A recent article talked about what many economists and experts are expecting to happen this holiday shopping season. More people will cut back on their gift budgets and will become very mindful of their credit card usage. It is a natural reaction to rising debt I suppose.
The Scrooge In All of Us
This will most likely mean that because cash will be primarily used for purchases, the gifts underneath the tree will most likely be smaller and less expensive. Everyone is tightening their belts when it comes to spending and while that is good thing, it can also lead to fewer people on your list who will get presents. I mean, how close are you to that cousin from another state anyway? And what about that neighbor of yours who always liked to show off his good fortune in the middle of a recession whether it was through a new car or a summer vacation? Surely, they can do without a gift from you.
What to get?
So now that you have cut that list down to the bare minimum, should you get started? Not so fast. In Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays, Waldfogel, an economist, argues that we may be just wasting money. He calculates that about 85 billion dollars worth of presents goes down the drain each Christmas season. How can that be?
Well, when was the last time that you received gifts for Christmas and loved every single one of them. I can’t remember a year. All those presents that I did not like were bought with the best intentions (please keep buying me gifts!) but were ultimately ignored or even re-gifted. Guilty.
It’s a horrible thing to find out that your gift was unappreciated and made even more so by the fact that it was purchased on a credit card like most people used to do. You are in debt and the gift was a bust. Yeah, I would call that wasting money.
The solution?
Gift cards. A whopping 55 percent of people polled said that they would prefer to get gift cards so that they can decide what to buy themselves. Apparently some people do not like what they get for Christmas and would rather have the choice to shop for themselves. So is this the best choice out there? It lets you give a present that they will most likely appreciate and there is a wide variety of them.
Who is Uncle Barnes & Noble?
But the downside of gift cards or prepaid cards like some from Visa or American Express is that they come with some fees. By giving a gift card for someone from a retailer like a bookstore, you might also be giving them some hassle. They come in the form of fees.
If the recipient of your well-thought out present does not use the gift card in a specific amount of time, the companies start taking a ‘dormancy” fee every month. So when your sister goes to the store to use your present, they might not even have the full value of the card anymore. And if they wait a really long time, the money might completely disappear altogether through inactivity fees and other fees like it. You just gave the bookstore 50 dollars and now your sister is mad at you for not telling her to use her gift card sooner.
Does this really happen? Yes, it does. According to some statistics, about 8 cents of every dollar used to buy gift cards goes to the gift card issuer. Add up all the gift cards every year and that present to the gift card issuer is almost 8 billion dollars. Now that is a gift I am sure the companies will really appreciate. And here you are cutting out your cousin from the list and giving 8 billion to a stranger. Tsk! Tsk!
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[...] entrepreneur. Once we get the money back, then we can treat it like a regular gift card although my feelings about them are pretty [...]