10 Gift Cards to Avoid While Holiday Shopping

Gift cards require no thought or creativity, making them a holiday shopping staple for lazy consumers.

According to a survey by Bankrate.com during the last holiday season, half of consumers said they planned to give a gift card to someoneon their list. However, only 27% of Americans said they wanted to receive one. In fact, younger generations who've never known a holiday without gift cards seem to resent them most. While 34% of younger Millennials (ages 18 through 25) wanted a gift card, a whopping 57% preferred a tangible gift.

Though 23% of all gift recipients didn't care if they receive a gift card or tangible gift, just 9% of that younger group felt the same. That's in stark contrast to their older Baby Boomer grandparents (ages 62 through 70) who don't think much of receiving gifts (44%) and are more likely than any age group (66%) to buy gift cards for others.

"Finding a gift that suits each individual on your holiday list can be a challenging task," said Bankrate.com analyst Mike Cetera. "Given the vast selection, electronic delivery options and potential security features, gift cards are still a solid choice for many gift-givers."

The Baby Boomers and others may have overdone it with gift cards in recent years, but demand for them fluctuates. According to the National Retail Federation's Gift Card Spending Survey from 2014, those thinking of buying gift cards spent about $20 less on them ($153.08 vs. $172.74 in 2014) during the 2015 holiday season. That was still $25.9 billion, but it was the first drop in average spending since 2009. However, in 2016, gift card spending rose to $27.5 billion. The most popular types of gift cards included those from restaurants (35% of buyers), department stores (33%), Visa/MasterCard/American Express (22%), coffee shops (21%) and entertainment (17%). However, even the NRF, a huge proponent of its retailers' gift cards, is starting to see them more as fallback option than anyone's first choice.

"Retailers' early promotions and exclusive offerings have made it easier for consumers to find everything they need without having to consider raiding the gift card rack," said NRF President and chief executive Matthew Shay said in a statement accompanying the survey's release. "That said, there is an interesting disconnect between gift givers and gift recipients this year as gift cards still top millions of Americans' wish lists."

However, gift cards have evolved over the years. According to Bankrate, 67% of cards purchased in 2016 had a personal identification number (PIN), up from 50% from 2015 and 35% three years ago. However, only 62% of cards had some form of loss and theft protection (most likely offered on e-cards), down from 72% and 68% in 2015 and 2014. That's not particularly helpful when one in four Americans and 40% of Millennials have lost a gift card before using its entire balance.

"With so many recent data breaches and the transition to EMV chip credit cards, security is top of mind for many Americans," said Claes Bell, a Bankrate.com banking analyst. "Retailers are taking note and have made gift cards a much safer way to spend money."

Gift cards have also become more convenient. According to Bankrate, 67% of gift cards in 2016 were available as e-cards as well, with 40 of the 41 cards available as e-cards requiring an email or phone number to purchase. Also, 64% of gift cards were reloadable, up from 60% in 2015 and 52% three years ago. Granted e-cards are not always reloadable, and some gift cards can only be reloaded in-store, but it beats dealing with a zero balance.

For 24.7% of NRF shoppers, gift cards easier and faster to buy than traditional gifts. Another 50% like the fact that they allow recipients to choose their own gifts. Meanwhile, 5.2% like the fact that they don't have to worry about returns. Unfortunately for all of those folks above, gift recipients are starting to get a sense that they're being handed a short cut.

Though about 77% of Americans have given a gift card, according to Card Cash, they aren't always doing so willingly. According to Bizrate Insights, a division of retail market research firm Connexity, 61% of online buyers want to receive a gift card, but only 46% plan on giving them as gifts. The NRF doesn't like talking about why people might dislike a gift card, but their survey respondents once did. In a survey two years ago among shoppers who weren't buying gift cards, 25% thought gift cards werere impersonal. A full 16.3% of potential gift-card buyers worried about the card expiring, while 2.1% didn't like the idea of the retailer who issued it going bankrupt.

That last group is on to something. This has been a particularly bloody year for retail bankruptcies and restaurant closures, which makes gift cards from those imperiled businesses a particularly dicey proposition. Just as an example of the gift-card minefield that awaits you during your holiday shopping, here are ten examples of retailers and restaurants that might not be the easiest places to redeem a gift card a year from now:

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Hhgregg

Filed for bankruptcy: March 6

We're actually surprised there aren't more electronics retailers on this list. This Indiana-born electronics chain managed to survive Sears, Best Buy and multiple electronics chains during its more than 60-year existence, but it didn't see Amazon coming and drowned in a miasma of insufficient online presence and inadequate free shipping options. Also, that name remains a branding nightmare. Though the chain claims it's restructuring for future stability, closing 90 stores doesn't instill much faith in its present.

