Why Gift Card?

OK, let’s cut the chase – this is why I think gift cards are not so good for consumers:

• Possibility of not using them: 6%, as noted in a recent Today coverage. This could be due to losing it, forgetting about it, and not liking the card-related products. That’s like consumers donating millions to the industry. According to the Today coverage, $100B gift card sales with $6B unused + most popular gifts, 5 years running. I remember a time where I had an w’aay extendedholiday trip only to realize a lot later that I had an outdated rebate check.
• Tie Consumers to the Stores/Products: Gift card issuer should sell them for lower value. Companies lover the, because it ties consumers to those products/companies (e.g. Lowe’s gift cards mean that recipients need to go to the store to get those money cards used). In addition, to use the full benefits of the card or to maximize the card’s value, one need to get products that are higher price that the cards’ values. For instance, if you have a $25 Target gift card, ideally, you’d spend on something that is $25, but c’mon, seriously, find something that is $25 … with sales taxes plus nd while you’re there, you might as well buy those other stuff.
• Why not Give Cash?: New taboo? Behavioral – as in most Americans like to put those on the cards? I like the subtitle Daniel Gross put on his article: “They’re the best insult money can buy.”

Currently, I have a $10 gift certificate from Kohl’s (valid after Christmas) and a $10 off coupon for gift cards sold at Albertson’s. I’m likely to use the Kohl’s gift certificate … and the Abertson’s – guess what? The cheapest gift card is a $25 ones. I’ll use the Albertson’s for something that’s I’ll use anyways (Hint: not Starbucks one).