it’s not your money to earn interest on it. And you wouldn’t get any interest on any gifts they might purchase instead of the gift card.

I agree about the small balances though. I find that extremely annoying and mostly I try to use it the next time I shop at that store or just leave them as it is

4 Brian

I’ll send you my address and you can send your unused gift cards to me. :)

How about re-gifting them?

I have been caught with a few small balances on gift cards, but it was a gift and no money out of my pocket.

5 Red

Now wait a minute. I have big problems with your first few points.

1) If you have excess money left over, you can use it on your next purchase. It’s very unlikely that you’re going to be gifted a card to a place you’d never otherwise shop.

3) If you write down the card number, you can get the gift card back if you lose it. Even my local Food City allows this. You give them the number, and they can pull up the balance in their computers and reissue the card.

5) A very popular option now is to get gift cards backed by credit card companies. You can usually buy them at your local mall. Our malls offer Visa and American Express gift cards, and they can be used anywhere the credit cards are accepted.

11) It is just you. I’d rather be sure I get what I want than leave that up to my cooky relatives.

6 Rogue Marvel

Some of these gift card issues don’t apply to many states, like fees and expiration dates, thanks to laws regulating gift cards. i honestly had thought it was nation wide but i guess not.

here is how I feel. If someone gives me cash I’m going to use it for practical things, like bills. Sometimes thats great because I could really use the extra cash. At the same time if someone give me a gift card I can only spend it at that store and generally its something fun. Someone give me $50 bucks I feel obligated to spend it on bills, someone gives me a $50 gift card to Game Stop, I have a new game that I want. I would not have spent that $50 on the game if I had not gotten the gift card. Now its probably better that i had that $50 for bills, but I got more enjoyment out of the gift card then the cash.

7 Jonesie

I have to agree with the majority of comments. I especially like gift cards because I like to pick things out for myself. I am also guilty of giving gift cards.

One other thought is that it’s a gift and you should appreciate that someone cared enough about you to purchase the card on your behalf. Receiving an unwanted gift card is nothing different than receiving a gift that you don’t like and can’t return except you can actually use the gift card for something you would like.

8 Sandy L

There are some relatives where I’d love it if they gave me a gift card…or nothing at all. It beats the immediate trip to the salvation army the day after Christmas.

I hate to sound like an ingrate, but my house is small and when I get stuff that means it or something else has to go. I’d much prefer a consumable item like food or tickets to something.

The best gift of all is time with your loved ones.

9 Budgeting in the Fun Stuff

I rather receive a gift card than cash simply because I will put cash into savings but I do spend gift cards on fun things…usually “fun stuff” is what the giver was hoping for, so it works great!

10 Brandy

I always give a receipt with the gift card so people know the balence and if its to a specialty store I really never go to, if I have any leftover balence I give it away to someone else in the store.

11 Car Negotiation Coach

Wow, I’m actually a little surprised that nobody agrees with me! But, I will respect the fact that everyone has their own opinions. My intent was not to offend anyone. I don’t think the gift card givers and receivers are at fault, just the companies that offer them. It’s just another retail trick to encourage spending.

I will say though that each year at the holidays I encourage everyone other than my immediate family not to give me anything. I feel like it’s unncessary for all the adults in the extended family to be obligated to spend $25 or $50 on every other adult. It just seems wasteful to me.

I’d much rather that money be added to what’s spent on the kids in the family or put towards your own retirement (which, who really does enough of these days?). It’s gotten to the point where family members just trade gift cards for the same dollar amount. If that’s going to be the case, I can control my own spending, and I’d like to be able to decide where to do it.

@Steph- I will make an exception if people want to give me gift cards to the liquor store.

12 Stelensmith

Personally, I prefer gift cards for presents because I’m super picky, but only to places where I shop all the time (*cough*Express*cough*) so it’s okay when the item costs more than the gc. But I can see they could be a pain in other parts of the country, or if I got one to somewhere I wouldn’t use– it’s just never been the case for me, I guess.

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