Jan 5, 2005

In Defense of Gift Cards

It seems that there has been a lot of controversy as of late over the humble gift card. Slate's Daniel Gross complains that gift cards are evil on three counts:

1) . . . every moment you don't use it, Wal-Mart or some other giant retailer is collecting interest on the giver's cash.

2) When you go to redeem it, chances are you'll end up spending some of your own coin.

3) And it probably reflects the giver's implicit criticism of your poor taste and untrustworthiness.

However, there are obvious rebuttals to each of these points, which does not mean that the information is incorrect, but that Gross's slant on the facts is unnecessarily negative. Here goes:

1) So the retailer collects interest on the giver's cash as long as the gift card remains unredeemed. So what? It's not a secret that retailers are in business to make money and, as long as the retailer neither charges the consumer interest nor devaluates the gift card over time, what difference does it make? If I've somehow misunderstood the economics going on here, please correct me. Thus far, I don't see any harm in the practice.
2) Yes, you probably will shell out some of your own cash beyond the value of the gift card. Not necessarily, but it is likely. I think the issue here is whether or not you have been given a card to a store that you frequent or one where you seldom shop. For example, let's say you've been given a Neiman Marcus card. However, as Neiman Marcus tends to be rather expensive, you virtually never shop there. In that case, you might feel forced to buy something just because you've been given a card. Then (unless it's a card of an extremely generous denomination), you will probably exceed the value and dip into your own funds. If, on the other hand, you've been given a card to a retailer like Barnes & Noble (where, for the sake of argument, we'll assume you often shop), you can use the card to pay for at least a portion of a purchase you otherwise would have made entirely with your own cash. So, while it is likely that you'll spend some of your own money in excess of the card (let's face it-- how many purchases total exactly $10, $25, or $50?), if you've been given a card to a retailer you already frequent, it chops some of the cost off of your purchase. While it may not be an ideal system, it's not bad.

3) And the gift of a card does not automatically indicate the giver's distrust or criticism of your taste. Sure, if it's a gift card from Great Aunt Millicent who hasn't seen you since you were six years old, it's probably going to be a better reflection of her taste than of yours (and of the fact that she still thinks you're six). But, as long as the giver knows you, a gift card is often just as thoughtful, sometimes more logical, and shows as much (if not more) trust in or approval of your taste as any other present. Again, an example: Your hypothetical parents live in a different state. They know you need some things for your new apartment, such as new sheets, some pans that still retain their Teflon coating, and possibly an upgraded blender or toaster. But they also know that there's a Bed & Bath only four blocks from your apartment. So instead of buying you heavy pans that you'll then have to lug across state lines in your suitcase, they give you a highly portable gift card that you appreciate. And, unlike cash, which you might fritter away on groceries or a Metrocard before even realizing that you'd spent it, the gift card is already earmarked for your present.

Essentially, I do think that well-thought out, well-chosen presents are usually more meaningful than gift cards. But I don't think that gift cards deserve the thorough vilification they've been dealt lately. They can be practical, appropriate, and very much appreciated.

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