Today Mellody talks about the down side of buying gift cards.
I hate to be a wet blanket, but as we kick off the holiday season, I need to get the truth out there: gift cards stink. It’s an enormous business, with sales expected to reach $100 billion this year. Odds are that the majority of you are going to purchase at least one gift card and that you also would like to receive one. People love them, but they’re kidding themselves.
What do you have against gift cards?
First of all, unless you go through a registration process at one of the few stores who offer them, if a gift card is lost, that’s it. And even if you do manage to hold onto a gift card, so many cards sit around collecting dust never to be redeemed. Consumer Reports has repeatedly warned the public about the billions of dollars in gift cards that go unredeemed each year. And here’s a stunning statistic reported by the Wall Street Journal: From 2005 through 2011, the total amount of money that went unspent in gift cards was $41 billion. This is great news for retailers—they collected money without actually having to sell anything—but not so great for consumers.
Also, most people end up spending more at the store if they do actually ever redeem the card. Think about it: When was the last time you found something at the store for EXACTLY $40 or whatever the amount was on your gift card? That never happens. What happens more frequently is you don’t want to carry around a card with $3 left on it, so you buy something that costs more than the card value and in essence end up paying for your own gift.