Gift Card Madness

Can't think of a gift to get for your teenage niece who is beyond Furbies, Webkinz, and Groovy Girl Dolls? Your nephew no longer cares about Pokémon, Transformers, or Lego? Well, you can always get them a gift card.

We are currently living in the age of "Gift Cards." My sons have been receiving them and giving them at birthday parties for several years now. Best Buy, EB Games, and Rogers seem to be the most prevalent choices. The kids can pick their own video game for any of their video gaming systems. These are the best “I have no clue what to give you” presents. Some people give cash, which many gift-givers are loath to do, but I've never heard a complaint from the recipient.

Nowadays, you can take the gift card phenomenon one step further. Instead of traipsing to the local mall to buy a card for a specific store, you can simply buy a CREDIT gift card, which enables the person to use it at any store that accepts credit cards. It’s not quite cash and still indicates some thought on the part of the giver. Convenient? Yes. But a good practice? I’m not so sure.

Visa or Mastercard gift cards certainly have their appeal, but they also have their hidden dangers. Put a credit card in the hands of a child or a teenager and very soon they’ll adapt to this great new way of shopping. What a brilliant way for credit card companies to indoctrinate kids into the world of credit. Unconsciously, they are being trained to pull out a card to make a purchase without thinking about the expense or how the cost is to be covered. One day, they will be paying 21% extra for the privilege, but they don’t need to know this yet.

Before gift cards there were gift certificates, and most of them had expiry dates. If you didn’t use them within 3, 6 or 12 months they’d be as good as a coupon from 1953. And there was often no mercy. If you came into the store with an expired gift certificate, the staff person would look at the date, nod their head in sympathy and say, “Sorry, but it clearly states right here in black and white that this certificate expired in June, 2003.” You could ask for the manager, raise your voice, stomp up and down, but really, you had no leg to stand on.

Fortunately, many gift cards don’t have expiry dates, but they do have other pitfalls, and this is why stores LOVE them. According to ConsumersReports.org’s National Research, about 25% of gift card recipients do not use them within the year. As stated in the report, “Over one-third of those respondents said they didn't use the cards because they either forgot about them, lost them, or the cards had expired. But the most common reasons people gave for not spending their gift cards were that they didn't have time to shop (58 percent) or couldn't find anything to buy (35 percent).”

Such is retailer heaven—free cash, free revenues.

My father once received a gift card from his financial advisor for Christmas and when he went to use it the card contained no funds. What do you do when you receive a well-intentioned present like that and it’s void? My father, not a particularly shy man, called his broker and basically told him that his Christmas present was a dud. Many of us would not be bold enough to make such a call. We’d feel bad for the giver and, considering that most people don’t keep the receipt, we wouldn’t want them to feel compelled to buy us another one.

Since that incident, I always include the receipt with the card so the gift card holder has proof of the purchase on hand.

Years ago, I gave someone who had back pains a $100 gift certificate for a massage at a spa. Within six months, before the certificate was redeemed, the spa suddenly disappeared—bankrupt. What a waste!

This past Christmas, my husband and I decided not to get each other gifts for the sake of economizing. Since he has difficulty keeping such agreements, he bought me something anyway. Knowing how much I love bookstores and books, he bought me a gift card for a new multi-faceted bookstore in Toronto called McNALLY ROBINSON, which opened in the fall. With plenty of comfortable seats to lounge and read, and a fine restaurant to have a lunch, my husband thought I’d enjoy a pleasant afternoon there...which I would have.

He purchased the gift card a few days before Christmas and guess what happened a few days after Christmas—yes, the store went bankrupt. The company had overextended in a difficult economic climate and instead of bucking the trend, they joined it. Sad for the owners, sad for the creditors and sad for me!

The other thoughtful gift my husband gave me was a gift card for a spa. I’m using it this Sunday. If they’re still open for business, that is.