How the Little Guy Gets Screwed: Holiday Edition!

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Ok, this isn't really so much that the little guy gets screwed. It's just that the Big Guy wins. Every time. Any way you spin it, the Big Guy wins on this one.

Gift cards.

I have a love/hate relationship with them fiscally and emotionally.

Say you: Huh?

Say me: Getting there! Geez, I just started.

Emotionally: On the one hand, they're really easy to buy. Walk in, grab the card, head to the cashier and you're through. Job well done! Moving on! On the other hand, they're really easy to buy. Walk in, grab the card, head to the cashier....

They just feeling like cheating to me. Like I haven't really done my homework with the gift giving. One should put thought into a gift, and a gift card, to me, strikes me as just the opposite except under certain, quite specific, circumstances.

Then again, this is coming from the woman who has a decidedly dysfunctional relationship with wrapping paper.

Fiscally: Have you ever really thought about it? How many gift cards do you have in your possession that have $1.15 sitting on it? Or, that's been sitting in your home unused at all? In my house alone, I can think of five different cards from five different retailers that have yet to be redeemed in full. Three of them alone are unused and left over from Christmas last year! (One found in the crevices of The Boy's room just this morning. He had completely forgotten about it.)

It's ridiculous.

Aside from the obvious fact that retailers make buckets of cash from gift cards not fully utilized ($1.15 here, $0.34 there...it all adds up), many people go in with every intention of using the whole card--and rightly so. But here's the rub: Almost every card one receives is for a whole dollar amount, right? Ten bucks, twenty, twenty-five, fifty....

Have you EVER gone to a store and spent exactly twenty dollars?* No. So with a gift card, you're going to buy that $19.99 item and be stuck with the sales tax, which is just plain annoying. Or, more likely I think, you go and buy a bunch of stuff or a high-ticket item and spend more than what the gift card is worth--anywhere from 15% to 40% more. It's called "uplift". The marketers have done their job, right? You've not only entered their store but you've spent extra money.

They win.

And just as an aside, what happens to that one little penny left over from an iTunes purchase anyway? Bastards they are, linking to your checking account. A fifteen dollar card will buy you fifteen songs, with 15 cents left over. Do you buy another song or twenty? (I would. They win. My brother does. They win.) or leave it out there in the ether (they win? Or does the retailer who sold you the card win?)

Interesting facts and figures:

Americans will spend $25 billion on gift cards this year, down 25% from 2007. Still, a staggering amount of money.
Retailers actually put gift cards as a liability on their balance sheets until they're redeemed. Here's another way to think about it: We're actually giving the retailer an interest free loan until the receiver spends it (IF they spend it.) Sorry, but does McDonalds need an interest free loan from any of us?
As Prin noted last month, some retailers--most notoriously the Sharper Image--don't necessarily honor gift cards if they're in financial trouble. Or just keep issuing them anyway and THEN not honor them. Borders was in dire straights not long ago. Might want to spend that card if you have one in your possession (as we do here.)
Every state has laws, called "escheat" laws, that allows them to sieze unclaimed property. Unused gift cards fall into this category, of which half the states make a full or partial claim. That being said....
135 million dollars: That's how much money Best Buy made in 2004 and 2005 from unused or under used gift cards.
43 million dollars: Money Home Depot added to its pretax earnings in 2005 from unredeemed gift cards issued before 2002.
Undisclosed: The Mart of Darkness remains tight lipped about how much they pull in on annual basis from gift cards not redeemed. I'm just going to go out on a limb here and say it's a LOT. Target is evasive on exact numbers as well--they actually add a percentage of the gift card as revenue each time one is sold.
Some retailers charge "dormancy" or "maintenance" fees for cards. Kmart, A Pea In the Pod, Academy Sports, BRIO Tuscan Grille, Goody's, Quiznos, Tony Roma's and Rack Room Shoes are a few examples of retailers who charge "dormancy" fees. So in these cases, the little guy does get screwed after a certain time. You can go here for a complete list of retailers, terms, and conditions for gift cards (this isn't just an American site!) Bank cards are the worst offenders as far as fees are concerned.

All right, lesson over. The brothers are in town for the holiday starting tomorrow. This means that I'll likely be too juiced on wine for the remainder of the week to write anything of consequence.

I sincerely hope that all of you have a wonderful holiday.

Merry Christmas!

Happy Hanukkah!

See you next week! ->

*Stick it to the Man! Starbucks will let you buy a card for any amount over $5. I bought one today for $18.70--the price of four venti specialty drinks plus tax. HA! It was a specific circumstance, by the way.