What Are the Pros and Cons of Gift Cards? (2024)

FAQs

What are the advantages and disadvantages of gift cards? ›

Freedom to choose: With the entire world available online, Gift Cards give the receiver the freedom to choose whatever they want from a retail store or online. Safety: Gift Cards work like a debit card and are safe as they can be frozen in case of loss or theft, without losing the money in it.

There's a lot to like about gift cards and, in terms of gift-giving, the presentation of a gift card is much more pleasant than cash. Gift cards make paying for things way more convenient and saves you room in your wallet, sparing you from the pain of too many dollar bills jumbled up inside.

Credit cards have a few disadvantages, such as high interest charges, overspending by the cardholders, risk of frauds, etc. Additionally, there may also be a few additional expenses such as annual fees, fees of foreign transactions, expenses on cash withdrawal, etc. associated with a credit card.

The Cleveland Clinic reports that gift-giving can lower your blood pressure, increase self-esteem, and lower depression. Evidence shows that when you give a gift feel-good chemicals such as serotonin, dopamine, and oxytocin are secreted in our brains creating a helper's high.

Can the card ever have a negative balance? If a merchant puts through a transaction without prior authorization and funds are not available on the card, you may be liable for the amount greater than your available balance and be required to make payment to cover that amount.

Cons of Using a Visa Gift Card

Prepaid Visa gift cards typically have an activation fee, ATM fees, and other charges. A lot of the money you put onto the card may get used up through bank fees as a result. If you can, find a card with low fees and without an activation fee.

Gift cards are for gifts, not for payments. As soon as someone tells you to pay them with a gift card, that's a scam. Gift cards are popular with scammers because they're easy for people to find and buy. They also have fewer protections for buyers compared to some other payment options.

Gift cards also offer a fantastic way to budget for some folks. Cash is easy to lose track of and a cash gift will be spent without a second thought, but when it's a gift card with a certain amount on it, folks tend to make sure they don't exceed the amount by much.

Gift Cards Are Your Safest Option

If your credit card or debit card is lost or stolen, thieves may have the ability to gain access not only to your line of credit or the money in your bank account, but sensitive and personal account information, as well. You stand to lose more than just your money.

Can buying gift cards save money? ›

Buying discounted gift cards can be a good way to save money, but unless you plan on purchasing in large amounts, the time-to-savings ratio doesn't always warrant the investment. Some card sites will buy back unused cards, but you are unlikely to receive a full credit or the cash equivalent.

For co-workers, casual friends and your children's teachers, stay in the $10 to $20 range. Gift cards for close friends and family members can range from $25 to $100. When you're selecting a gift card for a spouse, parent or someone else who's very special, choose a card worth $75 or more.

Prepaid cards, a type of debit card issued by a bank or credit card company, can be used to make purchases, pay bills, or get cash from ATMs. Gift cards are mainly for use at a particular retailer, though some credit card companies issue them too; they traditionally can only be used to buy items.

You want to give an amount in the gift card that seems appropriate. General etiquette is usually under $20 for casual acquaintances, like co-workers, $30-$75 for close friends and family members and more for someone like your spouse or for a big occasion, like a wedding.

Credit cards offer convenience, consumer protections and in some cases rewards or special financing. But they may also tempt you to overspend, charge variable interest rates that are typically higher than you'd pay with a loan, and often have late fees or penalty interest rates.

People prefer gift cards over presents

But this couldn't be further from the truth. A gift card is one of the most thoughtful and personal presents there is – it's saying to that someone that you appreciate them, and you want to gift them something.

By giving a gift card, you are giving the gift of freedom to the recipients to buy whatever they want, whenever they want it. Gift cards are also ideal if you are buying for in-laws or families that you don't know that well. If you are purchasing gifts for a lot of people, you can budget a dollar amount for each card.

Freedom to buy whatever they want:

To avoid these problems, the best gift for a birthday is a birthday Gift Card. A Gift Card enables the person to buy whatever they like from the particular store.

The gift card liability represents cash that you've already received and a promise to fulfill a future good or service. You can almost think of a gift card as an interest-free loan given to you by the purchaser of the gift card.

What happens if you use a gift card that doesn t have enough money? ›

Depending on where you make a purchase, you may be able to use your Gift Card toward a portion of the final purchase price, and use another form of payment to pay the balance. If the business agrees to a split payment for the transaction, ask them to charge a dollar amount up to the remaining balance on your Gift Card.

So What Happens To Unspent Gift Cards? The simple answer is that the issuing company or retailer gets to benefit from that. Once a gift card reaches its validity period and it's still unused or there is a leftover balance, the issuing company gets a certain amount back.

General-use gift cards, such as those from Visa and Mastercard, tend to have one upfront fee, often called a purchase or activation fee, which the gift giver would pay.

Customer presents the gift card as form of payment for goods or services. Merchant selects program on terminal or POS system. Merchant inputs clerk ID and swipes the card through the terminal. Merchant keys in dollar amount to redeem off the card.

– There's a troubling trend hitting consumers; gift cards are being hacked into and drained before you even get to use them. Crooks grab cards off the rack, write down the numbers and pins, and put the card back. Once that card is activated they have all the info they need to spend the money on it themselves.

Expiry dates can vary as the trader decides how long they are valid for. Some sellers can be flexible. If your voucher has expired, contact the seller to see if they will extend it. However, if you bought the gift voucher before 2 December 2019, they have no legal obligation to do this and may charge you a fee.

