I typically put together a handmade basket of "goodies" for my clients after they close on their home. I figure it's something they will use and even if they've forgotten about me long after it's gone, it's something they can enjoy right after their purchase. On occasion, I've considered getting a gift card. But am I throwing my hard-earned money away?
Considered a great "green" gift, gift cards have become the the top gift choice for the hard to shop for recipient - especially during the holidays. Advertising Age reports, "Once regarded as an option for the lazy, inconsiderate or time-starved, gift cards are expected to reach $100 billion in sales this season."
This year BizReport commissioned Deloitte to conduct an Annual Holiday Survey. They found that 69% of holiday shoppers are expected to purchase gift cards, up from 66% the previous year. "Clearly we want them," said Stacy Janiak, Deloitte's U.S. retail leader. "They're the No. 1 gift because people want to receive them."
Hmmmmm, do we want to receive them or do we want to give them? That is the question. It would appear if such a large number of recipients are not redeeming them then perhaps they are not what we all want.
In an effort to educate consumers, Consumer Reports took out a full page ad in the New York Times this Tuesday.
"We've gotten a lot of complaints from readers recently about them, and it's clear that an enormous amount of money is going to waste here," says Greg Daugherty, the magazine's executive editor.
With a whopping estimated $8 billion worth of gift cards given last holiday season still not redeemed, could it be the wrong gift? It would appear so.
Consumer Reports surveyed gift card recipients and the results showed that 27 percent have not used one or more of the cards they received last year. The reasons vary:
- 58 percent didn't have time
- 35 percent couldn't find anything they wanted to buy
- 32 percent forgot about the card
- 4 percent tried to redeem the cards too late - they had expired
- 3 percent said the cards were lost
The financial-services research firm TowerGroup estimated that of the $80 billion spent on gift cards in 2006, roughly $8 billion were never redeemed - "a bigger impact on consumers," Tower notes, "than the combined total of both debit- and credit-card fraud." This same group estimates that $100 billion will be spent on gift cards for 2008.
Retailers contend that the unused cards are not automatically credited to the institutions issuing the cards. "In most states, if a gift card is not used within a few years it is considered unclaimed property, and the retailer must give that money to the state. "
"It's not leftover money that most retailers can put in their pocket," says Ellen Davis of the National Retail Federation.
Consumer Reports sees this as a clear advantage to the retailer because they can invest the money spent on the gift card until it's used to buy something. "It's not a good thing for consumers regardless of where the money happens to be on the accounting ledger," says Daugherty. "It's a winning proposition for stores all around, but not for consumers."
Clearly, Consumer Reports sees bank issued gift cards as the most costly to consumers. "The terms and conditions of bank-issued cards vary widely, even among those with the same credit-card logo. That makes it difficult for card givers and recipients to know exactly what they're getting. Compounding the problem is that it's not always clear where to look for information--on the card, on the packaging, or on the issuer's Web site." Consumer Reports
Do we have so much dispensable income that we can afford to throw our money away? Well, I certainly don't! Think long and hard before you spend your hard earned money on a gift card this holiday season. It could end up sitting at the bottom of someone's old purse or worse - in a stranger's pocket! It might have been a better idea to give cash. Green goes with EVERYTHING!
Additional Source: MSNBC.com "Look this gift horse in the mouth"
Target Gift Cards - have no fees and do not expire - ever. Thank you - Debbie Cook! Updated
Comments(23)