The Problem With Gift Cards

Gift cards are everyone’s favorite gift to give and receive. They look like you put in thought and effort, but without actually putting in thought and effort. In reality, it’s like giving someone shopping homework. And just like homework, it often gets neglected or put off. 

Sure, a gift card pairs nicely with a greeting card, but there are more drawbacks to gift cards than you might think. From wasted money to depreciating value, from “homework assignments” to trading in for an inferior product, gift cards aren’t always the slam dunk they appear to be. 

Gift Cards Go Unused

On average, 15% of all gift cards go unused, wasting billions of dollars every year.

In Canada, most gift cards can no longer legally expire—a win for consumers—but that doesn’t stop them from sitting in drawers for years before finally being redeemed.

Gift cards also don’t rise in value with inflation. A $50 card from five years ago still buys you $50 worth of goods, while the same amount of cash could have been invested, spent, or at least held its flexibility.

By contrast, vouchers (like two movie tickets and a popcorn combo) hold their value because the “experience” doesn’t change with time—two tickets are still two tickets whether redeemed next month or twenty years from now.

Gift Cards Lose Value Over Time

Inflation erodes the purchasing power of a gift card just as it does with cash. The difference? Cash is liquid—it moves, it can be invested, and it doesn’t lock you into one store. Gift cards tie you down.

And let’s be honest—who wants to carry 12 gift cards around just in case? On a spontaneous movie date, you’ll probably end up paying cash because the card is at home. That defeats the purpose.

You’re Giving Homework to the Receiver

The best part of receiving a gift is that someone else did the work—researching, shopping, picking it out, and delivering it. A sweater, a book, or a bottle of wine feels special because it saves the receiver the effort.

With a gift card, you’re basically saying: “Here’s an errand. Enjoy.”

Gift Cards Lack Personalization 

Gifts are supposed to show thought and care. When you take time to find out what your special someone likes—their style, their size, their hobbies—it shows effort. And effort shows love.

Gift cards, on the other hand, feel impersonal. When Christmas turns into nothing more than a rotation of gift cards, it feels like the commercialization of giving has gone too far.

Turning Money Into an Inferior Currency

Money is the most versatile gift of all—it can buy anything, anywhere. A DAVIDs TEA gift card, on the other hand, can only buy tea. That’s great if you’re a tea lover, but useless if you need groceries or new tires.

Because of this, people will literally sell their $100 gift cards for $80 cash just to unlock the value. That’s a built-in downgrade.

If you must give a gift card, at least make it worthwhile. Some retailers offer promotions like “Spend $80, get $100 in gift cards” or “Buy $20, get a free burger.” If you were going to shop there anyway, these deals are a logical way to gift. The giver spends less, the receiver gets more, and the business locks in your money. That’s a win-win-win.

In fact if you love eating out at restaurants that have gift cards at Costco you are pretty much getting 20% off your bill if you always use gift cards, which restaurants are not known for their discounts on food.

   

If you love gift cards, keep using them—just be aware of the drawbacks. A surprise card from your boss when you weren’t expecting anything can mean the world. But if you really want to show affection, do the research, put in the effort, and give something thoughtful.

Because at the end of the day, a gift should say more than “Here’s some store credit.”

If you found this helpful and would like help budgeting or investing please email me at BudgettoWealthTM@gmail.com