Gift Cards Make Terrible Gifts

Before beginning my thoughts, I want to take a second to introduce myself. My name is Kfir, and like Daniel, I just moved to LA. Since I met Daniel and found out about this site, I’ve been reading the articles and become accustomed to interesting and informative posts. I was a business student as an undergrad and I’d like to think in terms of dollars and cents. I watch my wallet and so far it’s paid off.

What I’d like to start a discussion about is the idea of gift cards. Specifically: why I hate getting them. If you’re contemplating giving someone a gift card, my advice: don’t.

So let’s get into the ‘why.’ My first reason (and I think most obvious reason) is the lack of flexibility. When I get a gift card to a particular store, I have to go to said store and spend the money there and nowhere else. There are better ways to tell people you think they smell bad than by giving them a gift card to Bath and Body Works.

I know what most of you are thinking and I am aware of the American Express (and other credit card companies) gift cards. For those that don’t know, it’s basically a prepaid debit card that has a given amount on it, say $50. You can take this card to any store and use it as would normally use a debit card. The only way to get maximum use out of this is to use the gift card to purchase everyday items, something that is up for debate.

For example, if you know someone with a prepaid cell phone, you could give them a gift card to that company to help them pay their monthly bill. However, many people think gifts should be gifts and not used for necessities. The credit card gift cards alleviate the specific store issue but my second issue is very much still a problem.

The second problem I have is actually two issues rolled up into one. I refer to them as: ‘underspending’ and ‘overspending.’ Underspending is when I get a gift card for $20 and only end up spending $14.03. That may not be an issue for a lot of people because one can always spend the balance at a later point in time but what if you lose the card? Or it has an expiration date in the fine print? Either way the company has taken $20 and only returned $14.03 worth of goods.

As you’ve probably figured out ‘Overspending’ is the exact opposite issue. I get a $20 gift card and I end up spending $28 at the store. If I didn’t have that gift card, most likely I wouldn’t have gone to the store and bought the thing I don’t need for $28 and actually put down 8$ of my own money. In this scenario, I was essentially duped into spending money.

In both instances, the company who provides the gift card wins. They either keep the money I don’t spend, or make more of a margin on the extra money I throw down to buy the good. Either way, I LOSE.

Therefore, don’t give gift cards. But if you do receive a gift card, don’t throw it away, there are ways to get the most from your gift cards. If you want to get someone something but don’t know what, give them cash. That way, THEY can decide what to get and where to get it or maybe just put it away for a rainy day.

16 Responses to Gift Cards Make Terrible Gifts

  1. A lot of times the point of a gift card is to force someone to spend money on themselves. You don’t get to pick what gift I decide to give you; I give you what I want you to have. If that’s $50 to Best Buy, then that’s what you get.

    Also remember, a lot of places sell gift cards to other stores. You can use a gift card at Best Buy to buy an Amazon gift card if you would rather have something from there.

  2. Sean says:

    I think some of that is just bunk. First, “but what if you lose the card”???? Do you go around just losing your cash or your credit cards? Give some people a little credit here.

    What if you know that someone goes to a particular restaurant or store on a regular basis? They are going anyway, so the overspending isn’t an issue. You already stated that underspending isn’t that much of an issue, so I’ll leave it at that.

    I agree, though, if you just randomly choose a store to use for a gift card, that’s probably a bad idea – you obviously don’t care enough about that person to care.

    Overall, though, gift cards are great! You not only allow the receiver to get what they really want, but, like so many of us are spread all over the world, you can save a ton on shipping as well.

    • Kfir says:

      @Sean, I know you think its “bunk” to lose a gift card but let me ask you a question. where do you keep your gift cards? In the same place you keep your credit cards and cash?
      I definitely don’t carry them around with me all the time like I do cash and credit. I throw them in a drawer and end up forgetting about them. Hence the “losing” comment.

      • Sean says:

        @Kfir,
        Sure I put it in my wallet. Where do you put the rest of your money and credit cards? You can’t spend it if you don’t have it with you.

        • Kfir says:

          @Sean, Interesting. How is your wallet not bulging with cards and such? I mean I have 2 credit cards, a debit card, car stuff (license, insurance, registration), a couple of pictures, a costco card and cash and my wallet is stuffed.
          When I want to spend it, I go into my drawer and take it out. Usually I make a special trip to the store. By now, my friends and family know that I hate gift cards and dont give them to me anymore so I dont have that issue at all…

  3. I think it’s largely a psychological thing. At least with a gift card you know that someone took the time to go to a particular store (most of the time) and get something as if they were going to buy a present. Cash just seems a little more impersonal. Granted, I have no problem getting cash but it seems to be a ‘thing’ in some peoples mind that makes it less than ideal.

