Monday, January 18, 2010

Gift Cards Are Evil

Gift cards are great for retailers. However, they are lousy for gift recipients.

When you give a gift, you can spend time buying or creating a gift that you think somebody will enjoy. With gifts, the value cash value is typically hidden. An alternate is to give cash. This approach gives the giftee flexibility to purchase what they desire. However, it also gives them the burden of shopping to obtain the gift. It also puts the value out front. The receiver of the gift is free to buy what they choose, or simply use the money for everyday purchases.

Then there is the third way. Gift Cards. This combines the worst of both types of gifts. Like a cash gift, it says "I didn't want to pick something for you, so I'll just give you money to buy something yourself." However, as with a gift, it locks somebody in to something particular. (In this case, a specific store, or even a specific card.) A gift card is also something else for somebody to keep track of.

The perceived advantage of a gift card is that it "shows" some thought by picking somebody's favorite store, while letting them buy what they want. However, if this is the desire, why not actually buy something at the store and give a gift receipt? If the store has a good return policy, they an return it and get the item of their choice (or even cash). If they actually like what they received, then you have saved them the effort of buying something themselves. If they don't like it, they end up making the same trip they would have made anyway. [ok, online is different - but many places also allow easy online returns.]

There are also the negative aspects of gift cards themselves. Some gift cards have fees and expiration dates. Luckily, these are becoming more rare. Gift cards also have amounts that rarely exactly match actual costs of goods. Thus, a recipient maximizing value is often stuck forking over some of their own money or leaving money on the card (unless they get close enough to the value.) Gift cards require recipients to actually keep track of the card and keep it with them when they shop. Even 'credit card' gift cards have to be kept track of. What good does a wallet full of gift cards do?

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