Gift Cards

[Ready]

Every time I walk into a store I see more and more promotions to buy gift cards. Just go into a local supermarket and they have an entire wall dedicated to gift cards that can be used at just about every retail store and restaurant in the area. Sometimes these displays have more than 100 gift cards available. It always makes me wonder, who actually buys these things?

If you could buy a $100 gift card for the Cheesecake Factory for $100, what is the purpose in doing so? Why wouldn't you rather have $100 in cash that can be used anywhere, rather than $100 that limits you to one restaurant? I suppose for people who need to give a gift and can't think of anything better, a gift card is an alternative to giving cash, but it still seems like a very foolish ritual.

I did receive an email promotion from one of my favorite restaurants that offered to give me an extra $20.00 gift card with every $100 card purchased. So in effect you are getting almost a 20% discount on your purchase. Since I regularly eat at this restaurant anyway, this seems like an intelligent purchase to me.

I also like to look through the gift cards they have at Costco. Generally they sell $100 gift cards for $79.99, and sometimes they are discounted down to $69.99. If it's a store or restaurant I would use anyway, getting 20% off makes great sense to me.

And occasionally I've had credit cards over the years that offered gift cards once certain points are earned. I've since got rid of all of those cards and stick with the Fidelity AMEX card, which gives me a flat 2% back on all purchases with no annual fee. The typical AMEX card gives you 1% or less worth of points toward gift cards, and often has an annual fee, so I've never understood why anyone uses those cards.

How do other people make use of gift cards? Has anyone paid more than the value of the card, due to shipping or processing fees?

 

[Accidental Retiree]

We buy gift cards at Safeway, usually when they have 4x gas rewards. We benefit in 2 ways: by earning cash back on the CC we use for the purchase and by earning $1/gal off our gas purchases at Safeway stations.

Our last gas cost us $2.37/gal.

 

[Accidental Retiree]

PS. We buy gift cards for things we know are coming up: weddings and birthdays, sales at Lowe's, travel on Southwest, and like that.

A $250 Southwest gift card gets me 1000 pts., which equals a buck a gallon gas discount.

 

[aja8888]

Gift card issuers hope people will forget to use them, leave a small, unused cash balance on the card or don't notice the fees (on some). I assume this is very profitable for the issuers.

 

[Rustward]

Lots of restaurants promote gift cards around the holidays with deals like buy a $25 gift card and get a $5 for free, and others at various denominations. We usually buy a couple for ourselves.

One caveat about gift cards is that after they reach a certain age, whoever keeps track of them starts deducting a service charge (usually something like $1.00 or $1.50 per month). So if not used within a certain window, the cards start losing value. It would be interesting to see some numbers from the gift card industry about how much of those gift$ evaporate into thin air due to service charges. I bet it is significant, and that is one of the reasons you see gift cards everywhere.

 

[Amethyst]

Gift cards are just store debit cards. As far as I can see, the only reason to give people store debit cards instead of cash is that giving cash is somehow "not done." Some people apparently see cash as insulting, but the debit cards have been successfully marketed as "gift" cards, so they're not perceived as cash. It's not logical, but it works.

Amethyst

 

[sengsational]

Gift cards are just store debit cards. As far as I can see, the only reason to give people store debit cards instead of cash is that giving cash is somehow "not done." Some people apparently see cash as insulting, but the debit cards have been successfully marketed as "gift" cards, so they're not perceived as cash. It's not logical, but it works.

Amethyst

I think it also gives the buyer the illusion of "picking a gift" for someone, whereas cash is "impersonal".

I would much prefer cash as a gift, myself. Because of my fastidiousness, each card gets treated as "yet another account to be reconciled". It really annoys me that state and local governments are issuing cards instead of sending out a check! Thats off topic here except it aligns with the comments about how the issuers make money of people who don't end-up using the money on the card right away.

 

[Ready]

Gift card issuers hope people will forget to use them, leave a small, unused cash balance on the card or don't notice the fees (on some). I assume this is very profitable for the issuers.

