Making the Most of Gift Cards

MSN Money shares the 11 golden rules of gift card giving as follows:

1. Reduce the cost of gifting. Consumers who previously might have spent $100 on a gift card for a single recipient this year may consider buying a pair of $50 gift cards to take care of two people on their holiday shopping lists.

2. Let gift card dollars go further. Choosing prepaid cards from discounters and big-box stores lets gift recipients buy more merchandise. Henderson says that such stores let recipients select a broader range of merchandise, including discounted name-brand products.

3. Give people cards that pull 'double duty'. Ideally, gift cards can pull "double duty," offering the chance to be both functional and stylish. Some gift cards are even collectible.

4. Don't limit where gift cards can be spent. While the large selection of items at discount retailers allows for greater choice, so-called open-loop gift cards provide even greater options.

5. Beware of fees and expiration dates. Although open-loop cards provide greater freedom, it may come at a cost. To avoid having gift card dollars eaten away by fees and expiration dates, consider your options.

6. Go online. To save yourself time while increasing your gift card options, try the Internet.

7. Give the gift of health. You can't get any more practical than helping friends and loved ones stay healthy. The appearance of health care gift cards "really highlights that trend toward using gift cards for the purchase of necessities," says attorney Douglass of Alston & Bird.

8. Purchase gift card combo packs. Cross off several names on your holiday list at once with gift card combo packs.

9. Pitch in for group gifting. Retailers are helping prepaid card shoppers pool their resources. Best Buy's reloadable Pitch In card, for example, allows the recipient to create an online account. Friends and family members can contribute to a single account, with gift amounts starting at $5.

10. Get something for yourself. Just because you're giving gifts to others doesn't mean you can't also treat yourself. Some stores may provide a free item with the purchase of a gift card -- or a free gift card with your purchase -- so be on the lookout for such opportunities.

11. Be honest. No one of your list should be upset -- or surprised -- if you need to reduce your gift budget this year.

Here's my annual take/thoughts on gift cards:

1. Personally, I like to use them when I have no idea what the person I'm giving them to would like. Examples: the mailman and the newspaper boy.

2. When we give we try to make sure the store we buy from isn't too limiting (that the recipient has lots of choices of what to buy) if we don't know what the person likes. For instance, Best Buy is too limiting IMO for most people. Home Depot is too. Meijer (think super Walmart) gives lots of options -- everything a mass merchant offers plus food if they want to spend it in that way -- so it's our gift card of choice for "strangers". Everyone can find something they need/want at Meijer.

3. Gift cards are also good when you know what someone might want/like but they're far away and you need to mail them something. We quite often get gift cards for Walmart, Target, and Menards and mail them to various family members. Think about it this way as a recipient -- would you rather get a $20 gift that costs $5 to mail or a $25 gift card? I thought so.

4. Then again, why not simply give cash? For some reason, cash seems so impersonal while a gift card seems nicer. That seems strange, doesn't it?

5. Personally, I HATE receiving gift cards from places I don't regularly shop (especially if that place has limited options.) One store in particular comes to mind. I'm fine with receiving more flexible gift cards -- like ones from Meijer, Walmart, or Amazon.

6. Maybe we will simply give cash this year (to those we don't need to mail gifts to) -- but in a unique way. I still have about $1,000 left in gold, dollar coins, maybe I should give some of these away this holiday season.

7. I try to look for deals when buying gift cards. Some past offers:

• Receive an extra $5 when you buy a gift card over $25
• Get a free gift when you buy a gift card (you can then give away the gift to another person)
• Get a gift card yourself when you buy one
• Get a discount on your overall purchase when you buy a gift card

What's your take on gift cards? Like them or hate them?

Comments

[MoneyReasons]

Cash rules...

Gift cards are risky! I once got a gift card from work to a very popular online shopping site, and it expired on me after a year! At the time, I didn't realize that gift cards expire... :(

That said, I suggest to my sister that she can just buy me a gift card to a chinese restaurant call "House of Hunan" and "Starbucks". I then use these gift cards throughout the year as a reward on certain days. This works well for me since I'm on a special spot budget for lunch.

