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Why I Buy Gift Cards

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Last week, MoneyNing wrote an article about gift cards. In it, he states many of the reasons that gift cards are evil. He's not the only one against gift cards. Jim from Blueprint to Financial Prosperity thinks they are stupid as well. In many ways, I agree with both of these writers.

They show many reasons why not to buy gift cards including the following:

  • They expire - This is true in some states, but not in all states. In general, I haven't seen any expire before a super tremendously long length of time - like 7 years.
  • They are an interest free loan to the store - True, true. However, when I bought a coffee maker for my wife last year in November and left it wrapped up in a month, it amounted to nearly the same thing. The difference is the time from when you give the gift card to when it is used. In today's spending society, I tend to think that it isn't very long time.
  • The store gets the money for free if the card is lost - I think it's your responsibility to not lose the gift card. Treat it like you would cash. You wouldn't get a refund from Uncle Sam if you lose that would you?
  • Fees? - Jim even says that stores charge fees. I have yet to experience this, so maybe I'm lucky. If I ever did, I'd probably change my mind completely about gift cards. However, first I would grab a huge stack of store fliers or credit card applications, make them into confetti, and proceed to help the store celebrate it's wonderful policy.

Despite all these wonderful reasons, I still buy gift cards. I have three main reasons for doing so:

  • Etiquette - Though Jim proposes that we do as the Chinese do and give money, we aren't there in the United States yet. My wife and I prefer money and many people got us cash as a wedding gift. Yet friends of our parents tended to get us gift cards or buy off the registry.
  • People Receive Gifts they Want - Building on the above etiquette reason, if money isn't an option, a gift card is the next best thing. How many times have you received a bad gift and thought, I'd rather have a gift card to anywhere else? This has happened to me about 6,392 times.
  • (I Believe) I Save Money - If you followed all those weak reasons above and are still reading, you shall be rewarded. I have a credit card that gives me 5% cash back at all grocery stores, pharmacies, and gas stations. I can buy a gift card for Best Buy, Olive Garden, iTunes for $100 and get $5 back in rewards. Since my credit card doesn't break the rewards down by transaction, I can't really see if I'm earning rewards in this way. However, I believe that the credit card company just sees that I spent $X at Safeway/CVS/Walgreens and not that I spent it on a gift card for another place.

I hope that Jim's proposal catches on in the United States. It may just be a matter time. In a ten years we may look back and think that gift cards where just an interim step.

Posted on November 26, 2007.

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12 Responses to “Why I Buy Gift Cards”

  1. You are correct: my Discover Card gives cash back for the gift cards I have purchased. As a matter of fact, that’s why I bought them. Discover has special bonus cashback points four times a year – and that’s all I spend under the program, and the points showed up. Right now they’re doing restaurants and movie houses, so I just bought myself some gift cards for a couple of theaters and restaurants I use regularly. With five percent, and since I’m likely to use them up in a few months, that’s much better return than leaving it in the Ing account until I spend it.

  2. dong says:

    I don’t like the fact they expire, but the free loan and losing the card doesn’t really bother me. I think for the convenience of gift cards it’s a small price to pay. I always feel like sweating a “free loan” anything less than $1000 bucks is worrying too much about the small stuff.

  3. Gift cards do not have to expire. It depends on which state you live in. California does not allow gift cards to expire. So if you or a friend lives there they can refresh the gift card at any California branch of the retailer.

  4. tomshurt says:

    I’ve found that gift cards are becoming more convenient than ever before. Around where I live (the Phoenix area), I can go into just about any grocery store (Fry’s, Safeway, etc.) and find gift cards for a variety of restaurants and retailers. I have a feeling you can find the same thing in other parts of the country. From a grocer’s perspective, I think it’s a great way to drive more customers into the store.

  5. Matt Wolfe says:

    The gift cards that charge fees are the ones that are put out by mastercard and visa. It’s the ones that can be used anywhere, just like a regular debit card. They charge an activation fee.

  6. Sean says:

    Finally, someone who prefers money like I do! I really could not care for actual gifts. I could go out and buy whatever I get for holidays or birthdays… and probably better stuff! Money is the ultimate gift, you can use it for anything. It applies to all situations.

  7. escapee says:

    I’m going to have to respectfully disagree w/ you on this one :-) I normally agree with everything you say, but I HATE gift cards. I DESPISE them. Every time I receive one in the mail I want to scream.

    The reason has nothing to do with any of the things that you have listed. Gift cards represent to me the ultimate in consumer driven holiday madness. IMHO (and yes, I know that everyone doesn’t feel this way!), they are very impersonal and when I get one I feel like the person is saying “I don’t know you well enough and/or care enough to try to determine something that you would actually enjoy.”

    Every year my dad (who I do not particularly care for) and I give each other basically identical gift cards. Why not just exchange cash, or better yet- why even bother? The sentiment that should be attached to gift giving is not there.

  8. Mrs. Micah says:

    I’m very fond of gift cards to my favorite craft store. While sometimes giftcards seem impersonal, Joann cards seem to say “I know your favorite hobby is crafting and your favorite place is the fabric store. Now go have fun making something pretty or practical or whatever you want!!!” Fabric gifts are greatly appreciated, but most people are too concerned to pick them out.

  9. K says:

    Under WASHINGTON state law gift cards issued by merchants cannNOT have an expiration date OR maintenance fees.

    But gift cards sold by malls and by banks are not subject to those same restrictions.

  10. Brip Blap says:

    I think by the time you get to exchanging gift cards – as escapee said – you might as well just give up and stop the madness. Cash is great for weddings, etc. but it’s tough in a “gift-exchange” setup like Christmas.

    The whole system is just driven by consumer madness. I tell every single person I know every single Christmas and birthday that I just want them to donate money to one of my 3 charities, and absolutely positively nothing else. Nobody manages to do that – they feel bad because love means buying THINGS…

  11. While I would also appreciate cash a gift, I understand why people don’t give it. As to the Chinese argument, there are a lot of things they do that we don’t, and I’m glad. Just remember that gift cards are just that, a gift. If you don’t use it in time or whatever, it’s on you. Just be grateful you got something. And as far as giving them yourself, it’s a nice way of showing that you put some thought into it without assuming that you know exactly what they want and their tastes.

  12. Fed Up says:

    Most gift cards suck because like suicide, it’s the coward’s way out. People tend to overdo them because it’s easy.

    If you truly don’t know the person well and it’s to a store the recepient likes, then I suppose it’s ok. I just received a $100 gift card to the AT&T store from my HUSBAND.I have never, EVER expressed an interest in anything from the AT&T store! Their service is abysmal and anything they have, I can find somewhere else cheaper. Not a fan of gift cards, though I admit they do beat being regifted something unwanted by the previous recepient.

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