Photo courtesy of krisandapril
We have recently attended a number of weddings, birthday parties and other celebrations. With little time to shop for gifts we resorted to giving cash or gift cards in most cases, but from now on I think I’ll opt for simply giving cash. Here are a few reasons why:
- Cash can be spent anywhere. Unlike gift cards to specific stores, cash can be spent anywhere. I always appreciate receiving a cash gift because I spend it in whatever manner I want. Gift cards and gift certificates do not provide the same flexibility.
- Cash can be used for things other than spending. Depending on what stage you are in of your financial turnaround, it might make sense to hang on to the cash gift, or use it to pay down debt. In the past I have considered selling gift cards on eBay (for slightly less than face value) just to get the cash value to apply towards other goals. Newlyweds may be particularly appreciative of cash gifts to cover honeymoon expenses. In fact, cash has become such a popular wedding option in Israel that couples are renting ATMs that allow wedding guests to transfer a sum of money in the newlywed’s bank account with the swipe of a credit or debit card.
- Gift cards may get lost. I am notoriously bad at keeping up with gift cards, and the remaining balances. If I toss the cash gift in a separate envelope I know exactly how much of the gift is left by simply counting the money. That’s a lot easier than calling a 1-800 number and wading through a sea of voice prompts.
- Giving cash to kids helps reinforce spending lessons. It is true what they say, spending with cash hurts. When you hand over that $20 bill you got in your birthday card and get three pennies back it registers. When you swipe the same amount on a gift card it just doesn’t create the same kind of mental lesson of separating you from your money. What a better time to reinforce this lesson than when kids are young.
- Gift card balances are rarely fully redeemed. Of course, this is primary reason retailers offer gift cards. Unused portions of gift card sales eventually add to the company’s balance sheet. Best Buy compiled its gift card redemption statistics and found that of its unused gift card balances, the average card had been held and not redeemed for about 2.2 years. It’s probably safe to say the majority of those balanced will never be redeemed.
- Some gift cards and gift certificates expire with little warning. I gave my wife a gift certificate for a day at the spa a couple Mother’s Day ago, along with the promise of keeping the kids out of her hair and letting her enjoy a day of pampering. It was a while before we scheduled the spa day, and were disappointed to find out the gift certificate had expired the month before. Fortunately, after talking with the spa owner she was still able to use it, but it made me recognize that if I had simply paid for the spa day on the day she visited we would have not had to worry about expiration dates.
Would you rather receive cash or a gift card?