Personal Finance, Shopping 

Gift Cards Are Stupid

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I absolutely hate the idea of a gift card. I understand the difficulty with holiday shopping and I don’t despise gift cards, as some people do, because they lack thought and feeling; I don’t like them because they force someone to spend money at some store that the giver assumes they shop at. In addition to that, companies make money from gift cards because of the fees, the fact that they know a shopper will tend to spend more than the value of the gift card when they buy something, and because 12% of gift cards are never redeemed. I think the most ludicrous aspect of gift cards are the fees – the store already has your money, you can’t get it back, so why do they need to ding you with fees?

A little over a year ago I digested and regurgitated a helpful resource online that outlined the laws that protected consumers against predatory gift cards, specifically fees and expiration dates, and that may be helpful now when you receive a gift card in about a month. Some folks are protected against fees and expiration dates, but not everyone is, review the list to see where your state falls.

I propose that Americans pick up a tradition the Chinese use (because the great retail marketing machine hasn’t yet changed “traditions” yet) with great regularity and eons of success – just give cash. For birthdays and Chinese New Years (and any other gift giving time, including the holidays) the gift of choice is money. Cold hard cash. If you have a good idea of what to give someone, I’m not advocating that you scratch the idea and go with money – I’m merely recommending that instead of a restrictive store branded gift card or a fee-based generic card, consider cash.

No one ever gets upset with cash and they’ll have no problem figuring out how they’ll spend it. (If they do, email me and I’ll help them spend it)

{ 17 comments, please add your thoughts now! }

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17 Responses to “Gift Cards Are Stupid”

  1. Amber says:

    I agree for the most part. For my birthday I was given a $10 gc for Blockbuster. I rarely rent movies, I get them from the library most of the time for free. If I rent anywhere, it’s Hollywood Video because there’s one nearby or the local one only location store up the street. Blockbuster has closed a good chunk of stores over the past year. I was very hard pressed to find one even remotely nearby. So it’ll sit in my wallet until the time comes when it can be used, if ever.

    But I do like earning gc’s. I visit MyPoints a lot and generally trade those points in for gas cards and sometimes restaurant cards when I know I’m going to be going someplace and will use it.

    I also prefer cash over a gc or some random silly token gift-because-we-had-to-buy-you-something

  2. ricemutt says:

    Hee hee. I always loved the red envelopes, and I’m all for giving cash. For the most part, I agree with your arguments above.

    From a corporate finance standpoint, my guess is that companies charge some of those fees in order to decrement the gift card amounts over time, because they need to move reserves on the issuances of gift cards off their balance sheets and onto the income statements at some point in time. Revenue recognition, and all that. I’m not sure why they wouldn’t be able to just immediately recognize gift card purchases as revenue though, so maybe I’m wrong.

    • Anonymous says:

      when i took accounting they clearly stated gift cards are a liability until cashed in because you owe that person that amount of product. Never quite understood that one myself either as they recieve the money and not a lot of people cash in all of their gift cards. But that is how its treated accounting-wise.

  3. FMF says:

    Good thoughts. I’ll be expecting cash from you this year. 😉

  4. twins15 says:

    “I’m not sure why they wouldn’t be able to just immediately recognize gift card purchases as revenue though, so maybe I’m wrong.”

    My guess is that it would just basically be an unearned revenue, like a magazine subscription. They received the money, but they haven’t really incurred any expenses (other than the cost of the plastic to make the gift card), but will do so in the future.

  5. Matt says:

    Cash is so much better than a gift card. I try to avoid gift cards unless I know the person is looking for something out of my price range in a specific store (Say parents wanting to buy a TV at Best Buy… that’s worthy of a card… but Money would do just as well)

  6. Bellen says:

    I, too, hate gift cards – both getting and giving. I just never know if it’s to the right store.
    Cash, however, I like to give and receive. There are lots of way to give so it’s fun – wrap a roll of quarters like a peppermint stick, give a box of origami folded money (there are books on this), put it in the toe of a stocking ..and on and on. If it’s to go towards a particular item – say the TV – make a card, find a card, and insert the money into where the screen would be. Just be creative when giving cash – it doesn’t have to be ‘cold’ cash.

