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!
- 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.
- 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!
- 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.
- 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.
- 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.
- Expiration dates. Could you imagine if dollar bills had expiration dates and they evaporated after one year?
- 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?
- 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.
- 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.
- 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.
- 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.
- 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.