Why Cash Offers More Flexibility Than Gift Cards

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?


  1. When we were married we were so thankful to receive cash along with other wedding gifts. At that point we were saving up for a house and it helped us afford a down payment and a new piece of furniture. Whenever we receive cash we write a thank you note telling the giver what we purchased or what we are saving for. I want them to know what their gift meant to us.

  2. Cash is the perfect gift. It’s always the right color, it’s never too big, and it goes with everything.

    The only exception is when you’re giving it to someone who, no matter what, believes it’s not good enough. Which is someone who doesn’t deserve a gift from you anyway.

  3. OK, let me be the contrarian as always.

    I think cash is the tackiest gift possible (there was a Seinfeld episode specifically about this). I cannot imagine giving or receiving cash as a gift to/from anybody, for any occasion.

    For people who are big budgeters (like myself) the cash isn’t really a gift, but gets accounted for as income, and if you spend it, it comes out of your normal budget. Net result: it never gets spent. Give me $25 in cash and it goes straight to the bank and I’ve forgotten about it the next day, and I will never spend it, ever. Is that really what the gift-giver intended?

    On the other hand, give me a gift card, and it is ‘off the books’ money. I don’t feel guilty about spending it, because I have no other choice. Give me a $25 gift card to Jack in the Box and at least I can get several good meals out of it.

    In fact, I think restaurant gift cards are great gifts. Give a decent restaurant gift card to a couple and they can go out for dinner, an experience which is the gift. Give them $50 in cash and it just gets added to their income. Maybe a few months later they go out for dinner but there is hardly the connection like there is with a gift card.

  4. I’m of the opinion that cash is the best way too. I suspect that most people actually put it aside and spend it on something they want.

    I’ve had far too many presents in the past of things that I just don’t need and I see it as a waste. I’m sure I’ve also given a few bad ones too.

  5. I think I have to agree with Frugal Bachelor and Writer’s Coin — its true that from an economic maximization perspective, cash is by far the better option, but I think there are bigger issues at play when you are giving a gift. Like it or not, I think gift cards are often looked at as being a more “personal” gift than cash, and if that is the common perception, I think I would rather give a gift card than take a stand on principle. I’m also more inclined to go with gift cards anyway since the value of most of the gift cards I give out are not that high in value; with bigger gifts, I’d certainly give more weight to the benefits of cash.

  6. Rationally, cash for sure. But seriously? If someone gives me an envelope filled with cash, there better be a lot of it in there. It’s so “easy” to give cash — you don’t have to give it any thought at all. I know the stats for gift cards aren’t good, but that’s the other person’s problem. I use my gift cards right away, but I like getting something with a little more to it. The other day we got a gift card for cooking classes and that was awesome. Very thoughtful.

  7. Cash is king! I like the Chinese custom of giving red envelopes of cash as gifts (I’m Chinese), for all the reasons you state.

    Also, if a card says it can expire, check your state’s gift card rules. For example, cards cannot expire in California.

  8. I would so rather receive cash. I used to prefer giving gift cards until we bought one for my mom and she lost it. The store was willing to cancel it and issue her a new one. Then she lost that one. Weeks later the old one, that had been canceled was found. Ahhhhhhhh. What a hassel. At least with cash, if she loses it I won’t have anybody to call to see if I can help solve her problem. She will be on her own!

  9. I agree with Frugal Bachelor. If I’m given cash, chances are pretty good that it will get absorbed into the regular budget, or I’ll spend it on something for my kids. If I’m given a gift card, I am much more likely to spend it on myself.

  10. My sister received a ‘gift card’ for our recent vacation that I thought was a great idea. Her office mates laminated a Disneyland photo collage and put ‘Disneyland Gift Card’ on it then taped cash to the back. It was very thoughtful because they went out of their way to create something special for her and obviously put some thought into it, but she was free to spend the money as she pleased.

  11. Giving cash is the easiest option and nice enough but you might sending a message to the recipient that you didn’t put enough thought to consider what he or she would really like. Gift giving is an appreciation of the person and what that person is to you. Cash is only really ok if you are certain that the person is really needing it.

  12. I stopped giving gift cards a long time ago. I don’t know why there’s a negative connotation with giving cash. At least in Asian cultures, cash is always more preferable.

  13. Gift is nice I prefer giving cash as people are picky about if the gift is not what they thought it should be.Give a cash let them decide i prefer that way.Giving gifts to people who are greedy and no respect for you… any thing is not good…But some times you need to give gift rather forced.. then throw some money and get away with…

  14. I don’t get why some people prefer not to give money as a gift. Ever since I was a kid receiving some cash in a card was the best possible gift I could receive! It meant i could get exactly what I wanted.. Furthermore, the amount of unwanted gifts sent each year is astronomical!
    I came across http://www.boonspace.com it’s a great way to send gift money online. You can really personalize your gift and even send a virtual gift as a suggestion of what you’d like the recipient to purchase. It shows you’ve put in some thought and you know it will be happily received.