The only benefit of receiving gift cards is that they make sure you spend the money instead of saving it like you might be tempted to do if you were to receive cash instead (I guilty of this...).

[savvy]

I only do gift cards when I have a specific gift in mind. Giving a gift card (rather than cash) helps to ensure the person actually gets what they want vs the money being absorbed into their budget.

For example, I know my brother wants a certain item from IKEA. I'm not willing to buy the whole item but I will buy a gift card from IKEA in an amount that will make it doable for him to get what he wants.

[MC]

Like savvy, I like giving gift cards for stores that I know people really really like, but where I can't afford to give any one particular item from that store. For example, I give my babysitter gift cards to J Crew (trendy!) instead of some clothing from Target, because I know she craves that high end stuff and she appreciates help towards getting what she wants.

On the other hand, when I receive a gift card it's mostly "meh". Unless it's for Barnes and Noble or Starbucks, I'm basically never going to use it/would never shop there anyway.

There's nothing worse than having to go out of your way to go to a store you aren't interested in at all, where you then search and search for something you might possibly want that might be in your size! Waste of time, waste of someone's money. Ugh.

[Sarah]

Oooh, I get to pay fees (potentially) to become an unsecured creditor of a store! Where do I sign up???

Seriously, I agree with savvy and MC--they can be handy if you know someone is pining for stuff from a particular store but it's out of their reach. Or if there's a significant discount attached to it and you know the person shops there anyway. Otherwise, no. If one must give cash, checks work just fine.

[Crystal]

I love getting gift cards to places I shop like Amazon, Walmart, or Kohl's. I appreciate them even more than cash since I always put cash in the bank and gift cards can be used for "fun" stuff. If I receive a gift card for a place I do not shop, I either "sell" it to friends at a slight loss or re-gift it to someone that would like it...for example, I always get Olive Garden gift cards from my biological father for Christmas and my Bday that week. I regift them to my best friend since she and her father LOVE Olive Garden. Works out for everybody. :)

[RJ Weiss]

If people ask for them I get them. If they don't ask, I normally wouldn't give a gift card.

Whenever I purchase a gift card for someone who doesn't ask, I feel as if I'm just checking another gift off my list instead of putting some thought into it.

[Holly]

I give out a lot of gift cards, but for some reason, I have never rec'd one. I would love a restaurant gift card since, with three kids, it costs a small fortune to go out to eat; even if the g.c. is for $25.00, it still goes a long way toward a dinner at the Olive Garden.

Cash is boring...it sits in my wallet. Then it gets frittered away on candy for the kids, cash to the kids' school to cover the latest fundraising effort, or milk and bread on the way home from work, for example.

And who wouldn't love a Home Depot gift card!? They sell plants/planters, curtains, faucets, thermostats, lighting fixtures, Christmas and home decor, everything I love!

[Tamara]

I *hate* gift cards. In Canada, most provinces have legislation that prohibits gift cards from expiring, so that is not my issue. Why though, would I take money that is good anywhere, and exchange it for money that is only good in one place? If you truely don't know what to get someone I say give them money. Or, perhaps it's time to reevaluate why they are on your gift giving list in the first place.

[Justin]

http://www.giftzip.com speaks to all of the things mentioned above. It is a great site to buy gift cards online and is free.

[Terry]

1. Personally, I like to use them when I have no idea what the person I'm giving them to would like. Examples: the mailman and the newspaper boy

- I totally agree with this. For those whom I personally know and have an idea on what they like or prefer, I would offer them something that they would value.

[hari]

You can follow this conversation by subscribing to the comment feed for this post.

Cash rules...

Gift cards are risky! I once got a gift card from work to a very popular online shopping site, and it expired on me after a year! At the time, I didn't realize that gift cards expire... :(

That said, I suggest to my sister that she can just buy me a gift card to a chinese restaurant call "House of Hunan" and "Starbucks". I then use these gift cards throughout the year as a reward on certain days. This works well for me since I'm on a special spot budget for lunch.

The only benefit of receiving gift cards is that they make sure you spend the money instead of saving it like you might be tempted to do if you were to receive cash instead (I guilty of this...).