RadioShack

Filed for bankruptcy: March 8

Stop. Just stop buying from RadioShack. We don't care if the one near you is still open. We don't care if a RadioShack helped you make a transistor for a school project three decades ago. We don't care that there are still somehow more than 1,000 of these stores left: We're going to live to see this once-great niche chain become a bunch of Sprint stores. Get out while you can. And don't give someone a RadioShack gift card: That's just mean.

Gymboree

Filed for bankruptcy: June 11

There are already 450 stores going away as part of the "restructuring" of this heavily indebted chain. Consumers already have The Children's Place, Carter's and every discount store in the country to fall back on and may not be so eager to see how Gymboree emerges from Chapter 11, if it does. Gymboree was great when it was running play centers and was completely different than any other children's chain out there, but selling off those play spaces made it incredibly expendable, as owner Bain Capital is likely aware.

The Limited

Filed for bankruptcy: January 7

"This isn't goodbye," you say? You have no stores after closing all 250 in January. You have an online presence, but the Sycamore Partners private equity firm paid $26.8 million for you and stuck you in a dead-weight portfolio with Talbots, Hot Topic, Nine West and Belk. Why should anyone shop at an online retailer that's basically in brand limbo? We can't think of a compelling reason.

Applebee's/IHOP

Filed for bankruptcy: Didn't, but is closing locations

Parent company DineEquity is closing 105 to 135 Applebee's and IHOP locations after more than a year of rebranding efforts didn't pan out. In the words of Applebee's executive John Cywinski, the redesign was supposed to inspire. "a more youthful and affluent demographic with a more independent or even sophisticated dining mindset, including a clear pendulum swing towards Millennials." But, no: Millennials didn't want chicken wonton tacos or a sandwich with three forms of pig in it. Sales dropped 6%, Cywinski admitted that Applebee's had only succeeded in angering loyal customers and the entire flair-covered casual dining segment saw more than 1,000 locations close. Market research firm NPD Group notes that the restaurant segment has reached its saturation point and with chain restaurants accounting for 64% of all restaurant visits, they're most directly affected when folks decided they'd rather have meals delivered to them in kits.

Gander Mountain

Filed for bankruptcy: March 10

Sports Authority is gone. Sports Chalet closed along with it. Cabela's is a breath away from being just another arm of Bass Pro Shops. In that environment, it isn't a surprise that Gander Mountain hit tough times and had to have Camping World -- basically an RV retailer -- rescue it from bankruptcy. Even with that lifeline, its 70 remaining stores are less than half of what the chain had at its peak less than five years ago.

Payless Shoesource

Filed for bankruptcy: April 4

How does a discount shoe store end up in so much debt. Well, a leveraged buyout by private equity in 2012 doesn't help, but relying on a self-service model that looks ancient to anyone who's been using Zappos for the last decade or so certainly doesn't help. They're only closing 800 stores out of 4,400, but given the sheer number of discount options available both in stores and online, there are many places where holiday shoppers can pay less than they would at Payless.

Rue 21

Filed for bankruptcy: May 15

How did this chain have 1,200 locations at the beginning of the year? Creditors likely asked the same question, which is why cutting 400 stores at the beginning of the year wasn't enough to keep this teen retailer out of bankruptcy. The kids aren't coming back to the malls and the environment that led Rue 21 to over-expand roughly a decade ago has disappeared. What we're seeing isn't just the death of teen-driven mall retail, but the death of a great dad joke. You'll "rue" the day, indeed.

Toys R Us

Filed for bankruptcy: September 18

Because that's how you want to go into the holiday season and your meatiest portion of the retail calendar: $4.9 billion in debt. Even worse, $400 million of that debt has interest payments due in 2018 and $1.7 billion of which is due in 2019. So how did a company with 1,600 Toy R Us and Babies R Us stores around the world get into this mess?. Look back to its acquisition by Kohlberg Kravis Roberts, Bain Capital Partners and real estate investment trust Vornado Realty Trust in 2005. That deal was valued at $6.6 billion at a time well before the iPhone when online shopping was in its juvenile state at best and malls were still thriving enterprises. Somehow, neither Toys R Us nor its investors saw a time when giant stores in strip malls that required driving would seem obsolete compared to huge online enterprises that would deliver those same toys to your door for a lower price. This bankruptcy doesn't mean Toys R Us is dead, mind you, but if toy companies like Mattel and Hasbro are worried about the effects of this bankruptcy on their holiday sales, shoppers should be worried about whether or not their local Toys R Us will be able to weather the coming storm.

Sears/Kmart

Filed for bankruptcy: It's coming

Sears Holding Corporation (SHLD) is basically a real estate firm that occasionally sells items to consumers. CEO Eddie Lampert just keeps selling off assets like Lands End and Craftsman and closing stores to fuel its burgeoning real-estate business. If Sears' suppliers aren't confident enough in these retailers to stay aboard, there's no way that a consumer should going into a Kmart or Sears with any confidence. Not only are you likely not getting a great deal, but there's a chance that your location may not even exist by the time your loved one unwraps their gift card.