Do You Expect to Get Fair Market Value Out of Gift Cards You Receive?

On my post titled Why I Hate Macy's, I railed on the fact that most (all?) of the merchandise at Macy's is over-priced and how I couldn't find anything reasonably priced to buy with a gift card I received as a present. The first comment chimed in with the following:

I may have misread this post. If you got a Macy's gift card, what does it matter what things cost in the store? If you use your gift card and don't go over it, you haven't used any of your money.

I responded as follows:

That's one line of thinking. Personally, I'd like to get fair value for my gift. For example, if I have a $50 gift card, I'd like to get $50 in value -- not $25 in value.

Another commenter followed up with this response:

Wrong attitude about the gift card, FMF. At that rate, there's few gift cards that you would like! Unless it is for nothing, treat it like freebie coupon offer that you can only use at one store and buy something that doesn't exceed the value of the card. It's all well and good to want to get "value", but there's also a time not to push it. Your post almost sounds like my mom's complaint when she couldn't use a normal discount code at a site when using the gift certificate I bought her to the site. It wasn't costing her anything, but she was upset she wasn't getting the "value" she should have because if she had paid for the items it would have been a lot cheaper. I suggested that she was losing sight of the fact that she wasn't paying for the items at all, I was. Same here with you, FMF.

I'm interested in what the rest of you think. When you get a gift card, do you look at it as "free money" that you spend on anything no matter what the price (even if you know you could get it elsewhere at a much lower price) or do you try and get a fair value out of it?

I TOTALLY disagree with the commenter's statement that, "At that rate, there's few gift cards that you would like!" Most of my gift cards, I do find things I want/like and at values that are at least close to decent prices. A few examples: Target, Meijer, and a local restaurant. All of them offer good values so when I spend $25 on a gift card with them, I'm getting what the marketplace would generally value at $25. At Macy's if I spend $25 on a gift card, I get something I could pay $10 for elsewhere.

What do you think?

BTW, since I wrote the original piece we did find winter coats on clearance (70% off) for our kids that were at least reasonable in price, so we did get value out of those purchases. Then again, my son's last winter coat was an almost-new Columbia ski jacket (very nice coat indeed!) that my wife got at a thrift store for $6, so maybe the 70% off wasn't such a good deal. ;-)

Comments

[Jon]

I tend to think like FMF on the gift card issue. If I have a gift card I want to get decent value for it. I feel your pain with Macy's gift cards as I recently got married and received over $500 worth of gift cards from Macy's. We also received alot of gift cards from Bed Bath and Beyond which proved to be much easier to use, when combined with 20% coupons there is alot of decent value to be had at that store.

It can also be worse than Macy's. We received a bizarre gift from Pottery Barn that was not on our registry (we suspect it was a regift). We returned it and received store credit since it didn't include a gift receipt... Good luck trying to spend $70 at Pottery Barn and getting good value for it. We ended up with a $70 throw blanket, which while nice, we don't value much more than an equivalent $20 throw blanket from Target. BTW... If Pottery Barn survives this economic downturn, I'll be very surprised.

[Scoutsigns]

On a related note, I hate buying gift cards at book stores and not being able to use my discount card.

It isn't like the discount cards are free--there is an annual fee.

Bookstores--I would buy a LOT more gift cards at your establishments if I could use my discount. And they could be for more $$$, resulting in more product moved for you.

[Money Minder]

I guess it's the thought that counts. Perhaps the person who gave you the Macy's gift card thought it would be a treat for you since you normally wouldn't shop there yourself (like when people buy you a present that you wouldn't normally buy for yourself). They just didn't realize your reasons for choosing not to shop at Macy's.

I know how you feel though. If I get a gift card for a store I don't patronize or for a product I don't really use, it is a challenge to find a use for it. You could have re-gifted it to someone who you know actually likes Macy's.

[Ben E.]

I agree with FMF that it reasonable to desire a fair value for your gift card. However, I think it takes a savvy buyer to maximize the gift card. FMF just bought a winter coat at 70% off. I think that would qualify as a good purchase. Stores like Macy's should be frequented around major selling times (end of season, holidays, etc). But that's true for most stores.

If one was truly disappointed with a store that was severely overpriced and never offered sales, then it might be worthwhile to sell the gift card on ebay and recover most of the face value of the card in cash.

[Noah]

I think it's bad form to complain about gifts, and free things in general. On the other hand, there's nothing wrong with complaining about the lack of a free thing (Cheryl?!?)

