‘Tis the season to give gift cards

Looove gift cards! To detractors who carp that these tiny plastic offerings reflect a serious lack of imagination or initiative I recommend they ask themselves: Do I really know what my child’s teachers and coaches want as a token of appreciation for putting up with my kid? While recipients may pretend to be delighted with the eau de cologne from the dollar store, what they’d really love is a dozen Starbucks Gingerbread Lattes or the latest best seller from Barnes & Noble on you.

Apparently I’m not the only fan of gift cards. Total holiday gift card spending has jumped from about $17 billion in 2003 to an estimated $26 billion this holiday season, according to a study conducted by BIGresearch for the National Retail Federation (NRF). A Consumer Reports survey finds that 62% of consumers will purchase gift cards this year.

Some other reasons I like them is they cost almost nothing to ship when mailed inside a holiday card. Shipping costs add up quickly when sending presents across the country. Sorry, UPS and FedEx, I’d rather put my money toward a more generous gift than fatten your bottom lines this holiday season. (And waiting in the dreaded line at the Post Office is something we all want to avoid.) Gift cards can also be part of the solution for what to buy picky tweens and teens who can be harder to shop for than younger children. With the exception of cold hard cash (how crass), gift cards are near the top of lots of older children’s lists this year.

But the boom in gift cards comes at a steep cost to consumers. As Consumer Reports warned shoppers in a full-page advertisement in The New York Times recently, some $8 billion in gift cards went unredeemed last year because the cards were either unused, lost, or had expired. The survey also found that 27% of last year’s cards have yet to be used. I know my family accounts for some of that unredeemed value. That’s free money for retailers at our expense!

If the trend continues and gift cards, as expected, become an even larger component of holiday largess, both gift givers and recipients need to get wise to the pitfalls associated with gift cards. The NRF has published its Top 10 Tips for Buying Gift Cards. Chief among them is to understand the difference between retailer-issued and bank-issued cards and to check for expiration dates and other conditions. Then, of course, there’s remembering to use them. Consumer Reports suggests spending gift cards quickly and down to the last penny!

What’s needed, I think, is a holiday in January dedicated to redeeming gift cards: a sort of secular Redemption Day.  As retailers don’t book a gift card as a sale until it’s redeemed and merchandise is exchanged, I’m sure they’re already working on one.