Whenever a wedding or birthday rolls around, I always have trouble deciding what gift to get. Naturally, the idea always comes back to writing a person a check because it’s so easy for me to do and the gift receiver can use the money on whatever they want or need without restriction. Win-Win situation in my mind! However, somehow or another I get talked into buying people a gift card as it doesn’t seem as tacky as writing a check or giving cash. In all honesty, I think the receiver and giver would both be better off if real money (cash or checks) were exchanged!

On the other end of the spectrum, I received a $100 gift card during Christmas for Macy’s from a friend. While I am grateful for the card, there are a few drawbacks for me. First, I never shop for clothes and on top of that, if I do, Macy’s is not where I go. Macy’s, at least to me, is overpriced and normally packed with people so it’s not fun to go to. Now I have this gift card to Macy’s and I am not looking forward to going there to use it. As a giver or receiver, gift cards have some major negative aspects for practical (or pessimistic, as my gf likes to say) people like me. I have outlined a few of those aspects below.

Five Drawbacks of Gift Cards:

1. Fees – Think you are getting the stated amount of your gift card? Guess again! On a visa gift card, a $2.95 admin fee is applied for each month after the 13th month until it expires. There is a $5 fee if the card is lost and needs to be replaced and a $15 fee to replace an expired gift card. Or lets looks at an AMC movie gift card; you are charged a $2 fee for every month after the 18th month if you don’t use it. I know one thing, cash doesn’t expire!

2. Forced to shop at a certain store – If you were lucky enough to get a gift card to a place you like, congrats! If not, you’ll be forced to spend some time in your not-so-favorite store. Even if you get a Visa gift card, some places don’t take Visa so you can’t use your card there. I don’t like shopping at Macy’s but now I am forced to go there because I have a gift card! I know there are sites like CardAvenue.com or even eBay where you can sell gift cards but don’t expect to get paid face value for the card. Right now on eBay I see a $250 Macy’s card on sale for $235. If you do the math that’s a 6% hit for getting rid of the card.

3. Spending too much – If I found a $100 bill on the floor, I would happily put it in my wallet then deposit it in my savings account. I wouldn’t go out of my way to go spend all my newly acquired $100. However, with gift cards, they don’t exactly feel like cash. Let’s say you have $100 gift card. You spend hours in your not-so-favorite store, searching for something, anything that catches your eye. Finally you find something but it cost $129.99. Even though your gift card will pay for most of it, you still have to spend $30 out of your own pocket.

4. Only use online – A new trend in gift cards are eGift Cards. This is where you go to a site for example, like Walmart.com, and buy someone a gift card online, specifically an e-gift card. Through the magic of the internet, the gift card is sent through email to the recipient in only a few hours. This is way better than actually going to the store. There is one catch however; some eGift Cards can only be used online. For example Walmart.com says eGift Cards “Cannot be used at Wal-Mart stores or at SAM’S Club stores” but they can be used at walmart.com or samsclub.com. Therefore, it’s incredibly important to make sure you know where you can actually use these e-cards.

5. Are gift cards more personal than cash? Whenever I want to write a check for someone’s birthday, I am told gift cards are better. Here’s the problem, are they really more personal than cash? Basically if it’s the thought that counts then both gift cards and cash/checks aren’t thoughtful enough. Go for an actual gift whenever an occasion rolls around. If the person likes it, great! If they don’t, hopefully you included a gift-receipt so they can return it for something they really want.

I know there are a lot of positive things about gift cards: convenience, freedom of choice, some can even be personalized, but I still think there are better ways to give and receive gifts. If you have to get a present, go for something real and leave the gift cards alone!