[Kate]

I treat a gift card like I treat cash, I try to get full value for it. We have given away gift cards that just are not our thing. I find that less frustrating than trying to use something that I don't appreciate. Could you donate unwanted gift cards to a charitable cause (like a silent auction fund-raiser) and get a tax deduction for the full value?

[Kevin M]

Even if it's a gift card, I still try to maximize my value from it.

[Kimberly]

I side more with the commenter. The value is lost at the giving. The giver chose to pay $50 for a gift that you might only value at say, $25, because of how you view the value of merchandise at Macy's. I don't think it's your fault or Macy's fault if you can't get what you see as the full $50 of value from the gift card, as there exists other gift card receivers that WOULD value a $50 Macy's gift card at $50. It is honorable of you to TRY to get the full $50 of "value" out of the card, but I don't think it's going to happen in this case.

[Kimberly]

An article in the NYT about the economics of gift cards, by our beloved Freakonomics authors: http://www.nytimes.com/2007/01/07/magazine/07wwln_freak.t.html

[Tarah]

I'm thankful for any gifts I get. When it's a gift card, I wait until that magical time between seasons when the brand-new stuff just came in, and practically the whole store is 80% off. I just did that with my JCPenny gift cards. I bought a $200 suit for $40, including tax. That way I get the best of both worlds. I get a good deal and something that I would not normally afford for myself.

[Bob]

I was always on the fence and I don't know how I generally feel about people who buy things at the thrift store who actually could afford to purchase the item at full price. I guess ultimately I am torn because I am a frugal person but on the other hand, don't want to take something from someone who actually needs it since I can afford full price or at least from a department store on sale.

I always think of the thrift store as a place where people who can't afford certain things to actually "survive" (survive might be too strong of a word) can find items which will help them get back on track.

Consider this example. Would it be okay for people who can afford to eat, go to a food bank? Or to a food bank which offered food items at 10% of the original price? I think with this example, which is similar to the thrift store, people probably wouldn't do this.

FMF, this might start a whole new debate.....

[Uri]

If you look at eBay sales of gift cards, then you'll notice that the resale value of gift cards is roughly proportional to how low the prices are at a store. There's always an inconvenience factor with them which is why they never sell at face value. Why would I go to the trouble of buying a gift card at face value when I could just use my cash? Furthermore, that gift card has restrictions. Can only use it at one store and must use that money to buy things sold at that store. Must use by a certain date sometimes. Cannot lose it (more dangerous than credit card). Won't get any cash back from it. Risk of fraud in transaction (you might not ship it or it might be empty). Must use it all (sucks to have $2 left on a card). Yet another card I have to keep around.

The result - no one wants to gain nothing to inherit these troubles. I have a $9 Pier 1 gift card that I have no idea what to do with. It's worth $0 to me.

That being said, a gift is a gift and if someone wants to give you a gift card you should appreciate the thought and try to respect their wishes. In the worst case, the item has no value to you but at least you have the thought.

[Dave]

FMF, I generally agree with your posts, but I couldn't disagree with you more on this one, for several reasons.

First, I have personally gotten MANY great deals at Macy's. (No affiliation, btw!) The primary suit I wear, I've had for at least 5 years and I got it at a 75% discount at Macy's. If you time it right, you can get stuff there for as cheap as Target but better quality.

More importantly, what you are REALLY saying has nothing to do with gift cards and everything to do with the store. In other words, you hate gift cards from Macy's because Macy's itself is overpriced, and you'd never shop there. It's kind of like if I got a $50 gift card for Louis Vuitton. What would be the point? There's not a lot I'd purchase there anyway, right?

Macy's is not a significantly "high end" retailer, compared to Bloomie's, Saks, Neiman, Dillard's, etc. So, again, what you are REALLY saying is that most retailers in America do not sell their products at what you perceive to be "fair market value." I think that's incorrect. I think it's true that most retailers do not sell their products at your own PERSONAL and subjective view of what is a fair "price." But the very term "fair market value" signifies what the MARKET will BEAR (i.e., the rest of the country!). So BY DEFINITION, any gift card from an average, nationwide store like Macy's is a gift card for products that are priced at "fair market value."

