How much would you estimate that your family has in unused gift cards? $50? $100? The odds are good that the total is a lot larger. In fact, a recent study found that the average American household has about $300 in unredeemed credit cards. When you add up all households, the sum comes to about $30 billion—nearly double NASA’s budget for the year 2012.
Gift cards are a $90 billion industry annually, but roughly 7% of them go unredeemed. Why is such a seemingly popular gift so unpopular with consumers? How can gift card givers ensure that the recipient enjoys the present and gets the most out of its value?
It might be helpful to consider what people did in an age before gift cards. It’s hard for me to imagine such a world. I remember being seven or eight and receiving gift cards to Blockbuster—and actually being able to use them. But the concept of a gift card never made much sense to me. If the giver wants you to buy something you enjoy, wouldn’t cash be more helpful? That way, you aren’t bound to one store in particular. With a gift card to only one store, you’re out of luck if their rival is having a great sale.
I had a few other gripes about gift cards—they used to charge hidden fees, could expire, and could be easily lost—until I understood why people's reasoning for giving gift cards. They give gift cards not to maximize the value that the recipient gets out of the present, but to show that some thought went into the process. Handing over cash feels cold and tactless; taking the time to select a card to a certain store shows a personal connection that is hard to muster with cash.
I now understand why people enjoy giving gift cards, and I am more accepting of their place in society. Still, if you plan on giving a gift card in the near future, there are a few general rules you should follow to make sure the recipient gets the most out of their present:
Choose a gift card that offers large flexibility for purchases, such as Amazon or VISA. Although it’s nice to buy a gift card for a store that you know the recipient enjoys, you never know whether that will be their preference at the time of the present. Maybe they just went on a big shopping spree there and picked out everything they want; maybe they really need something from another store for an unexpected reason.
The perks of gift cards such as Amazon’s, which offer purchases on huge categories of goods online, or VISA’s, which are useable like debit cards, are that they allow the user to allocate their money. And if you’re concerned about the variety coming off as callous or generic, you can always suggest an item to purchase in your accompanying note.
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Buy discounted gift cards online, and trade in your own unused cards for cold hard cash. The website Cardpool offers a great service to buy gift cards at discounted rates, meaning that you get more bang for your gift-giving buck.
You could also buy some discounted gift cards to stores you shop regularly so that the next time you go there you get better value. Or, if you’re one those people sitting on a massive pile of unused cards, you could trade them in and get as high as 90% of the cash value.
I know I have a bunch of unused cards sitting in bags that I plan on trading in soon, and I’m very happy that someone created a marketplace for it (although I would have loved to create it myself). Buying with Cardpool gives you better value on your presents, and it helps you salvage old presents you otherwise wouldn’t use—sounds like a win-win to me.
Make sure the gift card amount lines up with an item the recipient could purchase. As this blog and this blog point out, a $10 gift card to Starbucks is a great gift idea that would ensure the recipient could get something. A $10 gift card to a pricier department store, though, wouldn’t be as good because it would force the recipient to spend a lot of their own money to redeem the value. (Of course, smaller-value gift cards to be used at pricier stores can make perfect sense if given as VISA cards or something similar so that the recipient isn’t forced to shop there.)
Avoid fees and expiration dates. Congress cracked down on these practices with legislation passed in 2009, but some cards do still carry fees for inactivity, activating the card, or other behaviors. Thankfully, the card companies must now disclose those fees, as per the legislation, so you should know full well what you are purchasing. In particular, the Amazon cards discussed above carry no fees and never expire, so those are great. I also believe some of the VISA cards carry no fees after an initial activation fee. Still, make sure to do your research so that your recipient doesn’t end up with a worthless card.
Choose a gift card that offers large flexibility for purchases, such as Amazon or VISA. Although it’s nice to buy a gift card for a store that you know the recipient enjoys, you never know whether that will be their preference at the time of the present. Maybe they just went on a big shopping spree there and picked out everything they want; maybe they really need something from another store for an unexpected reason.
The perks of gift cards such as Amazon’s, which offer purchases on huge categories of goods online, or VISA’s, which are useable like debit cards, are that they allow the user to allocate their money. And if you’re concerned about the variety coming off as callous or generic, you can always suggest an item to purchase in your accompanying note.
Buy discounted gift cards online, and trade in your own unused cards for cold hard cash. The website Cardpool offers a great service to buy gift cards at discounted rates, meaning that you get more bang for your gift-giving buck.
You could also buy some discounted gift cards to stores you shop regularly so that the next time you go there you get better value. Or, if you’re one those people sitting on a massive pile of unused cards, you could trade them in and get as high as 90% of the cash value.
I know I have a bunch of unused cards sitting in bags that I plan on trading in soon, and I’m very happy that someone created a marketplace for it (although I would have loved to create it myself). Buying with Cardpool gives you better value on your presents, and it helps you salvage old presents you otherwise wouldn’t use—sounds like a win-win to me.
Make sure the gift card amount lines up with an item the recipient could purchase. As this blog and this blog point out, a $10 gift card to Starbucks is a great gift idea that would ensure the recipient could get something. A $10 gift card to a pricier department store, though, wouldn’t be as good because it would force the recipient to spend a lot of their own money to redeem the value. (Of course, smaller-value gift cards to be used at pricier stores can make perfect sense if given as VISA cards or something similar so that the recipient isn’t forced to shop there.)
Avoid fees and expiration dates. Congress cracked down on these practices with legislation passed in 2009, but some cards do still carry fees for inactivity, activating the card, or other behaviors. Thankfully, the card companies must now disclose those fees, as per the legislation, so you should know full well what you are purchasing. In particular, the Amazon cards discussed above carry no fees and never expire, so those are great. I also believe some of the VISA cards carry no fees after an initial activation fee. Still, make sure to do your research so that your recipient doesn’t end up with a worthless card.
Gift cards are a huge part of the gift-giving economy, but large amounts of them go unused each year. To get the most value out of your gifts, it is important to follow the above rules and be considerate of the recipient’s preferences. There are, of course, exceptions to the above, but gift-givers would do better in general to give broadly, buy at a discount, line up card values with purchase items, and avoid fees and early expiration dates.
It's a nice post, some other things to add:
ReplyDeleteI think Ebay and other similar sites are in general better for gift card buying/selling. But at a minimum it's a good idea to check out both to see better deals (both buying and selling).
Also, you can get a lot of store specific gift cards around the holidays or graduation times for fairly discounted or with bonus items. Those are really the time to get them, because at a minimum you can use them in gifts later. If you go there a lot, it is worth it.
Finally, there are sites like restaurant.com. You can get their gift cards really cheap on ebay, and while it's very limited what you can do with them, they're really cheap if you go to any of the restaurants.
Not to take anything away from the post, just some additions.
Hey mackler,
ReplyDeleteThank you for the additional suggestions. Don't worry about taking anything away from the post; I'm glad to have more input on the subject matter, and I certainly don't take any offense at your additions.
I agree that eBay is an interesting option in terms of buying and selling gift cards. The aspect of it that I don't like is that the price range is variable, so it's hard to tell how good of a deal you're getting, but that can also be its upside (when you happen to get a great deal). I find that I'm personally happier with a fixed price that I can look up, but I definitely see room for both eBay and sites like Cardpool in the gift card marketplace.