Yes, I seem to have an entire pile of gift cards with small dollars left. It drives me nuts. In California, if the gift card balance is less than $5.00 you can request that it be cashed out, but you have to ask. Most merchants won't volunteer that information, and in some cases, I have had to cite the specific law that California passed to the cashier and get a bit pushy before they would agree to it.

 

[audreyh1]

I did receive an email promotion from one of my favorite restaurants that offered to give me an extra $20.00 gift card with every $100 card purchased. So in effect you are getting almost a 20% discount on your purchase. Since I regularly eat at this restaurant anyway, this seems like an intelligent purchase to me.

I also like to look through the gift cards they have at Costco. Generally they sell $100 gift cards for $79.99, and sometimes they are discounted down to $69.99. If it's a store or restaurant I would use anyway, getting 20% off makes great sense to me.

And occasionally I've had credit cards over the years that offered gift cards once certain points are earned. I've since got rid of all of those cards and stick with the Fidelity AMEX card, which gives me a flat 2% back on all purchases with no annual fee. The typical AMEX card gives you 1% or less worth of points toward gift cards, and often has an annual fee, so I've never understood why anyone uses those cards.

How do other people make use of gift cards? Has anyone paid more than the value of the card, due to shipping or processing fees?

Pappadeaux? I usually take advantage of their $20 gift card for buying $100 in gift cards once a year. That's a good discount for a restaurant.

I think people use gift cards to give as gifts.

I prefer egift cards - I have trained my siblings - Amazon or iTunes - either works for me .

 

[Katsmeow]

Every time I walk into a store I see more and more promotions to buy gift cards. Just go into a local supermarket and they have an entire wall dedicated to gift cards that can be used at just about every retail store and restaurant in the area. Sometimes these displays have more than 100 gift cards available. It always makes me wonder, who actually buys these things?

If you could buy a $100 gift card for the Cheesecake Factory for $100, what is the purpose in doing so? Why wouldn't you rather have $100 in cash that can be used anywhere, rather than $100 that limits you to one restaurant? I suppose for people who need to give a gift and can't think of anything better, a gift card is an alternative to giving cash, but it still seems like a very foolish ritual.

I use gift cards for 2 purposes. First, I use them as ..... gifts for certain people. For example, my kids (adolescents and young adults) like getting a gift card for stores that they like. Yes, cash is nice but they also don't necessarily like to carry around a lot of cash. Also, for some things cash won't work. My son likes to buy stuff from iTunes but he doesn't have a credit card (well, he has one on our account but that is for school stuff not personal stuff). So buying on iTunes is difficult for him. If I give him a gift card then it is very easy for him to use the gift card so that he can buy stuff on iTunes.

Despite that I could give cash and occasionally I do so, usually when someone has specifically asked for it. One advantage of a gift card is that you are hopefully buying a gift card for a place that is a particular interest of that person. So I buy iTunes cards for my son and I buy Starbucks cards for my daughter. They are both very happy with those choices. And, it is very personal as each one speaks to their individual interests.

So why don't I just buy physical objects instead? Go buy coffee at Starbucks and give it instead? Well, for some items, there are no physical objects. DS wants his music where he can download it. And, I know he wants to choose it himself. As for my daughter, she doesn't like coffee. She likes the kinds of things you consume that Starbucks makes.

Again, I sometimes do buy physical objects where I know of a specific item that someone will love more than a gift card. But, if I know that what I can give someone that they will love the most is a gift card to a specific place then I don't see a reason to buy a physical object that they will like less. To me, that would be foolish.

Second reason I sometimes buy a gift card for myself is because I can get a discount. I get reward points from Amex. I can use them just to pay my bill. However, sometimes specific gift cards are a discount so that I can get a $25 gift card at a 5% discount. Whenever they have restaurant cards at a discount (for places we already eat at regularly) it seems sensible to use the reward points to buy the restaurant cards. Also, last Christmas time Chili's had a discount to buy their gift cards.

