Some Background
Photo: ThomasExciting
This means that when it comes time for me to get gifts, people usually resort to getting me a gift card of some sort. There is nothing wrong with this, and I like getting them, but over the past few years, I have found that they are a sham. The ultimate sham.
Cards I have gotten
I have gotten cards from Amazon, Panera, Visa Gift Cards, Wal Mart, and many other cards of that sort. Although the store centric cards have not posed a problem, the Visa cards are definitely 100% sham. Store centric cards are fine if they are for a store that you usually buy from, but are a little bit harder to use for less frequent shopping trips. The issuing stores are banking on you forgetting it at home, or ultimately forgetting about it altogether.
You would think that a Visa gift card would be the most effective way to transfer money as a gift, because the recipient is not locked into a certain store. It’s just money that you can spend anywhere, right? Wrong.
Keep in mind that i am writing this based on experience with about fifteen such gift cards, and they all have some serious pitfalls.
The Rub
They Cost Money
When you buy a $25 gift card for someone, you have to pay $2.50. This may not sound like a lot of money, but it’s 10% of the face value.
They Cost Money to Upkeep
All cards have a shelf life before they start costing to upkeep. After several months (from as few as 7 to as many as 13) the cards start losing value on the first of each month. The lowest I have seen was $1.50 per month, and they go up do about $2.50 a month.
For me, I have found that I put a card in my wallet, and forgot about it. I went to spend money on the card a few months later, and found that I had lost $10 off the card! So, in the time that it was stewing in my wallet, the issuing company made $12.50 off that card. 50% of the face value!
Once a card runs below about $7, it’s useless!
So, you go out to lunch once. You pick up a cheap lunch another day. You end up with $6 left on the card. Now, the conundrum. What do you do with this money? If you try to split a bill somewhere, in most cases, it will not work. I am not sure why it doesn’t but the transaction gets denied. Without fail.
Currently, in my wallet, I have three cards, with an average of $7 on them. I should have $21 to spend, but no matter how I try to split it up, I cannot charge up to the lowest whole dollar amount on my card. Over the next few months, these cards will tank a few bucks a month until there is nothing left.
Do Everyone a Favor
Do the math. In the best case, you can end up with the following situation:
| Charge | Amount |
| Initial Value | $25 |
| Purchase Fee | -$2.50 |
| Unusuable Leftovers | -$2.50 |
| Real Value | $20 |
So, in the best case, you fork over 20% of the face value to the issuing company.
In my usual case:
| Charge | Amount |
| Initial Value | $25 |
| Purchase Fee | -$2.50 |
| Unusable Leftovers | -$7 |
| Money I can spend | $15.50 |
Note that that extra seven bucks usually gets soaked in that monthly service fee. So, the issuing company made 62% on that card. When you add up all the people who get such cards, that is a great investment… For the issuing company.
So, do everyone a favor. When you find that person that you want to give a gift to. The guy who has everything. Write him a check, and keep the middle man out of the game.
I still remember getting that $5 check for my birthday when I was a kid. I would go out and buy an album or some 45’s. For my $5 gift from Auntie Lori, I got $5 worth of value.
Thinking about how the gift card system works now, If i were that same 8 year old now, I would be confused. And sad.
Bulk food stores buy staples (and an assortment of other goodies) by the truckload, and break the quantities down, and sell them in plain plastic bags. This allows them to sell staples at a much lower cost to you.
