This holiday season gift cards are once again predicted to fill out a lion’s share of gift giving. In 2020, there was a surge in gift card giving as shoppers avoided stores and even holiday gatherings for fear of COVID-19.
In 2021 supply chains were still an issue and many gifts were unavailable – pushing consumers to buy gift cards in hopes their friends and loved ones would be able to make their desired purchase later.
Today, inflation is a growing problem. Many consumers are concerned about being able to buy gifts or even make ends meet. Gift cards may seem like an easy way to avoid spending additional money on goods while still offering something of value.
But Gift Cards Suck
There are a lot of reasons to see gift cards as a good gift option this holiday season. But the truth is you might be throwing your money away. Billions of dollars of unused gift cards go unused in the US every single year.
Nearly half (47%) of Americans have at least one unused gift card, voucher or store credit collecting dust or sitting in the purse or wallet. And eventually those unused gift cards expire, which means the recipient loses their gift while the business gets to pocket nearly free cash.
Most gift card users work hard to make a purchase within the card’s limit. The remaining balance then languishes. Those who don’t manage to leave pennies on a now virtually useless card spend 40% or more over the value of the card.
But the biggest reason gift cards suck? Forcing the recipient to make their purchase from a specific store.
Cash is Just Better
Physical currency shows a great deal more thought than a random gift card. Providing cash to friends and loved ones means you are looking out for the short or long-term worth of the gift you are giving. Cash doesn’t expire and can be used for anything the recipient desires – whether that’s something extravagant, a meal or even rent.
Some might argue that gift cards look nicer. But you can’t fold a gift card into a fancy bow, and you can just as easily dress up cash with a fancy box, card or envelope as you can some rounded-cornered piece of plastic.
But one of the best reasons cash is a better gift option is that it’s ongoing use by every generation. Cash use grew to 20% in 2021. Americans 18-44 usually hold around $50 on-hand at any given time. And Gen Z, especially, is beginning to discover the true value of cash when it comes to budgeting and gifts.
Go With Cash
Inflation and supply chains issues may make gift cards an attractive option for gift giving this year. But stop and think about the difficulties gift cards really create for recipients of these slim plastic presents. Rather than putting limits, expirations and responsibilities on your friends and loved ones, instead consider giving the freedom of the gift of cash.
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