Why this gift is illogical

Commentary:

(MoneyWatch) Have I got a deal for you. If you will send me $105.38, I'll send you $100. What's the catch you ask? There are a few. First, you can't use the $100 everywhere or even to pay off debt. Next, unlike your $105.38, the $100 I give you has an expiration date. Finally, you may not be able to combine the $100 I sell you with real cash. How many can I sign you up for? Remember, quantities are limited.

What I've just described is a $100 gift card currently for sale at Wal-Mart. And I don't mean to pick on Wal-Mart. They probably have the best price around if you want to buy a $100 "ubiquitous" gift card.

I don't know if it's just me but it seems a bit illogical to turn a more ubiquitous $105.38 into a slightly less ubiquitous $100. After all, by law, the $105.38 is legal tender and can't be turned down. It never expires and no one charges a fee if you use it. And while I've never conducted a survey, I'm willing to bet most people would rather receive a gift of $105.38 cash than a $100 gift card.

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Illogical and thoughtless

I'm aware that gift giving isn't logical. Even I knew last week not to give my wife $100 for Valentine's Day even though she could have bought a dozen roses with it and had some funds left over. A good gift should show thoughtfulness and be something the recipient would not have otherwise bought. According to Duke Behavioral economist, Dan Ariely, "a good gift is something that someone really wants, but feels guilty buying it for themselves."

I'm not sure anyone would think I'm thoughtful for picking out the $100 gift card. I personally don't feel the card would be used to buy something more extravagant than if the gift had just been cash.

So why have sales of gift cards reached $100 billion? I haven't a clue. But hey, clue or no clue, I'm willing to one-up Wal-Mart. Send me $104 and I'll send you $100 in hard cold never expiring cash. That's a much better deal, I think.

[gcgirlfriend]

I totally see your point on this and agree that when you focus on the dollars in vs. dollars out, open-loop gift cards don't seem like a great deal. But here's another perspective.

If you give me $100 cash, I'll deposit the money in my checking account and it will go to groceries and gas without a second thought. It will be a nice bump in the balance, but I won't use it to buy something that I feel guilty spending the money on in the first place. In fact, I'd probably feel guilty being indulgent with the money when I COULD use it to pay for bills.

Enter the gift card that forces me to buy something. I can't pay bills with it and I can't have the cash value. So I will treat myself to something fun.

That's my perspective. Then again, I'm a gift card fan. I'd love to talk more.

~ Gift Card Girlfriend

[Allan_Roth]

Hi Gift Card Girlfriend. I agree with you if it's a gift card for a particular store that only sells non-essentials. I gave me wife a gift to to a local boutique that sells stuff only my wife likes - not my son and me. They also did an amazing job of boxing and wrapping the gift job and it had a really nice presentation.

But giving a ubiquitous Visa or MasterCard gift card can go to buy groceries, and essentials that $105.38 would have bought more.

I really like your website and perspective!

http://giftcardgirlfriend.com/

Thanks for this insightful comment.

[Allan_Roth]

MTNBIKR,

No - it's not taxes. I don't think that Wal-Mart is doing anything wrong either. They have costs to stock the cards and to sell and activate the cards. They are merely meeting a customer demand for gift cards. I think one might pay more elsewhere.

[mtnbikr]

Allan, perhaps you can explain in your article WHY you are paying $105.38 for a $100 gift card. I'll assume you're referring to tax that Walmart is charging you to purchase the card. If so, this is illegal. Taxes are only collected when the gift card is redeemed. If the $5.38 is a "fee" that Walmart charges, then they are just downright criminals and to purchase one would be, as you say, illogical.