You can easily turn gift cards into cash (or more desirable gift cards) through reputable sites like Raise and CardCash. The site you choose will depend on the ease of sale and the type of gift card you have. You won't get full value for it, but that's still better than letting a gift card go unused.

For co-workers, casual friends and your children's teachers, stay in the $10 to $20 range. Gift cards for close friends and family members can range from $25 to $100.

How did my gift card get hacked? ›

As soon as you put money on the card, thieves are tracking it online and stealing that money. Some cards have the bar code exposed but have a PIN that's still covered. Once you buy the card, you scratch off the PIN to activate it. If the PIN is already exposed, it's been compromised.

Amazon Gift Card

Amazon gift card remains one of the top gift cards in the US every year because they can be used to purchase a wide variety of items at Amazon. Items include books, household items, gadgets, and clothing. One of the most widely used online retailers in the US is Amazon.

Yes. Because a Visa gift card functions like a credit card, it can be used anywhere that Visa cards are accepted, including online purchases—though it will likely need to be registered online or by phone prior to use. We'll explain how to do that later. And you don't need a bank account to get a Visa gift card.

The card is presented to the system (swiped or read) and the unique card number is confirmed in a database. The dollar amount to load on the card is input to the database and is associated with the unique card number within the database. The card is now activated or loaded.

A. Under federal law, a gift card cannot expire in less than five years after the date of purchase. But if it's not used within 12 months, fees for inactivity, dormancy or service can be charged to the card each month, diminishing its value.

Approximately 6% to 10% of gift cards go unused each year.

Tax does not apply to the sale of gift certificates. Upon redemption of the gift certificates, the value of the certificate is includable in the measure of tax. Gift certificate transactions are not treated as discount transactions but regarded as credit memorandums.

The gift card amount people purchase depends mainly on their budget. According to a survey conducted on over 1000 participants, more than 40% said they would spend between $20- $25 on Birthday Gift Cards. This is to say that most people will spend an average of $25 on Birthday Gift Cards.

To that point, 47% of people currently have at least one unused gift card, voucher or store credit, according to a new survey from CreditCards.com.

Birthday money

It appears that the general amount for a birthday celebration is around $25, no matter the relationship. Money etiquette experts suggest spending $10 to $20 for classmates while expanding the budget to $25 for close friends, $50 for relatives and upwards of $100 for your own children.

What is the best prepaid gift card to buy? ›

Both cards work the same and can be redeemed at most major retailers. When you buy from us, you'll also have the same activation and replacement fees. So, which one you go for depends on yours or the recipients personal preferences.

Visa $100 Gift Card ($5.95 activation fee)

The card can be purchased in $20 denominations, ranging from $20 to $500. Once the card is activation, no additional fees apply and the funds never expire. Per the cardholder agreement, activation costs between $4.95 and $9.95 depending on the dollar value and number of cards activated.

“Under these federal regulations, carriers are permitted to accept a gift worth $20 or less from a customer per occasion, such as Christmas,” it states on the USPS website. “However, cash and cash equivalents, such as checks or gift cards that can be exchanged for cash, must never be accepted in any amount.

Cons of Using a Visa Gift Card

Prepaid Visa gift cards typically have an activation fee, ATM fees, and other charges. A lot of the money you put onto the card may get used up through bank fees as a result. If you can, find a card with low fees and without an activation fee.

Store credit cards often have a lower credit limit than other credit cards. If you carry a balance, this can harm your credit score. For example, if your credit limit is $2,000 and you're carrying a $2,000 balance, your credit utilization will be 100%, which is well above the recommended 30%.

Cash is less secure than a credit card. Unlike credit cards, if you lose physical money or have it stolen, there's no way to recover your losses. Less Convenient. You can't always use cash as a payment method.

Unlike store-issued gift cards, your Visa Gift card is intended for use anywhere Visa cards are accepted, in person or online. Can I use my Visa Gift card at more than one merchant? Yes. You can use your Visa Gift card anywhere Visa cards are accepted.

General-use gift cards, such as those from Visa and Mastercard, tend to have one upfront fee, often called a purchase or activation fee, which the gift giver would pay.

What is the difference between a Visa gift card and prepaid card? ›

The biggest difference between the two reflects their permanence: prepaid cards can be reloaded and used indefinitely, while gift cards can generally only be used until the dollar amount on them is exhausted.

Secure transactions

When you own credit or debit cards, you don't have to worry about carrying wads of cash in your wallet. Now with chip cards and pass codes, they offer secure transactions. So if someone steals your wallet or you lose it, all you have to do is call the bank and block the cards.

A disadvantage is the opposite of an advantage, a lucky or favorable circ*mstance. At the root of both words is the Old French avant, "at the front." Definitions of disadvantage. the quality of having an inferior or less favorable position. Antonyms: advantage, vantage.

Convenience. Credit cards are often more convenient and secure than carrying cash. As long as you can pay your bill in full each month, using a credit card is typically more advantageous than using cash for in-person purchases. You need to use a credit card for online transactions as you can't pay in cash.

Avoid buying gift cards from unknown sites. The cards may be counterfeit or stolen, so be sure to buy gift cards from sources you know and trust. If you are buying a card from a retailer, check it before purchasing. Make sure that the codes on the back of the card haven't been scratched off to show the PIN number.