It's In The Cards

My younger brother has two kids, a boy who is 17 and a girl who is 14-going-on-21. We never know what to buy them for Christmas or birthdays. So, like a good many Americans, we just back out of it somewhat and buy gift cards. They're easy to find. They're in any denomination we please. And one size fits all.

The only problem is, the retailer is the primary beneficiary of our gift giving.

Retailers love to sell gift cards. In fact, some stores have taken to selling a wide array of gift cards from unaffiliated chains, like United Supermarkets is doing with their smorgasbord of options.

Assuming the gift card isn't lost or misplaced (like our nephew did with ours last Christmas), it virtually guarantees the recipient will be trudging over to the local store to do some shopping. If the card is lost, that's a 100% profit for the store. And if they show up to spend it, the store is still going to gain.

How's that?

It's called add-on sales. One of my former students works for a major retailer in Amarillo, and he told me how they know that for every $3 on the gift card, the customer will add in $1 of his own. Thus, give a $75 gift card, and the customer will buy $100 of stuff. You don't want to leave a small balance dangling on the card, because that becomes pure profit for the retailer if you never use it.

To add to the profiteering, consider also that some gift cards carry fine print that says there is a "dormancy" charge if the balance is not spent by a certain date. In other words, use it or lose it.

Furthermore, remember that the money you give to the retailer to buy that gift card is in essence an advance on their allowance. They have the money and can earn interest on it long before the merchandise is ever sold.

In our debit card society, the idea of gift cards has a lot of currency (pun intended). It makes sense to a lot of people, and the extra piece of plastic is not seen as an inconvenience in the billfold (although some may wind up with George Costanza's wallet if they're not careful).

Similar problems occur with some of the pay-as-you-go cell phone plans. You can buy a cheap phone for $35 at Sam's. You buy airtime in 300-minute blocks at 10 cents per minute (an outrageous amount!). But the minutes are only good for the month or as long as you keep buying something on a monthly basic. It all begins to sound like a service plan without the hassle of a credit check, and exploits the poor who have a lousy credit score. I guess we won't be buying one of these for my mother-in-law; she'd wind up hating us for the ongoing expense of keeping it activated.

Which brings me back to my main question: Is a gift card an impersonal gift, an easy way out for someone who doesn't want to take (or make) the time to shop? Or is it a wise choice in an era when we often do not really know the recipient well enough to make good gift purchases for them?

Critics will argue that if you're going to skip the tangible gift and buy a card instead, you would be better off just giving cash. That way there's no dangling leftover balances, dormancy fees, or other things that benefit the retailer.

As for me, I'll keep giving the cards. They look nicer than dirty old paper money, and they save me a lot of time.

Dr "Paper or Plastic" Gerlich