Money in the hand Gift cards are a bad present Theyre also the most asked-for gift in America This is a paradox that hangs on two wonky pegs Western squeamishness when it comes to gifting cash and our tendency to leave buying presents until the last minute But its not without consequence The problem with gift cards is that a vast proportion of the value thats given is never spent by recipients because they forget to use them lose them or because the cards go out of date Billions of dollars every year disappears thus into the coffers of massive companies Heres the bottom line We should get a grip stop giving gift cards to each other and give cold hard cash instead But I want a gift card No you dont What you want is the opportunity to buy things you actually desire In fact you probably dont even want to have to buy them you just accept thats the deal to get a well-fitting skirt or pleasant cologne Gift cards are worse than imperfect theyre money-wasting impersonal and restrictive in ways we have learned to accept but which arent truly helpful and dont make sense A gift card does three things to the recipient It restricts what they can spend the money on it restricts the places they can spend it and it usually restricts how long they have to spend it The first of these the restriction on what types of item one can buy can be helpful in some ways It makes the money feel more akin to an object than to a fungible asset and crucially bestows the license for self-indulgence The second is less helpful What if you want a sweater from Gap but your gift card is from Gucci Even if its for a company whose products you love there might not be anything in stock right now that you like The third the use-by date is truly egregious How many of us have left gift cards in a drawer only to realize theyve gone out of date The answer is millions of us Unspent gift card money called breakage amounts to about 1 billion a year in the US That figure has come down because consumer law cracked down on some particularly bad vendor practice like inactivity fees for cards that werent used enough Between 2005 and 2016 an estimated 45 billion was simply wasted on gift cards that were never redeemed according to customer group Finder UK-consumer rights group Which surveyed a number of retailers in 2017 to find out how quickly their gift cards ran out and why The US has 5-year minimum expiration dates The UK stores Which surveyed mostly had 1-2 year expiration times and some were shorter None had a really compelling case for why the cards had to expire at all and some stores didnt set expiration dates Is breakage a cunning plan It might sound like companies want gift cards to go unredeemed but the reality is slightly more complicated When companies report their earnings unredeemed gift cards have to be listed as a liability Finder explains since the customer could still turn up and ask for the goods Companies also say that they want customers to spend the money because on average they spend well over the value of the card and because it increases footfall digital or otherwise But companies also know that a fat whack of the total spent on gift cards wont be redeemed And so after a time they book it as profit Lets use Amazon as an example As of September 2018 its most recent filing its liabilities for unredeemed gift cards were 17 billion Amazons cards dont run out for 10 years but the firm knows that it can book the profit before then because as time elapses it becomes incredibly unlikely that the holder of the card will ever spend the money Amazon books profit after nine months the expected customer redemption period saying in its filings that the likelihood of a cards redemption becomes remote two years after the date of issuance Embrace the wad-of-bills-stuffed-in-an-envelope approach Our busy cultures often mean theres a perceived lack of time to shop make gifts or think carefully about what a recipient might want Though for those interested in personalizing their presents there are ways to do so for loved ones If time is short and choosing hard a cash gift instead of a gift card would mean less money seeping away into unchecked pockets and forgotten filing systems But why is giving cash so difficult The problem is both psychological and culturally specific Theodore Caplow an American sociologist made a much-cited study of gifting in a small middle-American town back in 1979 finding that giving money was acceptable so long as the giver was older than the recipient 10 of gifts in Caplows study were money but 94 of those were made by older people to younger ones The findings still hold true The gifting of money between peers is seen as somehow distasteful and embarrassing in the West Gift cards are a socially acceptable alternative Thats not the case in many countries In India my colleague Akshat Rathi confirms there is no taboo around giving family members or peers money on occasions ranging from birthdays to weddings to Diwali Indians also give gold an always-valuable asset thats prettier than a gift card and doesnt expire though in a world of scarce natural resources we wouldnt advise the gifting of gold as a particularly great option And of course with the upswell in use of digital money transfer systems like Venmo in the US and Monzo in the UK the transfer could be more seamless and perhaps more seemly than the mafia-esque roll of bills Were living in the end times of cash after all The etiquette of gift cards Not convinced Ok As a determined giver of gift-cards and recipient of them there are still things you can do to staunch the financial bleeding If you plan to buy a gift card check the expiry dates of the vendor choosing one with a long time period and without penalties for gaps in usage Flag any conditions to your recipient when you give the gift and keep the sales receipt Consider whether a gift card is open-loop meaning it can be spent at any retailer that accepts particular credit cards or closed-loop meaning that it can only be spent at certain shops You might also want to get a digital card which is harder to lose than a physical one What if youve lost your card or its expired One route is to contact the person who gave you the card because they as the purchaser have more rights than the recipient Any reinstatement of unspent money is at a firms discretion Contacting the company that issued the card can also work though they have no obligation to honor one thats been lost or has expired Finally some firms have hacks for expiry dates John Lewis a chain of high-end UK department stores resets the clock on a gift card for an extra two years if you log on to check a cards balance Lots of people like to receive gift cards Almost 60 of Americans surveyed in 2015 said they would prefer one to any other present If cash were offered instead it seems unlikely theyd turn it down The transaction might feel unusual and even uncomfortable but it would be win for the recipients of gifts rather than 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