How gift cards work
By Marshall Brain
http://www.JewishWorldReview.com | (MCT) Just about any store you go into right now is pushing gift cards. Why? Because gift cards are GREAT for retailers. The problem is that gift cards are not very good for anyone else. Once you understand how many problems there are with gift cards, chances are that you will look at them in a different light.
When you give someone the gift of money, you have two choices: a gift card or cash. Here, in a nutshell, are the biggest problems that gift cards have when you compare them to cash:
First, unlike cash, gift cards often have fees. These fees can include: purchase fees, monthly fees, inactivity fees, transaction fees and other random fees that retailers make up out of the blue like balance inquiry fees, etc. Gift card fees are great for the retailer, but not for you. With cash, there are never any fees.
Second, unlike cash, some gift cards have expiration dates. Imagine that - money that expires. That is fantastic for the retailer, obviously, but no good for you. Cash never expires.
Third, unlike cash, gift cards restrict where you can use the card. And if you want to turn the card into cash so you can eliminate this restriction, many gift cards will either refuse to help you or charge a fee. This restriction is great for the retailer, but useless for you. Cash has no restrictions.
Fourth, unlike cash, gift cards can become worthless if the retailer goes out of business or changes the rules. That benefits the retailer and it hurts you. You can spend cash anywhere, so it doesn't matter if one store goes out of business.
Fifth, unlike cash, gift cards are prone to scamming. There have been a number of scams in the past, none of which ever happen with cash.
Sixth, unlike cash, gift cards are easy to lose. When a person sees cash, he/she knows it is cash. It goes in the wallet and it gets spent. Of if a person sees a check, he/she knows it is a check, and cashes it at the bank. If not cashed, the gift giver keeps the money. With a gift card, it is a little piece of plastic, often with cutesy pictures on it. It may be lost, misplaced or thrown out because it may not be obvious that it is important. And when you don't spend the money on a gift card, the retailer gets to keep it. That is fantastic for the retailer and no good for you.
In addition, gift cards offer none of the protections offered by many credit cards. If you give cash and the recipient purchases a gift with a credit card, those protections are in place. If the recipient has a credit card that pays cash or gives other rewards, those rewards accrue. These things don't happen with a gift card.
The list of problems with gift cards goes on and on. If you search on the Web for "gift card problems" or "gift card scams," you will be amazed at what you discover.
With all of these potential headaches and pitfalls, why would anyone give a gift card? There is not a single good thing to say about a gift card compared to cash.
If you really think about it and analyze it from several angles, you will realize that the best present to give is probably a personal check. Why? Because if the recipient never gets around to cashing the check, you get to keep the cash.
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