  7. I think that people give gift cards because they feel guilty over giving cash. They feel cash demonstrates absolutely zero imagination, whereas gift cards at least show SOME thought was given, but is still a lot easier than actually shopping for a gift that would fit in a box. I don’t mind getting a card if it’s for a store I shop at. But if not, please send me cash. I’m still sitting on a card I received for Pier One.

  8. Debt Hater says:

    On the contrary, some people don’t like getting cash at all. Some relatives of mine had a fight over this very issue a few years back. Some people would give someone a crappy gift before giving cash. We’re PF Bloggers, so of course we think cash is a great gift.
    I agree though. I’ve bought gift cards in the past thinking it was so thoughtful, but they often got lost right after Christmas or the amount was no where near enough to cover the cost of a purchase. I gave up on them myself. I’d happily give cash, but I know my peeps wouldn’t appreciate it.

  9. Debt Free says:

    As they say in the small business world; “Cash is King”. It’s true, imagination may be lacking, however, sometimes it’s nice to get the cold, hard cash we all crave. Maybe Fidelity and Vanguard should start offering gift cards for the likes of us. That way we could force our less responsible friends and relatives to do abit of retirement planning.

  10. Jonathan says:

    How do you know when you’re getting old? When you are GIVING the red envelopes instead of GETTING them. Makes me so sad!

  11. mbhunter says:

    I don’t mind receiving either gift cards or cash, but if I can I prefer to give a gift card. Cash for a relative you know well is usually crass, especially if you know that they stop at Dunkin’ Donuts, Starbucks, or wherever two or three times a week. Cash in that instance suggests absolutely no thought went into that gift.

  12. Mrs L says:

    I live in the UK and buy for my family in the US, so the currency issue makes it impractical to give cash. They can’t cash a sterling check, and I’m not mailing cash internationally. I can shop online for my parents and my sister, but my two brothers and brother in law are impossible. I have no idea what they own or what they want. Their interests are enough diverged from mine that I haven’t a hope of guessing right. I have as much change of choosing an appropriate golf product as my brother does of choosing a sewing gadget for me. So the guys usually end up getting Amazon gift certificates from me. They aren’t quite as versatile as cash, but at least there is a wide range of things to choose from at a reasonable cost.

  13. Unless you’re buying for your kid (especially a broke college kid), I’d go with the inexpensive-but-thoughtful gifts. Cash? Why not just agree to give each other all cash, and then don’t. You’ll all break even and save yourself a few stamps.

  14. jesse says:

    YOU KNOW WHATS REALLY STUPID TOO??? VISA GIFT CARDS WTF.JUST GIVE MONEY! After thinking abou the obvious reasons why companies like gift cards. I also concluded that if people were to give money instead of gift cards, people would see that people giving people money back in forth is stupid. So they would do away with giving(spending) ……..So they used colorfull “gift” cards to keep the ball rolling…. its very stupid.

  15. al says:

    I really dislike getting gift cards from my husband. He never gets one from a place that I like. If I really wanted to spend that amount at that particular store I WOULD HAVE. So now I’m forced (because the store won’t just give me cash in exchange for the card) to spend my own hard earned money at a store that I really really really don’t like. The worst part is that the money for the card comes from a shared account, so it’s like he is giving me permission to spend money. What a yucky feeling!

  16. Andrew says:

    I think gift cards are stupid. Just the concept of it.

    Basically, when you give someone, say a $20 gift card, you’re saying to them, “hey I don’t want to give you $20 cash to use anywhere, you have to use this $20 at this particular store, and if you forget to use it or lose it, too bad.”

    I don’t see the incentive to buy a gift card to give to someone. Basically it’s take your $20 cash and saying give me a card with $20 that I can only use at a particular store. And you buy the card at its face value.

    If for example, you could buy a $20 gift card at a discount, say $15, then that would make sense to me.

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