The Gift Card: Who Is Benefiting?

But that is not the only advantage retailers get from the person you gift the card to. What happens when the gift card holder purchases an item that is less than the redeemable value of the card and is now stuck with an amount lower than any item he or she is interested in buying from the store. They will either leave the remaining amount on the card (in the industry it's called breakage) which is a free monetary gift to the retailer, or they will purchase another item and pay cash from their own pocket to cover the difference (an added sale that the store would've never received otherwise).

What concerns many in consumer advocacy groups is not these two disadvantages but another behaviour that has appeared with the use of gift cards. When entering an establihment with a gift card, consumers tend to ignore the pricing of items. They are not the wary shopper looking for the best value for their consumer dollar as the card is not money earned from their own labour. Foregoing scrutiny of pricing leads to the retailer becoming less conscience of lower prices for their goods. This leads to an overall increase in pricing industry wide as more and more purchases are transacted with gift cards. With many retailers now having more than half of their sales from gift cards, it bodes unwell for the average consumer and their monthly budgets.

It's time for gift givers to make a choice. If you don't want to give money to corporations who haven't earned it, then you should bite the bullet and give cash; how much more thoughtful are you if you give a gift card anyway? Or, you could actually take the time to find the present your friend or loved one will appreciate. Isn't that whole reason for gift-giving in the first place?

Gift Card - Page 1

Article by:
FS Staff

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