The gift card is viewed as a thoughtful, less crass alternative to cash. When you present a gift card to someone, the message sent is something like, “I didn’t want to buy you something you don’t need, so you decide.” But if it’s truly the thought that counts, old-fashioned greenbacks are the better way to go.
Why? The recipient is all but certain to use the cash. But the gift card? Who knows? Each year in the U.S., $6.8 billion—yes billion—worth of the gift cards bought are never redeemed. If you actually want the recipient to get something out of your gift, cash makes more sense—even if you believe the gift card somehow seems nicer. It’s just semantics, isn’t it? Whether it’s a gift card or cash, you’re basically providing the means for someone to buy something of their own choosing.
What’s more, when you give cash, you can actually give the person more compared to, say, an American Express gift card. Amex is in the news because it dropped some of its gift card fees. A year after a gift card was purchased, Amex used to start charging $2 monthly fees until the value on the card was used up in one way or another.
Those fees are now gone. But when you buy an Amex gift card, you’ll still be charged $2.95 to $6.95 on top of the $25 or $50 the card is actually worth to the recipient. A $100 gift card might cost the buyer $106.95. If I’m the giver in this situation, I’d prefer that extra money to go to the recipient or stay in my own wallet, rather than see it presented on a silver platter to Amex. After all, it’s not Amex’s birthday, is it?