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The Pros And Cons Of Gift Cards

Photo Credit: Thinkstock

Let's be honest, everybody loves cash. But for holidays, birthdays and thank you presents, handing a friend or family member some dollar-dollar bills can be tacky — so refrain. You can go the really thoughtful route and get your giftee something he or she wants or needs. Or, you can go the somewhat thoughtful route and hand over a gift card.

However, as convenient as gift cards can be — you can buy them everywhere from specialty stores to drugstores to online retailers — they sometimes come at a price (and we don't mean the amount you paid for it).

Read on for the pros and cons of gift cards.

The Pros

Last-Minute Convenience: Like we said, you can buy a gift card pretty much anywhere. Many drugstores, supermarkets and even some convenience stores carry a collection of them for American Express, Macy's and Amazon, not to mention a wide variety of chain restaurants. A quick five-minute stop on the way to your next party is all it takes to get one. Hopefully, you know the giftee well enough to know where he or she loves to shop.

Photo Credit: Target

No Exchanges and Returns: Andrea Woroch, consumer savings expert, points out the main beauty of gift cards as opposed to wrapped presents: the recipient no longer has to deal with the hassle of exchanging or returning gifts. In many cases, your recipient can even redeem their gift cards, such as those from Target and Kohl's, online.

Perfect for Faraway Friends: If you have a loved one who lives far away, the gift card is probably the best option for the holidays. "Gift cards cost less to ship across the country or overseas, especially for an expedited service," Woroch points out. "Gift cards also take up much less room in your luggage when traveling for the holidays so there's no need to pay for checked baggage or overweight luggage which may otherwise happen if you travel with presents."

Photo Credit: Thinkstock

The Cons

Considered Impersonal: Some believe the gift card is a last resort — that you had no idea what to give, so you took the easy way out. But, Woroch believes, not only do most people prefer receiving gift cards over wrapped presents for the reasons mentioned above, thousands of great brands, retailers and service providers now issue them. "This means that consumers have the opportunity to give a more meaningful and personalized gift card based on an individual's taste, style, interest and/or hobby," she adds.

Not Redeemed: Gift cards are intended to boost the retail industry and make it easier for people to give gifts when they have no idea what to get otherwise. But sometimes gift cards go to waste. The recipient loses it, forgets about it or simply doesn't like the store associated with the gift card. Kiha Lee and Jess Swain of daily deal site DealPulp point out that about 10 percent of gift cards in the U.S. go unredeemed. But as Scott Gamm, founder of personal finance website HelpSaveMyDollars, advises, you can always visit Plastic Jungle to sell it for real cash.

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Expiration Dates: Gift cards can't be returned, but many recipients don't realize that they also expire. Gamm notes that, until recently, redeemers had to pay about $2.50 per month in inactivity fees to use a card after the expiration date. Lucky for everyone, as of January 31, 2011, the expiration date and any fees associated with the card must be printed on the back of the card. "Thanks to the New Card Act of 2010, gift cards can't expire for a minimum of 5 years so recipients have plenty of time to plan their purchases," adds Woroch, "as opposed to actual gifts that carry 30- to 90-day return/exchange policies for which a gift receipt is needed."

The Takeaway

When considering a gift card vs. a super-personal gift, always think about who you're giving it to first. If the recipient is really particular or you just have no idea what he or she would want, go for the gift card. It's easier and can still be personal. But make sure to familiarize yourself with the terms and conditions so you know what you and your giftee are getting into.

Happy gifting!

Ysolt Usigan is a lifestyle editor and shopping guru. She has made it her mission to bring readers fabulous finds and practical advice to make their lives easier.

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