[FMF]

Dave --

I disagree. Items at Macy's are priced at "fair market value for what a Macy's shopper is willing to pay/thinks is a fair amount." That differs from either "fair market value" or what's a "good deal" (you pick one) based on what you can usually find the same items for elsewhere. Want some examples? See this post:

http://www.freemoneyfinance.com/2009/01/why-i-hate-macys.html

[Christy]

I agree with Dave above (it's your perception) and Tarah (be happy for what you have received). And I would love to see Bob's Thrift Store comment as a thread!

[Sarah]

It's free money, FMF. You can't "get it for cheaper elsewhere" because you are paying *zero* for the item!

Heck, I like to use gift cards for things that I'm interested in but that aren't a good value, in my judgment. I would never buy the item myself--but here's my chance to get it for free.

[Dave]

FMF, we seem to have fundamentally different views of the term "fair market value" and I'm happy to agree to disagree. You seem to suggest that "fair market value" = "good deal." My argument that if something is a "good deal," it is inherently not fair market value (because you're getting a good deal on it!).

I'm also not saying that Macy's is the be all and end all of what is "fair market value" in our country. However, you say that Macy's is NOT fair market value but the $6 Columbia jacket from the thrift store IS fair market value. I disagree 100%. I think the $6 jacket is a great deal! But between the two choices, there is no doubt in my mind that Macy's is a much closer representation of "fair market value" than the $6 thrift store.

In any event, please feel free to send me ALL gift cards you receive in the future which you do not want. I'm happy to take them! ;)

[Apex]

WARNING: SCROUGE ALERT

Gift giving in our society is way over done and since most of us have too much anyway no one knows what to get anyone else. This results in 1 of 3 likely scenarios.

1. The first is the traditional gift giving model where you just go out and get something you want to get for someone. In our society where everyone has everything they need or even want mostly, this is hard to do. It creates stress for the gift giver because they are not sure what to get and it results in the huge lines for returns the week after Christmas because so many things that are purchased are not what you want. So you either return it or just never use it or throw it away, or you regift it and pass the pain along to someone else. None of this is efficient and I think in our society of affluence it creates more stress for both the giver and receiver than it does feelings of joy.

So this leads to the compromise solution #2

2. Everyone makes lists for everyone else of the things they want, then people buy off the lists having to be careful either about giving only parts of the list out to different people or else the buyers have to coordinate so as not to double up on the gifts on the list. Unless your lists are specific to the point of I want the Sony 26 inch LCD TV model # WP26HRK then you get something close but probably not exactly what you would have bought. And this shows what exactly about the "thought behind the gift" It shows this is gift giving time and I am obligated to do it so here is the thing you wanted that I purchased for you and thank you for the thing I wanted that you purchased for me even though we could easily have purchased our own things for ourselves rather than this game we played to purchase other people's stuff for them. Can we start this process with groceries too please? :)

So this leads to easy way out solution #3.

3. Get people gift cards. I mean now this is a great gift. Now people can get whatever they want. I don't have to worry about them returning it because they don't want it. I don't have to worry about the lists and managing who gets who what. But yet I still get to give them something. This is great. But at this point, what is the point. You are trading forms of cash. But while its like cash, its worse than cash. As proof, you can sell your gift cards online and people will buy them but at far less than face value. It can only be used at certain locations. It may have a time limit where it expires or starts to loose value. It may have restrictions that don't allow it to be used with other money saving offers. And its easily lost, misplaced, or forgotten about. Why would you take cash which is universally accepted, has no expiration or limitations and trade that for something that has a face value of no more than the cash but with all the drawbacks and limitations and then give that to someone and say here, I want you to purchase something directly from this retailer. It's quite silly actually.

Obligatory holiday gift giving in anything but the smallest quantity (especially for adults) in our society of affluence is not only no longer helpful, its detrimental. As a society already steeped in debt and materialism, we do not need society generated obligations that require people to spend money on things that people do not need. How much do you want to bet that December is the month of the year with the largest increase in revolving debt that does not get paid off.

So to me, gift cards are a sign of societal economic illness. The fact that they exist is mostly a sickness resulting from the progression I listed above as a means to keep people addicted to the whole gift drug that keeps people spending money on things no one needs. And the fact that so many people view it as found money to be spent without trying to get value or to just spend it on something they wouldn't normally buy just proves the point. They promote wasting money as a society and putting everyone further in debt. You as the receiver may not go into debt but many people are going into debt to buy them, and you may have gone into debt to buy them for someone else too.

