10 Reasons Why Gift Cards Suck

When we announced the availability of free Consumerist anti-gift cards yesterday, we were surprised to see so many pro-gift card comments. So, we decided to put together a quick list of the reasons we think gift cards are lame — especially compared to cash.

1. Bank gift cards come with upfront fees. If you’re giving someone a gift, why should you get stuck paying a fee for the privilege? But you do, and those fees can be as much as $7.95, plus shipping.

2. Bank gift cards can come with dormancy fees. Some fees are as high as $2.50 per month, and kick in after just 6 months. So, if you don’t use that card fast, you could end up paying for the privilege of owning it, and end up with a worthless piece of plastic after just a few months. American Express recently announced it was dropping all dormancy fees, and the CARD Act will ban them until a card has been unused for 12 months, but they’re not going to disappear across-the-board anytime soon.

3. Bank cards can come with fees for no reason at all. At least one card we know of has a $2.50 per month “maintenance fee” after six months, just because.

4. Bank gift cards can expire. Not all do, but some can become worthless after two years.

5. Bank gift cards can require “reauthorization.” Many carry a misleading “valid thru” date. This isn’t an expiration date, but the card won’t work after this date unless you contact the bank and request a new card.

6. Retailer gift cards are usually only valid at a single retailer. Gee, thanks, Aunt Mabel. I always wanted to check out the menswear section at Forever 21.

7. Retailers can go bankrupt. When The Sharper Image went under last year, it suspended all gift cards. While other retailers, such as Brookstone, were willing to take the cards, they did so at just 25 cents on the dollar.

8. Gift cards can make you spend more money.
According to a recent survey from the Consumer Reports National Research Center, 65% of gift card users end up spending more than the card’s face value. That’s great news for retailers, but not for consumers, who may feel they have to spend the last $6.12 on a card, and end up making a $10 purchase to do so.

9. Gift cards lose value over time even without fees. Thanks to inflation, an unused gift card can lose as much as 3% of its value every year. You can’t put that unused card into a money-market account until you’re ready to use it.

10. Gift cards don’t always get used. The CRNRC survey also found that 25% of consumers have at least one gift card from last year’s holiday season that they still haven’t used. Forty percent said that the reason they haven’t used the cards yet is that they haven’t found anything worth buying. If those cards have dormancy fees or expiration dates, they could be worthless by the time they turn up at the bottom of the sock drawer a few years from now.

So, what’s the solution? You already know the answer: cash. It never expires, doesn’t carry any fees, and can earn interest until you’re ready to use it. And you can use it just about anywhere.

You can also dress up your cash with a free Consumerist Anti-Gift Card. Send us a SASE and we’ll send you a card that you’ll be proud to give to anyone on your list — as long as you actually include some cash with it.