Everyday Cheapskate: The dark side of gift cards

These days, you can buy gift cards (the modern replacement for the gift certificate) from just about every store imaginable. They are convenient, and for many people, gift cards appear to be the perfect gift solution. They’re not. I am so opposed to gift cards that I’m this close to declaring an all-out boycott. Why? Oh, please let me count the ways.

But first, let me define “gift card.” This is a card with the name of a retailer on it, such as Target, Walmart, Kohl’s or Honey Baked Ham. I am not referring to a prepaid debit or gift card with Visa or Mastercard. Here’s why I don’t recommend them as gifts:

No. 1: It’s impossible to spend a gift card exactly. Either you lose the difference because they leave that last amount on the card, or you have to dig into your pocket to supplement the cost of your gift. Try to tell that to a child.

No. 2: We don’t give plastic the same respect as cash. The fact that millions of gift cards are never redeemed is proof. But do you think millions of $20 bills are lost or go mysteriously missing? Kids don’t lose cash the way they lose gift cards.

No. 3: You may assume that, while it is unsafe to send cash through the mail, a gift card is OK to mail. No way. Gift cards are stolen all the time, and unless you have been careful to keep the receipt and the card’s identification number, you are out of luck. Even then, you or your recipient loses if the thief has spent the balance or the store decides to not honor your documentation. They don’t have to.

No. 4: Gift cards are most major retailers’ bestselling product. They make a huge fortune from this runaway craze. And just try to find out how many cards are redeemed or what they do with all the money from gift cards that aren’t redeemed.

No. 5: According to California law, gift cards cannot expire, nor can the retailer charge handling fees for inactivity, but the same is not true of other states. A gift card is subject to the state laws where it was purchased. Do you know what that state’s laws are regarding that gift card? You could get a big surprise.

I can hear all of you Starbucks card lovers screaming in horror. You adore the Starbucks gift cards (or Target or Bloomies) you get from students, parents and co-workers. You are a regular customer; you combine your cards; you see them as more precious than cash. You are more likely to lose your youngest child than your gift cards. Your gift cards give you permission to be frivolous and buy something for yourself you would never buy with cash.

OK, OK. I’m not saying there are no exceptions here.

This is a compromise I can live with: Give a gift card because that is at the top of your recipient’s wish list, not because it’s an easy default for you.

Some people believe there is an unwritten rule that giving cash is impersonal and inappropriate. But that is not true. There is nothing wrong with giving cash. Fold it into an imaginative origami animal. Take a stack of $1 or $5 bills and have them “padded” at a local copy shop. Get creative. Cash is cool.

When you give cash, you give your recipient many options -- to spend it anywhere or to save part or all of it. And if he or she uses it to buy food or to pay the utilities, so what? A gift should have no strings attached.

And for the record, let me state that I have never lost a gift card. I prefer to think of it as indefinitely misplaced. OK, now I feel better.

Stories by Everyday Cheapskate

Mary invites you to visit her at EverydayCheapskate.com, where this column is archived complete with links and resources for all recommended products and services. Mary invites questions and comments at “Ask Mary.” This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of EverydayCheapskate.com, a frugal living blog, and the author of the book “Debt-Proof Living.”