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This Christmas, Give Cash, Not Gift Cards

There have always been downsides to gift cards: the recipient is limited to only one store, the recipient may not be able to use all the money ($4.8 billion!?), the receipient may feel they have to spend extra trying to use up the whole gift. Or the store may go under before the receipient has a chance to use the gift card.

This year, there’s a higher chance the store will go under. In that case, the gift card may become completely worthless. I don’t expect most businesses to go under, but it’s hard to figure out just who will and who won’t.

The small teashop in my hometown had to close earlier this year. We always give my mom gift certificates for teas with friends. But since people were cutting back on their extra expenses, the tea shop didn’t have enough customers. Or for a nation-wide example, Circuit City declared bankruptcy. As of this writing, I believe their gift cards are still valid. But who knows how long that’ll last?

Cash not exciting enough for you? Dress it up with a festive Chinese red envelope. Hope the recipient uses it for some hobby or item? Include a note about why you chose to give cash vs. an actual gift. “To start a new quilt!” “To replace your tennis racket!”

Gift cards are a useful way to give someone you love a thing or experience that you can’t pick out for them. But don’t box yourself in or risk their losing it. Why not give cash this year? Make it look nice, include a thoughtful note or card, and it should be just as appreciated!

{ 5 trackbacks }

Frugal Friday Link Love | My Financial Recovery
November 21, 2008 at 10:21 am
Christmas Budgeting Tips: Avoid Overspending At This Expensive Time Of Year | Bible Money Matters
November 25, 2008 at 11:51 am
Have a Frugal Holiday Season Round Up | Oh My Aching Debts
December 12, 2008 at 9:01 am
What to Do With Gift Cards You Don’t Want
December 23, 2008 at 7:03 am
Gift Cards, Bankruptcies and Store Closings
December 29, 2008 at 7:01 am

{ 10 comments… read them below or add one }

Squawkfox November 21, 2008 at 8:04 am

I too am not a huge fan of gift cards…especially if you get a few of them. Too many rules and restrictions to know on each card, and all rules are not equal. Cash is nice. This year I’m giving books. Perhaps even personal finance books. 😉

Matt @ My Financial November 21, 2008 at 9:09 am

Thank you! I always prefer cash to gift cards but my family certainly does not seem to. I find that gift cards also encourage over spending for me because I want to make sure I use the balance.
Maybe if I set the example and give cash in place of gift cards everyone else will get the hint!

Vered - MomGrindv November 21, 2008 at 10:52 am

I haven’t thought about it, but you’re right. Gift cards may seem more classy, but right now they are simply too risky.

mrsmicah November 21, 2008 at 11:18 am

@ Squawkfox. Do they know you’re a PF blogger? I ask because some people might be offended. But I think it’s a worthwhile gift, and if they know it’s something that excites you, then they probably won’t think it’s a criticism.

@ Matt, the gift cards I like best are for things I’m already going to be buying. Like fabric…which I’ll definitely use up. But fabric money would mean even more options on where to buy it.

@Vered, that’s why I suggest the red envelopes. Gift cards do have a nicer look than cash, which needs some dressing up.

asgreen November 21, 2008 at 1:08 pm

When I need to give a gift card (when cash just won’t work) I use American Express gift cards that can be used anywhere.

bluntmoney November 21, 2008 at 1:27 pm

Good points, and as my dad says “green is always the right color”.

Frugalchick November 21, 2008 at 4:14 pm

Cash and checks are always exciting for me!

Dad November 21, 2008 at 9:36 pm

This is a risky year for gift cards beside the other disadvantages they have. Remember, a company does not have to literally go under (chapter 7, closed) to lose them. It is possible with Chapter 11 reoganization bankruptcy for the bankruptcy court to suspend redemption of gift cards. A gift card hold is like a creditor but one who is low on the payback schedule.

To asgreen. I’ve done that too. I don’t know about American Express but do read the terms before giving. It depends on the bank issuing them (Amex is probably just Amex). There may be fees if you don’t use them in a certain time and they may lose value after a period of time. We shopped around and avoided that hassle.

Ariel November 24, 2008 at 8:52 am

I think I must agree. However, I did want to let you know that my husband works for Circuit City. They are not going under. Their ‘bankruptcy’ is more of a payment extention than anything else. They are closing many stores but they are not going out of business…. Just in case anyone has gift cards for Circuit City, they are still useable. Just check with your local Circuit City and confirm that that location is still open.

mrsmicah November 24, 2008 at 12:24 pm

Good point, Ariel. The problem with Circuit City cards now is that the holders will have fewer opportunities to use them, depending on whether their local stores are closing.

Actually, the availability of local stores is something to consider with gift cards anyway. I once got one to Target, but at that point I was a 40-minute drive from any Targets…took me a while to use.

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