North American Bancard Blog

The Advantages – and Disadvantages – of Gift Cards

Posted by Nancy Bakanowicz on

gift cardsThe ubiquitous gift card. They come in all forms and practically any denomination. They can be from a favorite store or restaurant, or they can be like a prepaid Visa or Mastercard card. Gift cards still remain one of the most popular holiday gifts – according to the National Retail Federation (NRF), total spending on gift cards was expected to reach just shy of $26 billion in 2015, and in NRF’s first holiday survey released in October 2015, 58.8 percent of those surveyed said that they would like to receive a gift card, making them the most requested gift item nine years in a row. Despite this popularity and although there are many people who love to give and receive gift cards, there are plenty who don’t. Below are some advantages and disadvantages of giving and receiving gift cards, both for merchants and customers.


No gifts to return or exchange. There are any number of reasons why a gift would need to be returned or exchanged – it could be the wrong color, size or style, a duplicate gift or perhaps the recipient just didn’t like it. It happens. Gift cards take that guess work out of choosing a gift, letting the recipient choose what he or she wants from a favorite store.

Nice add-on gift. If you want to spend just another $25, a gift card can fill that void nicely. Or you could even just give it as a bonus gift, tucked in the pocket of a sweater or a pair of jeans, or even hung like an ornament from a Christmas tree.

Easy to send. If you have friends or relatives that live far away, it is easier – and far less expensive – to send a gift card in a pretty holiday card than to ship gifts.

Brings new customers to your store. People may sometimes be given a gift card for a store they have never been to before. This can be a great opportunity for them to discover a new place, and for you to gain a new customer.

Increases post-holiday sales. All those gift cards your customers bought as holiday gifts for friends and family will start coming back to your store in January. Yes, they’ve already been paid for, but chances are the gift card recipients will spend more than the gift card amount, usually about 20 percent more on a $50 gift card, which adds to your bottom line, and helps to bolster an otherwise slow retail season.


Some cards can only be used in specific stores. There are many gift cards that bear the Mastercard and Visa logos on them, and these cards can generally be used anywhere. But there are a lot of cards that are store-specific, meaning they can only be used at certain retailers. This is fine if the recipient shops at that store, but not so much if she doesn’t. If you are gift card shopping and not sure if the recipient likes a certain store, play it safe and go with a Mastercard or Visa gift card.

Gift cards can often look like a “thoughtless” or lazy gift. While many people like getting gift cards, others perceive them as a sign that you couldn’t be bothered to pick out an actual gift for the recipient, or even worse, forgot to get a gift for the recipient.

Gift cards can actually cost recipients money. Depending on the store, a $25 gift card may not go very far, which may cause the recipient to use some of her own money to use the gift card, thereby contributing her own money to her gift. If you are choosing a card for a specific store, make sure that the dollar amount will work with that store. In other words, don’t give someone a $20 for the Apple store.

Some gift cards have expiration dates. Just because you paid for your gift cards doesn’t mean they will be worth that amount forever. Some gift cards have expiration dates, meaning if they don’t get used by a certain date, the money disappears. Others have fees if they aren’t used within a certain amount of time. Check with the card issuer before deciding on a purchase to find out if there are any expiration dates or fees associated with non-use.

Despite their many flaws, gift cards are here to stay. The colorful pieces of plastic with cute holiday designs will find their way into the stockings of many people every holiday season, and many people will welcome them. They may not be as thoughtful as a pretty box covered in shiny paper and bows, but gift cards are really not a bad gift. Besides, when the stores are getting ready to close on Christmas Eve and you still have half a dozen people to buy gifts for, those much maligned gift cards could just save your holiday.