Giving cash is more thoughtful than gift cards

If you're already waving a white flag over picking out the perfect presents for your loved ones, resist, comrades, resist the temptations of the slap-in-the-face gift card. If it helps, heed the warning from none other than Sheldon from Big Bang Theory, "You haven't given me a gift. You've given me an obligation." So, turn to cash - and here's why:

First, cash is not a thoughtless gift and there's no reason to claim that giving gift cards have 'slightly more' thought behind them. You could easily argue that cash is the ultimate gift card while limited gift cards reduce your friend or loved one to a predictable shopper.

A survey for the 2017 Health of Cash report by Cardtronics found that even though Americans are more likely to give a gift card as a present, more people would prefer receiving cash instead (50% cash vs 29% gift card). And why wouldn't they? Cash is accepted just about everywhere, has no expiration date, mandatory mailing list subscriptions or HIDDEN FEES!

Second, how often do you spend the exact value in a gift card and no more? Imagine you've been given a $50 gift card to use for your online purchases, but what you want costs $55.99 (delivery costs, darling). Do you choose something else, or do you now have to spend $5.99 of your own money as well? This is great for retailers, but consumers are left to navigate a maze of federal, state and corporate policies, and often end up with worthless overvalued gift cards.

Alternatively, you could opt for a variety of lower priced items and end up spending $45.99 with the gift card. But that's okay because you'll spend the next $4.01 on your next shop. But then a week passes and you cannot seem to remember where you left the gift card! Life gets in the way, work is crazy, attending the kids' school plays come first and suddenly it's a year or so later, you finally find the card but lo and behold, the expiration date was last week. Nothing left to do but accept the loss. But hey, it wasn't your money anyways it was a gift. This thought(less) process doesn't happen with cash. 

Third, cash is the number one contingency payment plan. With 2017's many life-destroying natural disasters dominating the headlines and an increasingly politically violent world, we're reminded time and time again how in a crisis, we turn to cash for water, food, medicine, supplies and transport. When the sky is falling, you can pray for bars on your phone to save you but it's the paper in your wallet that will get you what you need, when you need it - and gift cards are no match.

Excerpt from The Motley Fool article

Companies like to sell gift cards, but they love it when those gift cards aren't used.

Together, Chipotle Mexican Grill (NYSE:CMG), Starbucks (NASDAQ:SBUX), and Barnes & Noble (NYSE:BKS) collected more than $99 million in income last year from so-called gift card "breakage," or gift card balances that are very unlikely to ever be redeemed.

Starbucks' customers carried balances of $1.34 billion on its gift cards, nearly 23 times more than Chipotle's outstanding balances. If Starbucks were a bank, its gift card balances would put it among the top 10% by assets.

Starbucks cards are very likely to be redeemed, but even small amounts of breakage on a percentage basis add up to huge sums of incremental earnings. Starbucks recognized $60.5 million of breakage income in just the last year, an astonishing amount of virtually expense-free revenue. Continue reading...

 There are also a few lesser-known risks that come with gift cards. Most know how to look after cash because it's the backbone payment option. When a banknote is suddenly banned, the government or state have an unavoidable responsibility to bring it to the attention of the public, and even then, it there is usually a grace period for exchanging the old notes/coins for the same value.

But when a gift card is sold empty, you won't know about it until you try to use it - by then, you better have a way of proving that it arrived empty. From unknowingly purchasing unloaded or empty gift cards to being a victim of the ol' bait and switch trick, it's about time the public opened their eyes to potential gift card dangers. Continue reading...

The bottom line: Cash is the ultimate gift card. 

 Sources

Owens, Kim. "5 Ugly Truths About Discount Gift Card Websites Everyone Should Know." The Huffington Post. June 02, 2016. Accessed October 24, 2017. https://www.huffingtonpost.com/kim-owens/5-ugly-truths-about-disco_b_10268626.html. 

Purdy, Kevin. "Why Cash is Almost Always Better than Gift Cards." Lifehacker. September 21, 2010. Accessed October 24, 2017. https://lifehacker.com/5643683/why-cash-is-almost-always-better-than-gift-cards. 

Wathen, Jordan. "These 3 Companies Earned $99 Million From Unused Gift Cards Last Year." The Motley Fool. July 15, 2017. Accessed October 24, 2017. https://www.fool.com/investing/2017/07/15/these-3-companies-earned-99-million-from-unused-gi.aspx.