 

[MRG]

My last manager at Megacorp used to buy one for each team member, for Christmas. There were only 5 of us at $25 apiece, but it was a nice gesture. He couldn't expense these, they came out his pay. The guy expected a lot from the team, but he was a good man.

MRG

 

[W2R]

Why wouldn't you rather have $100 in cash that can be used anywhere, rather than $100 that limits you to one restaurant? I suppose for people who need to give a gift and can't think of anything better, a gift card is an alternative to giving cash, but it still seems like a very foolish ritual.

I think that giving gifts at all to people who you may only see once or twice a year, if that, is "a very foolish ritual". How can you possibly know what they really want when you don't spend much time with them, and if they want it, how do you know whether or not they already have it? The whole ritual is so stupid and fills the back part of upper shelves in closets all over the country. Most of that stuff ends up being donated to Goodwill when one gets around to downsizing twenty years later.

At least if you send money or a gift card, you know that they have been able to pick out something they actually DO want and is not just filling up their storage space. A gift card ensures that the recipient will actually buy themselves something instead of spending the money on, say, the electric bill. It's nice to have extra money to spend on oneself instead of spending it on necessities.

Frank and I send very few gifts at all, but when we do we don't feel in the slightest bit bad about sending a gift card.

 

[chilkoot]

The gift card has become, by consensus, the replacement for the gift certificate. Say you want to buy someone dinner out, or a spa day. The gift card has become the medium to do so.
For the giver: this lets them give an actual object, not just make a vague promise.
For the business: if they sell 100 gift cards, they know not all of them will get used. The difference represents pure profit for them.
For the buyer: cards can sometimes be bought at a discount, resulting in good deals to had.

 

[JDARNELL]

I buy giftcards to Lowes, Home Depot, Subway, Marriott, and Mastercard from Staples with my Chase Bold Ink Card because I get 5x points spent which I use for airline tickets. Usually S/W. I have to pay a fee of $6.95 per $200 for the Mastercards but I get 1000 miles. Just did a R/T flight for 12K miles. So about $83 in fees. If I had paid it would have been $238. Pretty good return since I am going to spend the $$ anyway.

JDARNELL

 

[braumeister]

My mother, who lived to a great age, learned decades ago that it was kind of useless to give me presents (birthday, xmas) since I normally just bought what I wanted when I wanted it.

Still, she couldn't give up the habit of giving presents, so she settled on LL Bean gift certificates (later gift cards). That worked very well, since I've always been a happy Bean customer. She knew her gift was appreciated.

I also like to use gift cards for the annual xmas gift to newspaper delivery, postal carrier, barber, and similar folk whose service I appreciated during the year. They are all in the same general area, so I have developed the habit of getting gift cards at the local Kroger supermarket for this purpose. Everyone buys groceries, and that's pretty much the only game in town around here.

 

[RetiredAndFree]

I think that giving gifts at all to people who you may only see once or twice a year, if that, is "a very foolish ritual". How can you possibly know what they really want when you don't spend much time with them, and if they want it, how do you know whether or not they already have it? The whole ritual is so stupid and fills the back part of upper shelves in closets all over the country. Most of that stuff ends up being donated to Goodwill when one gets around to downsizing twenty years later.

At least if you send money or a gift card, you know that they have been able to pick out something they actually DO want and is not just filling up their storage space. A gift card ensures that the recipient will actually buy themselves something instead of spending the money on, say, the electric bill. It's nice to have extra money to spend on oneself instead of spending it on necessities.

Frank and I send very few gifts at all, but when we do we don't feel in the slightest bit bad about sending a gift card.

+1

I'll take a gift card, over stuff I likely don't want or need, any day, thank you. And I know my daughters love receiving them as well for much the same reasons.

But I will say, I love getting edible items as gifts, whether bought or homemade. Which is why, when we travel, we generally bring home edible items as gifts. Olive oil from Greece, chocolate from Switzerland, limoncello from Italy, green tea from China, and so on. It's fun, and it seems to be enjoyed by the receivers.

 

[Free To Canoe]

...For the buyer: cards can sometimes be bought at a discount, resulting in good deals to had.

FYI

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