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.
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