- If you buy a gift card that isn’t worth enough for what you actually buy, the store “wins” because you will probably make up the difference with cash and they then sell you something you either would not have bought at all, or bought somewhere else.
- If you buy a gift card that is worth more than whatever you end up buying, the store “wins” again because they have received the full value and you did not.
- If you buy a gift card and by some miracle it is exactly matching the cost of what you buy, the store “wins” yet again because (a) you were still only able to purchase items from that store, and (b) the entire time you were holding the card, it was slowly losing value because only bad things could have happened: the store might have stopped offering what you wanted, the price could have changed, or heck the store could have simply gone out of business. Meanwhile, the store was already paid by you for the card (in yesterday’s dollars) so they could do almost anything with that CASH, including putting it in a saving account, and end up better off than you.
Simply put, it is never, ever, ever to your advantage to have a gift card. Ever!! Cash is better in every possible way.
I mostly agree with you, but I don't think most people are buying gift cards for themselves. Why would they when there are activation fees attached to these products? Generally they're given out as kind of a lazy gift among family and friends during the holidays, or somtimes from businesses to their employees. As long as the card is for something mildly useful like Starbucks (Although according to the post this seems to be the one that is actually redeemed the least), or Amazon then I wouldn't be too upset about receiving one. At the end of the day though I'm in the same camp as you when it comes to my own spending. I don't like to give money to anyone for anything less than immediate services rendered.
I'd add one small exception; around here restaurants tend to do sales at certain times where if you buy a 50 dollar gift card, they'll add another 20 dollar gift card free, sometimes it is buy-one-get-one, which you can buy and enjoy like a coupon for taking out your family. For places you go to anyway, this is a great way to save a little.
So I admittedly don't tend to think of consumerism as a game that a consumer can win, but I just wanted to add one more route here. What if you buy a gift card on special deal that gives you an additional percentage of funds for you to spend? Such as... Buy $100 get an additional $20. Assuming this is a place that you regularly want to shop? Then you are effectively getting $20 off a purchase you were going to make anyways.
Yeah see that's what I thought, I feel like I saw a gift card like that through Sephora this year during the black Friday/Cyber Monday madness and I was really tempted to actually buy a gift card for once.
> If you buy a gift card that is worth more than whatever you end up buying, the store “wins” again because they have received the full value and you did not
Escheatment laws in most US states ensure gift card issuers can't just keep unredeemed balances for themselves. Unclaimed balances are remitted to the states.
Here in the UK there used to be a website for buying and selling gift cards (called Zeek). As you'd expect, the market value of a £100 gift card depended on the popularity of the issuing retailer. (Amazon vouchers would sell very quickly and for close to face value.) That website has since disappeared, but you can still do the same thing on eBay.
I got Visa cash gift cards from my employer as small bonuses. The terms sucked - don't use it and you get hit with a fee, it had an expiration date that cost money to "renew", etc.
Amazon's gift card policy is great. The money just sits in your account, doesn't expire, can be used for anything (except other Amazon gift cards) and there is no fee to reload it with a credit card AND you can reload with an exact amount.
So as soon as I got a crappy visa gift card, I'd just transfer 100% of the money to Amazon and spend it down over the next year. It was a perfect solution.
What about credit card rewards that are high in certain types of store (e.g., 6% cash back on groceries)? I don't see how this is more than the consumer getting a product 6% less than what they would initially pay.
- If you buy a gift card that isn’t worth enough for what you actually buy, the store “wins” because you will probably make up the difference with cash and they then sell you something you either would not have bought at all, or bought somewhere else.
- If you buy a gift card that is worth more than whatever you end up buying, the store “wins” again because they have received the full value and you did not.
- If you buy a gift card and by some miracle it is exactly matching the cost of what you buy, the store “wins” yet again because (a) you were still only able to purchase items from that store, and (b) the entire time you were holding the card, it was slowly losing value because only bad things could have happened: the store might have stopped offering what you wanted, the price could have changed, or heck the store could have simply gone out of business. Meanwhile, the store was already paid by you for the card (in yesterday’s dollars) so they could do almost anything with that CASH, including putting it in a saving account, and end up better off than you.
Simply put, it is never, ever, ever to your advantage to have a gift card. Ever!! Cash is better in every possible way.