Are gift cards a waste of money?

A survey conducted last September by suggested that Britons are sitting on unused gift cards worth approximately £580m. Some 70% of us have unused cards at home and half of us expect never to get round to using them. However sales of gift cards continue to grow – according to the UK Gift Card Voucher Association, annual growth in gift cards has accelerated from typically 5% a year to 10-15% a year since the recession. So why do we choose to buy a gift card?

The perception is that gift cards are a more personal gift than money. Providing the recipient with the flexibility to purchase what they like and when they like. However is this really the case?  Surprisingly few retailers acknowledge the increase in online shopping when it comes to their gift cards, restricting recipients to shopping in their stores and for a limited period. Most retailers impose an expiry date on their cards, which can be as little as six months from the date of purchase. Gift cards holders are also classed as creditors, when Zavvi (the music shop) went into administration in 2008, 12,500 customers found that their gift vouchers were refused, even though the stores were still trading.

So should we conclude that gift cards are a waste of money? Not necessary, a safer alternative is ‘open-loop’ gift cards, which are beginning to infiltrate the market and can be used in any store, online or off, that accepts Mastercard or Visa. No credit agreement, checks or card holder qualifications are required. They are secure, using chip & PIN technology, and the cards offer the flexibility to be used in over 26 million outlets worldwide, this confirming that the perception we have is true… with some gift cards.

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