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Home » What Are the Pros and Cons of Gift Cards?

What Are the Pros and Cons of Gift Cards?

Most retailers provide consumers with gift cards as a method to shop, or to give money to friends as well as in the brick-and-mortar varieties. There are two kinds of gift cards: physical as well as digital (e-gift cards)–and each has various advantages and features. If you’re thinking of purchasing gift cards for someone else in the Christmas season or if you’d like to purchase cards for yourself, it’s helpful to comprehend how they differ from other payment options.

The most important takeaways

Gift cards are an easy and effective alternative to cash when you have to purchase something or to gift a present to someone who is not your own.
Gift cards that are physical can be purchased in shops or on the internet, whereas the digital ones are made to be utilized online or via the phone.
The digital wallet can include gift card cards in order to make purchases much easier and safer.
It’s essential to look over physical and electronic gift card expirations dates as well as charges when you intend to load money on the card.

Click here for gift card printing.

How Gift Cards work

Gift cards are a method of payment that is used to buy items at restaurants, gas stations and many other places. You can load funds into the card. either you or the person who received the gift card can use at any of the places that accept credit cards.

Gift cards are open-loop or closed-loop. A gift card that is open loop can be used wherever the type of card is accepted. For instance, if possess a gift card stamped using that Visa image, then you may use it to purchase items anyplace Visa will be accepted.

Closed-loop cards is, however it is only available for specific retailers. For example, if buy a gift card at Starbucks or Amazon and you, or the person who received the gift card will be able to purchase items only at the merchant that issued the card.

Certain gift cards for prepaid use require a cost to purchase them. You can also pay an additional fee to transfer funds to a gift card when you intend to reuse the card.

Physical Vs. Electronic Gift Cards

They can be physical, which is that they are a card made of plastic or digital. Digital gift cards don’t have a physical appearance; instead, you’re given an unique gift code which you can redeem online at retailers for purchases. Physical gift cards are the most sought-after type of gift cards however it is expected that this will be changing within the near future.3

Companies like Amazon, Walmart, and Target let customers purchase physical cards, as well as to load digital or online accounts. Restaurant chains that are major including Starbucks, Chipotle, and Chili’s are also able to provide customers physical and digital gift cards. They make it easy that customers can pay meals and drinks using the app or an in-installation card reader, which speeds the process of making purchases.

Benefits of Gift Cards

Gift cards offer numerous benefits. For instance:

They are a great alternative payment method in the event that you prefer not to make a payment in cash or with credit cards.
Gift cards are an ideal gift for Christmas season or for any other event.
You can make use of gift cards to manage the amount you spend (helpful in avoiding banks overdrafts).
They can be simple and easy to make use of.

When it comes to gift-giving gifts cards could be the best option if you’ve no idea what to purchase for the person you’re considering gifting to since they let the recipient to buy whatever they’d like and at the time they’d like to. Keep in mind when you choose closed loop gift cards over open-loop ones this limits the gift recipient’s options of where they can utilize the cards.

If you’re considering making use of gift cards to aid children to understand the basics of money management, you might be interested in researching the prepaid debit cards available for teenagers. They operate similarly, however they generally have an open loop.

The cons of gift cards

The gift card can also have negatives. Below are 5 of them.

When you make purchases using the gift card could be a tiny amount of cash left over, and is not utilized, whether because of inertia or forgetfulness is lost.
You can pay for purchase or reload fees to increase funds.
Closed-loop cards limit purchase power.
The loss of a gift card or even having it stolen could be stressful, particularly in the event that you did not sign it up or retain it’s gift card number.6
You may be assessed an inactivity fee if you don’t make use of your credit card.