Don't Buy That Last-Minute Gift Card

Gift cards are the procrastinator's delight. They appear to demonstrate some thoughtfulness, because you had to physically buy something rather than just stuff a wad of cash in an envelope. But these days they're available at most supermarkets and drug stores, so you can pick one up without making a special trip. As a result, thousands of Americans will likely buy up last-minute gift cards in the next two days to give as Christmas gifts. They shouldn't bother.

First, let's debunk the reasons why you might think it's nice to buy someone a gift card.

It Shows I'm Thoughtful!

No, it shows you're lazy and a poor listener. As already mentioned, there's no challenge involved in purchasing a gift card these days. Moreover, buying good gifts is all about listening to people. If you have had dozens of conversations with a person and don't know a gift they might like for Christmas or their birthday, then you weren't really listening.

It's Safer Than Cash

How do you figure? When a gift card is swiped at a cash register it is activated. You put it in a card, and lose that card, then you also lose the gift card. If the card is stolen, then again, whoever takes it can just use it like they would have used cash -- it isn't personalized. Now if you save your receipt, then maybe there's a way to call wherever the gift card is from and try to get a new one. But chances are that most people who aren't thoughtful enough to buy someone a real gift probably aren't thoughtful enough to save all those gift card receipts just in case, either.

My Friend/Sibling/Parent/Other Distant Relative Wants a Gift Card

Maybe you think that someone would like a gift card. Perhaps you know that they like a certain store. Or they may even have said they'd like a gift card. But do you know what they'd like even more than a gift card? Cash. Then they don't have to worry about carrying an extra card or remembering to bring it to the store when they want to use it. They'll just slide the cash into their wallet and it's ready to be spent -- on whatever they want.

A Gift Card Can Actually Be Worse Than Cash

Now that you are presumably somewhat convinced that there isn't much advantage to giving a gift card instead of cash, it's time to reveal why it can sometimes actually be worse. This would be best explained through a story.

My wife and I live in a building that has a doorman/woman. The holiday season is also a time for tipping, so we wanted to show our appreciation for the work they do. Disregarding all of the strong arguments above, we thought gift cards would be a good idea.

So yesterday, during my lunch break when I was at the grocery store to get a sandwich, I visited its "Gift Card Mall." The best gift card in this situation would be a generic one, since we haven't had that many long conversations with our doormen/women to provide insight to specific stores they like. But when I started looking at the Visa and American Express gift cards, I suddenly realized that there were strings attached. First, there was an "activation fee" that I had to pay for each one, ranging from $4 to $6. When we're talking about a $5 fee on a $50 gift card, that's a 10% premium. The cards also had expiration dates, and some monthly maintenance fees that kick in after a certain period of time.

Now let's compare that to cash. If I go to my bank and withdraw $50, it costs me $50. The cash doesn't expire. There's no monthly maintenance fee that kicks in on that cash if the recipient doesn't use it quickly. Oh, and it's accepted everywhere, even where credit cards aren't accepted.

So what did I do? I bought the gift cards. Why? I'm still trying to figure that out. I wasn't thinking clearly. I later realized that the $55 I paid for the $50 gift card wasn't just a waste of $5 per card, but the recipients would almost have certainly preferred to receive $55 cash instead of a $50 gift card. Unfortunately, you also can't return gift cards.

Now not all gift cards involve fees and penalties like this, but some do. There are also some new guidelines that they must follow. But buying gift cards that include big fees and fine print isn't a mistake I'll make again. You shouldn't either. If you don't want to get someone a real present, stick to cash -- I can guarantee no gift recipient will be disappointed.