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A plea this Christmas — if you must give gift cards, be smart and thoughtful

Gift cards are displayed.
Gift cards hang on a display at a Best Buy store after doors opened at 5 a.m. Friday, Nov. 26, 2021, in Lone Tree, Colo. Supply shortages, higher prices and staffing issues are problems that both retailers—and consumers—are grappling with as the holiday shopping season slides into high gear with Black Friday.
David Zalubowski, Associated Press

The holiday shopping season has arrived and many shoppers have no idea what to buy for many people on their list. Add to that uncertainty the supply chain issues and other effects from COVID-19 and more and more people are turning to the trusty gift card.

“Americans are moving to a buy now and shop later mindset and are turning to gift cards as they weather a season filled with delays and frustration,” InMarket CEO Todd Dipaola said in a press release about the company’s Holiday 2021 Gift Card Scorecard report.

A recent survey by Blackhawk found more than half of shoppers said they’re likely to buy more gift cards this holiday season than in years past. And they expect to spend about $313 on average on those gift cards, 19% more than last year.

But there’s a problem. All those gift cards can lead to a lot of wasted money. The former CEO of Walmart, Bill Simon told CNBC that there can be around “3% to 5% breakage, meaning cards that don’t get redeemed.” People forget they have a gift card, aren’t sure where they put it, don’t like the store or sometimes let it expire. Looking at estimates from the Mercator Advisory Group, CBS figured out that in 2019, almost $3 billion in gift cards were left unused.

Another downside to gift cards is that the recipients often end up spending some of their own money. “About 20% to 30% more than the gift card is what you see, generally speaking,” according to Simon.

This year, if you’re having a tough time deciding on a gift for someone, instead of resorting to the gift card, do a little research. If spending time with the person isn’t enough to give you an idea of gifts they might like, take to social media. Scroll through their feeds to find out what they rave about, where they eat and what type of clothes they wear. Buy an actual gift, but also give the gift receipt. These days, most stores make returns easy enough that taking back a gift and choosing something you like better takes no more effort than using a gift card anyway.

If you must buy a gift card, use these same sleuthing skills to at least buy it to a business you know the recipient already loves. Try and stick to businesses with a wide variety of items and prices. Be familiar with the business so that you purchase a gift card amount that will adequately cover the cost of an average item there.

If you receive a gift card this holiday season, make sure you get the most bang for your giver’s buck.

  • Put it where you’ll remember to use it.
  • Use it within the first year. A good option is the third Saturday in January, “National Use Your Gift Card day.”
  • Check out the website on the card and register it online with your billing address. Then you are able to use it shopping online.
  • Upload it into the store’s app, if possible. Then it’s saved in your digital wallet there without needing to remember a physical card.
  • Check your state’s expiration and fee policies for gift cards. Federal law doesn’t allow gift cards to expire for at least five years, but each state has its own laws as well. For instance, in California, any card with a cash value of $10 or less can be redeemed for cash. And Washington allows a $1 per month fee if you haven’t used a card for 24 months and it has less than $5 remaining. Consumer Reports has a list of all state laws regarding gift cards.

Cash may indeed be the best option for some on your list. College students with a lot of expenses, newly married couples just starting life together and others may be more thrilled to receive a little extra money for their bank account to pay for life’s necessities.

But whether you decide to give presents, gift cards or cash, be a considerate giver. You are buying a gift for someone because you care about them; let them know that. A sincere note accompanying any gift that explains the thought you put into your selection can go a long way in making the season (and the gift) more meaningful.