Stop and Read This Before You Put That Gift Card in the Stocking

Editor's Pick: Originally Published Wednesday, Dec. 23.

The ubiquitous giving of gift cards has shaped it to turn into a widely popular tradition instead of becoming a lackluster habit for procrastinators during the holidays.

Gift cards remain the most requested gift items by consumers, but the love for them is declining, according to the National Retail Federation, a Washington, D.C.-based retail trade association. Their latest survey found that shoppers plan to spend $153 this year compared to $172 in 2014, the first decline in spending since 2009. Consumers plan to spend $25.9 billion on gift cards still with 58.8% of consumers who said they wanted their friends and family to give them one as a holiday gift. During this year’s Thanksgiving, a $100 eBay gift card was sold every three seconds.

The practicality of giving gift cards outweighs the lack of ingenuity and helps people avoid major gaffes and embarrassment, especially among acquaintances such as co-workers or the friendly neighbor who watches your house during vacations when you give an inappropriate gift, resulting in an extremely awkward encounter.

Yet, some well-meaning gift givers have even bungled up gift cards by giving their friends ones to stores that the recipient has never heard of or has an immense dislike for such as a hunting and fishing store for a devout vegetarian.

“Gift cards will never go out of fashion,” said Diane Gottsman, owner of The Protocol School of Texas in San Antonio. “It's important to give the right gift card to the right friend. Giving out random gift cards to stores that your friends or family will not appreciate is like receiving a scratchy pair of socks.”

Etiquette Tips

Digging a little deeper into a friend or family’s member’s personality will help you avoid running afoul of other blunders.

“Gift cards evoke the same feeling as tearing open a holiday gift and finding new socks or underwear -- you’ll use it, but you won’t be very excited about having it.” said April Masini, a New York-based author and relationship advice columnist. “The problem with gift cards is that when you give them to someone you know well, it feels like you didn’t put much thought into the gift -- which you probably didn’t. Popular gift cards like Starbucks and Amazon cards are almost as rampant as five dollar bills in your wallet.”

An appropriate time to give a gift card instead of searching high and low at the mall and local boutiques for a trendy item is when you plan to give a gift to your child’s elementary teacher that you have met once instead of the “20th batch of homemade chocolate chip cookies,” she said. “When you’re giving a gift to someone you don’t know well, like your child’s college roommate -- a gift card is great.”

Rick Popko, an account manager in San Francisco, said he sticks to giving his four nephews each a $100 MasterCard gift card, because they specifically requested them and truly “enjoy surfing the Internet and buying things they want along the way."

"They’re not old enough to drive, so they can’t really go out to stores and shop unless they can convince a parent to drive them,” he added.

If they change their minds next Christmas, Popko said he’s happy to change course and head to the malls or shop online for physical gifts. The same sentiment does not apply to one of his close friends, who is fairly easy to shop year in and year out, because he advertises his wishes on his Amazon gift list.

“I have one male friend that I typically buy a Christmas gift for,” he said. “I would never buy him a gift card, though. That would be a bit lazy in my eyes.”

More tips: refrain from relying on grabbing a random gift card at the grocery or convenience store as you head to meet a close friend for dinner, Masini says. Specialty gift cards in particular can be a bit trickier, so make sure the card does not have an expiration date and that there are several locations that are in close proximity to the receiver, said Gottsman.

“A girlfriend of mine knows I love a particular store, and she had mentioned that she liked a piece of costume jewelry,” she said. “I wasn't sure she had purchased it already so I got her a gift card to that store and when we opened each other's holiday card with the gift card enclosed we found we had just exchanged gift cards dollar for dollar! But, it was fun and we got a genuine laugh out of it.”

The monetary value of your gift card should not be a consideration, especially if you and your friend routinely exchange gift cards with each other.

“It's the thought that counts,” Gottsman said.

Many people still enjoy receiving gift cards, especially general ones that can be used anywhere or if you are helping them celebrate an occasion such as giving them a gift card from a home improvement store after they moved into a new home, said Jacqueline Whitmore, an etiquette expert and the founder of the Protocol School of Palm Beach, Fla.

“A gift card always fits," she said. "It’s never returned and it gives the receiver choices as to what he or she can buy.”

Giving each other gift cards has ironically helped Kathy Doyle Thomas’s family spend more time together. Among her 11 Gen Y nieces and nephews, the “kids swap gift cards.”

Thomas, a chief strategy officer for Half Price Books, the Dallas-based book store company, said she and her sisters have a tradition of buying gift cards to the same stores so the “kids can all go together the day after Christmas and buy something. This way they have more family time together.”

“Gift cards can bring relief for holiday shoppers having trouble finding the perfect present for loved ones,” said Pablo Rodriguez, director of global consumer initiatives for PayPal, the San Jose, Calif.-based payments technology company. 

More from Personal Finance

Former U.S. Education Secretary: Voters Are to Blame for Struggling Schools

Former U.S. Education Secretary: Voters Are to Blame for Struggling Schools

How Much is a Down Payment on a House? Do You Need 20 Percent?

How Much is a Down Payment on a House? Do You Need 20 Percent?

What Is the Cost of Home Appraisal and What Should I Know?

What Is the Cost of Home Appraisal and What Should I Know?

How to Get Out of a Car Lease Early Without Penalty

How to Get Out of a Car Lease Early Without Penalty

When Is the FAFSA Deadline and What Are the Application Requirements?

When Is the FAFSA Deadline and What Are the Application Requirements?