Saturday, December 4, 2010

Five Pitfalls of Gift Cards

You are going to get a few gift cards this holiday season. Chances are you are going to give a few too. This is a difficult post to write, knowing that many of my family and friends have given me such gift cards - so my point isn't to make anyone feel bad. My point is only to illuminate the pitfalls of gift cards, as there are many.

Why do I care? When I got married we received over $200 worth of gift cards to Home Depot and Lowes. They were even special wedding gift cards when a cute bride and groom on the plastic. The problem: we were moving into a second-story apartment in the metro New Orleans area. We had no reason to go to Home Depot - we wouldn't even have a yard. Our parents ended up buying the gift cards from us to be nice. Over the course of two years in New Orleans, we received around $50 worth of movie tickets to Regal Entertainment Cinemas from our family in Tallahassee. The problem: there isn't a Regal Cinema in the entire state of Louisiana. We could only use the tickets in Florida. In other words, we were given hundreds of dollars worth of gift cards that were worthless to us.

Here's a list of the pitfalls of gift cards that may make you think twice about giving plastic as a present. Alternatives: this Christmas give home-made gifts, make a donation to charity in your loved-one's name or just give cash.

Pitfall #1. What can you buy for exactly $20?

Nothing. You almost always have to purchase more than the value of the card to redeem every penny. Otherwise you are stuck with a card with 33 cents on it. Either way, you lose money. What kind of gift requires you to spend your own money?

Pitfall #2. What if that store doesn't exist in your town?

Well, you can always try to order something online. But when it's something like movie tickets....there's not much you can do. You can re-gift it to someone in another town, or the money is lost.

Pitfall #3. What if that store doesn't have anything you want?

Then you're REALLY out of luck. Very few cards are redeemable for cash. If you don't buy anything, the company gets to keep the gift-giver's money without selling any merchandise!

Pitfall #4. What if that store goes out of business before you use the card?

When Circuit City went out of business a few years ago, millions of dollars in gift cards went unredeemed, lost forever to the card holder. What a waste!

Pitfall #5. You should absolutely never buy a gift card with a credit card logo!

Above all, never give a gift card with a credit card logo. These often come with expiration dates or even activation fees. Why should anyone have to spend money only to spend more money?

Again, why not just give cash?

*The only thing positive I can say about gift cards is that I have been given cards to stores and restaurants that I never would have tried otherwise and in the end really enjoyed. Sometimes cards do encourage you to be adventurous and try new things. But in the big picture, gift cards benefit companies far more than they do consumers.


Chioma said...

I am a fan of the homemade gift...unfortunately, I get a little miffed when people wear cute knit hats I made just for them within a week of receiving the gift only to never wear it again once I'm no longer around! Lately, I've been really excited about giving the gift of a Groupon. This way, people have something they can use themselves or easily re-gift and even share the experience with someone else! (I don't really get many gift cards for gifts, but if I did, I think it would be fine as long as it was somewhere I would actually use it!)
Great holiday post :)

Heather said...

I'm big on burning cds, making pralines and painting pictures for gifts. I will also re-gift without shame if I think someone else would like it better than I would!

And I certainly do appreciate gift cards, and even like using them. But I make myself spend them all at once because I can't stand the idea of the company keeping one cent of a gift a friend bought for me.