  4. Kfir says:

    Hey guys,
    I was very curious as to how people would respond to this post. In general, I just want to be able to decide what I’m going to do with my “present.” That being said, cash is the ultimate currency to do what I want…

    The ultimate goal of this article was to eventually get to super saver shipping on amazon.com but the article got too long. Basically saying how the free shipping will ultimately make me spend more on amazon. Overall, good business idea but as a consumer, I spend more money than I was going to originally for things I dont need.

  5. I don’t typically respond to blog posts, but I’m making an exception for this one. If I’d been a family member who’d given you a gift card, I would be very sad to read this post. I understand wanting to save money, or get the most out of a gift card you’ve been given, but the position you take seems downright miserly.

    Someone in your life cared about you enough to get you a gift, a sum at a store where they thought they could help you, or where you might hesitate to spend money on yourself. If you don’t want to spend your own money (“overspend”) – don’t. You’re spending their money when you use the gift card. They just wanted you to buy something nice for yourself. They were willing to shell out money to a company (American Express, Best Buy, whatever) to do that. Why question or infringe on their decision to do so? Seems to me, you’re trying to control the gifting process from start to finish to wring every bit of useful capital from it you can – that’s not how gifts work. Your job as the recipient of a gift is to thank the person, buy something you feel comfortable with, and move on.

    I understand your desire to save money and get the most for your dollar in everyday life, but I also think that if that desire gets in the way of gratitude toward people who love you, you’re doing something wrong.

    • Kfir says:

      @June the Homemaker,
      Hey June,
      I completely understand what youre saying and I am very happy that this started quite a lively discussion because I like to hear other people’s points of view.
      Maybe I wasn’t clear enough in my post but I wanted to clarify something. It’s not that I dont like gifts or that Im ungrateful for the things people decide to “gift” me but I just believe that you should either give a gift (the end good) or money. I personally think that giving a gift card is a bit of a cop out.

      Soley my opinion: Either you know the person well or you dont. If you know the person well, then give them an object that you know they will like. If you dont know them well, give them cash so they can decide what they’d like to have.

  6. krantcents says:

    Personally I like cash because I usually have something in mind and the cash will defray the expense. I see your point how gift cards encourages spending more money though. If I received a card for a store I do not frequent, I may buy something I do not need.

  7. Darla says:

    You need to get familiar with the saying “Don’t look a gift horse in the mouth.”
    The advice given is: when given a present, be grateful for your good fortune and don’t look for more by examining it to assess its value.
    Good gravy, is it not enough that you were actually thought of? Now one feels entitled to complain about the method in which it is delivered? Build a bridge and get over it.

  8. SB @ One Cent At A Time says:

    Its all about discipline. If you don’t have that not spending on gift card never gonna help. I give gift cards and get gift cards. most of the gift cards I spend on grocery shopping. If I get a diner gift card I wait for a occasion to give friends a treat to use it.

    Everything is good and everything’s bad depends only on descipline

  9. Andy says:

    I enjoy gift cards and keep them with me at all times, just like a credit card or cash. I often use them to help pay for a purchase I planned to make anyway and almost view them as a coupon so “save” me some cash. Friends and family know well enough what stores I frequent and typically do a great job in selecting cards. If I get a particularly large gift card I will save it and use it to buy gifts for the holidays for friends and family.

  10. Tracy says:

    I give and get gift cards all the time and I don’t have a problem with it at all. In fact I know a lot of people who really do like getting gift cards. Sometimes I think that a gift card is better than an actual present b/c what if you don’t use the present? It’s wasted money. At least with a gift card you can get your money out of it somehow.

    If you know a person spends money at a certain store all the time, how would a gift card there be a bad idea?

    I think you should be appreciative of any gift you get.

  11. Gifter says:

    I think that in most cases a gift card will be much appreciated by the recipient as it is very personal and shows that the giver cares about the recipient

  12. Calendars says:

    You can buy discounted gift cards, getting you more for your money. You can also sell a card you have received or exchange it with someone else that has one you want. This gives you numerous options and reduces the worry that you are going to give or receive something that is not wanted.

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