SCROUGE OFF

[Dave]

Sarah is exactly on point on this, by the way. It's just basic economics. Let's say someone gave you a $100 gift card for "Dave's Overpriced Luxury Store," and the only thing that that store sold were electric shavers for $100. You can purchase that exact shame shaver for $19.99 at Target, and you really, really need the shaver. Well to you, it's still a better deal to use your gift card and get it for free at Dave's than shell out $20 at Target.

[FMF]

Dave --

Ha! ;-)

[FMF]

Dave --

While that example is true, real life differs from it in almost every case I can think of. In this case, Macy's sells a wide line of products that are generally over-priced compared to other options. That said, you can find SOME things that are "good values" but you have to look very hard, buy on sale, be flexible, and use a coupon...

;-)

[Dave]

I don't disagree with you that Macy's sells some products that are priced higher compared to "other options," and that other products are "good values." My whole point is that when you introduce the term "fair market value," you are no longer really referring to the best value or even good value.

In any event, I don't think we are very far off in our points of view. I don't shop in Macy's very often, but then again I'm not a big shopper in general. Much of my office/business clothes come from (GASP!!) Banana Republic, actually (I know, I know... you can't get everything at Target and there's a level of professional expectation in the office place) but I usually buy when things are on sale.

Ironically, I JUST got a $50 gift card for Macy's from my in-laws!

[Dave P]

I got a gift card for a local store for $50. Bought an item that was $69 paying $19 from my pocket. Could have got it at Walmart for $54, all of which would have came from my pocket. I saved $35 dollars by buying it with the gift card. The gift card didn't cost me anything and I came out ahead by using the local store.

[Maek]

First, I prefer cash, because it has complete flexibility, but if I am given a gift with restrictions, then all I can do is make the most of it within the restrictions. Just like frequent flier miles on airlines - maybe I would rather have a penny or two per mile instead, but since I don't have the choice, I earn them, and then use them wherever I think they are most cost-effective.

So I guess if I had a Macy's gift card, I would try to buy the least over-priced item I actually wanted, or something only Macy's sells, or try to sell it for more than what I think I would spend to buy the same items somewhere else.

I kinda feel like this whole gift card thing in America today is ridiculous (actually great marketing). The giver is really saying: "I can't be bothered to give you something you would like (or I don't know you well enough, or whatever), but giving cash is tacky. So instead I'll give you cash with restrictions". If they really want to "let you choose for yourself", then why not just give you the cash? Oh wait - cash is tacky.

[Nick]

Maek, I tend to disagree with you on the gift card issue, but I guess it depends on who you are giving it to and why. If you are giving the gift because you can't think of anything else then you are right, but, at least in my experience, there are many other reasons people give gift cards.

My friends and family don't give me cash because they know what I'd do with cash (put it in the bank). They also know I enjoy buying stuff, but don't do it because I am very strict about my budget. So they give me a gift card because I get to enjoy myself while shopping for whatever I get AND I get to enjoy whatever I purchase as well. I love getting amazon.com gift cards because there is always tons of stuff I want. Same applies to restaurant gift cards. My wife and I rarely eat out because it isn't in our budget, so a free dinner out is a great gift for us.

[Bruce]

I've got to agree with FMF on this one. I use gift cards almost the same as my own money. It's just that with gift cards they have to be spent for something at the store, when normally I might not buy anything there. Take Macy's, I wouldn't normally buy there because it is overpriced. But, they do have sales, so just like cash, I'd use the card on a good sale, even if I might still want to pay less.

Some say the gift card is free money, so just use it.
But if I can get 2 things for that money at Macy's, rather than just 1, I'd wait until the sales to get more for the same money.

The problem is when you get a gift card at a store where nothing is that cheap and you want nothing there. Say you hate spas and you get a $25 gift card to a spa where everything starts at $75. You might as well give the card to someone else.

Scoutsigns said he/she can't use a discount card with the gift at book stores. I can, at both B&N and Borders. Gift cards are just like paying in cash, any discounts or discount cards still apply.

[Bruce]

FNF,

If you don't like the store the gift card is from, have you thought about using a card swap site like Card Avenue? Any feedback on the likelihood of getting the card you traded for, or the responsiveness of the site if there is a claim. Unlike e-bay many who trade there are doing it for the first time, so there is often no history on people's honesty.

[Paula]

The problem with gift cards is very rarely do you find something for the exact amount. So you either loose part of the gift, or end up spending more. If it is for a place like Target, I don't mind, because I would buy stuff there anyways and the gift card is more like a good coupon. For a place I don't shop, it just bugs.