Why I Won't Be Sucked Into Buying Gift Cards or Certificates This Christmas

I've purchased gift cards or gift certificates before but I doubt I'll do so again, not after reading a recent report from Consumer Reports at www.consumerreports.org/cro/money/shopping/shopping-tips/gift-card-pitfalls-12-07/overview/gift-card-pitfalls-ov.htm

This report opened my eyes, especially after a frustrating personal experience. Last Christmas, my spouse got a  card for his favorite bookstore and never used it. Let me be clear - I don't blame anyone (well, maybe my husband) for this. He is a bit absent-minded and the kind peoplewho gave him that  card had no idea he'd never remember to use it. However, we were surprised to discover that the card lost value for every month it went unused. In less than a year, the card was worthless.

Before I read that recent study (link above), I thought my spouse was that rare someone who was just too busy or forgetful to use a gift card. But according to Consumer Reports , there were eight billion dollars worth of unused gift cards in 2006! That's right: eight billion dollars.

Pretty shocking, isn't it? Imagine what could be done with eight billion dollars in terms of helping needy families and communities. Some of those extra dollars could even stay in your bank account. Amazingly, in spite of these facts, gift cards continue to remain popular.

But according to research at TowerGroup (www.towergroup.com/research/news/news.htm , the store owners and the bank card issuers are the ones who are getting the real Christmas presents in the form of your hard-earned dollars - and not giving you a single item of merchandise in return!

 While I'm all for supporting local businesses, you might as well just hand them the money and forget about getting the card. Think of it as a seasonal donation to your local merchant or bank card issuer. According to TowerGroup, one large retailer showed a $42 million dollar benefit to its income statement for unused cards! Yep, a $42 million dollar windfall without having to really hand over anything but a card. Plus, all that unsold merchandise the cards COULD have bought were available for sale - a double bonus! 

 Were you one of the many people who bought a gift card and thought you were essentially giving a gift, perhaps to be used in  a recipient's favorite store? Last year, I certainly was and now I wonder how many of those cards never got used. Call it a "Duh!" moment.

Gift card purchasers may be trying to be thoughtful, allowing  the recipient to choose his or her favorite item from a special store. It seems logical, doesn't it? If you really know someone, you know his or her habits and shopping preferences. You generally have an idea of favorite stores. Why not give a gift card but allow the recipient to choose the exact item? That way, you bypass the time needed to return an unwanted gift. It seems to be a win/win situation. Except that - it isn't.

When I read the report from Consumer Reports, I discovered that all those who purchased those cards might as well have tossed their money into the wind or chopped it up in their garbage disposal or used it to help light a fire in their fireplace on Christmas Eve. Talk about burning dollars!

The reality, of course, is that when you buy something that never gets used, you are simply purchasing a card, not an actual gift. An unused card is simply a cold, hard piece of plastic, however pretty the design on the front. To have full value, a  card must not only be bought - but it must be used. That second part (using the card) seems to be tricky for many recipients.

So why not just give cash?

Whatever the reasons for buying gift cards, the recipients might as well have framed them and put them on their walls as artwork.  And yet, amazingly, they remain popular. According to Consumer Reports, the research firm known as TowerGroup www.towergroup.com/research/news/news.htm reported that sixty two percent of consumers STILL plan to give gift cards this year!