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Yes Virginia, Gift Cards Do Suck . . .

Posted By Barry Ritholtz On December 17, 2009 @ 9:00 am In Consumer Spending,Credit | Comments Disabled

OK, folks, listen up: we are getting closer to the holidays, and some of you are starting to panic. Less than 10 Shopping days to go, and more than a few of you are on the verge of buying a gift card.

Don’t do it!

Uncle Barry will tell you what no one else will: Gift cards blow. The straight dope your nephews and nieces and grand kids are too nice to tell you: They hate getting them.

Why? Because they suck.

Nothing says “I am both thoughtless and inconveniencing” like a gift card. They let the recipient know that you couldn’t be bothered actually picking out a present, so here is a cash equivalent — only so much less convenient than the crisp paper kind of cash. And, you can only spend it in one place.

How much do gift cards suck? Each year, $5 billion in gift cards [1] go unclaimed, forgotten about or lost. That’s how much people value them — they throw away $5 effen billion dollars worth every year!

They are an expensive and inefficient way to say “I feel obligated to get you something, but don’t know what.”

There is even a cottage industry to buy unwanted Gift Cards from their unhappy owners. The only reason sites like Gift Card Rescue [2] or Swap A Gift [3] or Plastic Jungle [4] or Gift Card Buy Back [5] even exist at all is because so many people want a way to get the damned cards out of their hands.  That these firms even exists is a testament to the gift cards’ crapulence.

Ahh, but there are alternatives. Sure, you could actually select a thoughtful gift tailored to the recipient, but if you were that type of shopper, we wouldn’t be discussing gift cards, now would we?

My advice to those of you who are haven’t figured this out yet yourselves, consider four superior options to the random gift card:

1) If you must get a gift card, then get them a Gift card they will actually use. Maybe they have a favorite clothing store or gadget shop. Not a random retailer, but a place you KNOW they really like. (as opposed to being near where you live). If your daughter is a Starbucks junkie, then at least you know the gift will be used — and appreciated.

2) Better yet: Get them an Online gift card (aka eGift Cards) But only to an account you are sure they already have. (This is the key). If your nephews shop at Amazon [6], if your nieces are regular eBay bidders [7], if your grandkids frequently buy songs at the Apple iTunes Music Store [8], then that is a far better option.  eGift cards are far less likely to be lost or go unclaimed. They can be recovered if accidentally deleted. And, they reflect some thought on your part.

3) Even better still: Get them a prepaid credit card. All the major credit card firms (Amex [9], Visa [10], Master Card [11]) let you buy prepaid CC as a gift card. These can be used anywhere credit cards are accepted. Its practically cash, and far more flexible than a Abercrombie or a Sears gift card.

4) Best of all: Just give them the damned cash. Hey, its gonna be worthless in a few years anyway — you might as well start giving it away now, while it still has some value!

There you have it — my holiday present to all the lousy gift givers out there.

Seasons Greetings!


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URL to article: http://www.ritholtz.com/blog/2009/12/gift-cards-suck/

URLs in this post:

[1] $5 billion in gift cards: http://www.nytimes.com/2009/12/12/your-money/credit-and-debit-cards/12money.html

[2] Gift Card Rescue: http://www.giftcardrescue.com/

[3] Swap A Gift: http://www.swapagift.com

[4] Plastic Jungle: http://www.plasticjungle.com/

[5] Gift Card Buy Back: http://www.giftcardbuyback.com/

[6] Amazon: http://www.amazon.com/gp/redirect.html?ie=UTF8&location=http%3A%2F%2Fwww.amazon.com%2Fgp%2Fgift-central%3Fie%3DUTF8%26ref_%3Dcm%255Fgift%255Fbutton%255Fgc%255Flp&tag=thebigpictu09-20&linkCode=ur2&camp=1789&creative=390957

[7] eBay bidders: http://giftcard.ebay.com/

[8] iTunes Music Store: http://store.apple.com/us/browse/home/giftcards/itunes/gallery

[9] Amex: https://www.americanexpress.com/gift/giftcardslanding.shtml

[10] Visa: http://usa.visa.com/personal/cards/prepaid/visa_gift_card.html

[11] Master Card: http://www.mastercard.com/us/personal/en/aboutourcards/prepaid/index.html

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