Not really, even with new federal rules ensuring that cards won’t expire for at least five years, and that “dormancy fees” can’t take away from a card’s monetary value unless you haven’t used the card in a year.
The new rules certainly make gift cards more consumer-friendly, in that card holders are less likely to be hit with fees and therefore more likely to use the full value of the card. So why don’t I endorse gift cards as wonderful gifts?
For one thing, as a Kiplinger story points out, many gift cards are still accompanied by fees:
It will cost you about $5 for most general-purpose cards, and you may have to pay a maintenance fee, too. American Express charges $3 to $7 for its gift cards, depending on the denomination, but no other fees. Discover sells its card for $3.95 and charges a $2.50 fee if you do not use it for a year.
The bigger point is that people like to give gift cards because they’re as good as money—only, for quite obvious reasons, they’re not as good as money. So why not just give money, which truly is the perfect gift?
When you want to give someone $20 to spend, you’d have to take $25 out of your wallet if you’re going the general-purpose gift card route. No matter if I was the giver or recipient in this situation, I’d prefer that the full $25 go to the recipient, which is what happens if you give cash. Why give Amex or whoever an easy $5 cut in the transaction? Just because you’ll feel crass by handing over cash? That’s silly and wasteful. I’d also prefer that no one has to ever worry about expiration dates or dormancy fees or having to use the money at certain stores, and none of these concerns come up if you give cash.
Also, even with better rules regarding expiration dates, there’s still a good chance that gift cards will be used for silly purchases (because you want to use up the card’s value before you forget about it), or that the card won’t be used at all. According to one study, of the $65 billion spent annually on gift cards, $6.8 billion is never redeemed. Now that’s really wasteful.
I don’t have any corresponding stats regarding the gift of greenbacks, but my guess is that in all but the rarest instances, recipients put the cash they’ve been given to use in one way or another.