Best Holiday Season Gift Cards — and Who Wants Them

November 11, 2016 by Paul Ausick

For the past nine years, the most popular type of holiday present has been gift cards. Retailers especially like them because about $1 billion in value went straight into their pockets last year without having to exchange any merchandise for the privilege. What’s not to like?

According to a study by Bankrate, more than half of consumers plan to give gift cards this year. But only 27% of those surveyed prefer receiving a gift card instead of an actual gift. Could be a lot of disappointed Americans out there on December 26.

It doesn’t matter how old you are either — people of all ages prefer a real gift. Younger millennials (18 to 25), for example, prefer real gifts by a margin of 57% to 34%, the widest gap of all age groups. Older millennials (26 to 35) go for real gifts by a margin of 52% to 25%. Except for younger millennials, no age group showed a preference level for gift cards of more than 29%.

If you are planning to give gift cards this year, here are a few tips that may make the recipient more grateful:

  • Think about the card as a gift. The Bankrate study showed that 57% of gift card givers thought that it was the best gift they could give the recipient. Does the intended recipient have a unique hobby — say fishing — and you don’t know one end of a fly rod from the other? A gift card to a sporting goods store may be very welcome.
  • Think about the dollar amount. Conversely, a $50 gift card to Tiffany’s is likely to be less welcome because many people would have to add some out-of-pocket cash in order to use the card. About two-thirds of consumers spend more than the face value of the gift card. This is one reason retailers love the cards.
  • Think about the real value of the card. While it may seem like a $100 gift card is worth $100, that is not altogether the case. For example, if you give someone a $100 gift card to a restaurant or store they do not patronize, there are online stores and exchanges where the recipient may sell or exchange the card. That’s where the $100 card can lose some of its face value. Some cards even offer the gift giver an upfront discount, but the trade-off comes in how much the card ends up being worth to the recipient.

Consumer research website WalletHub has just posted its list of the best gift cards for 2016. The researchers looked at 50 popular cards and ranked them on five features: card popularity, average discount, average resale value, retailer appeal and shipping fees. The top five cards based on a possible 100-point WalletHub scale are Target (65), Netflix (65), Wal-Mart (60), Amazon (60) and Best Buy (55). Four other cards matched Best Buy’s score of 55: Costco, Dunkin’ Donuts, T.J. Maxx and Apple’s iTunes.

According to WalletHub’s survey, the five cards with the highest resale value on a $100 gift card are Nike ($93.66), Wal-Mart ($83.94), Best Buy ($83.12), Safeway ($83.04) and Costco ($82.67).

For a closer look at the surveys, visit Bankrate’s website to find out about why consumers want — or don’t want — gift cards, and go to WalletHub to get more details on gift cards and the methodology the company used to rank them.

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