Traditionally, New Year’s resolutions are supposed to involve some sort of pain or hardship, like reducing spending or hauling ourselves to CrossFit class. But here’s one resolution we should all make this year that’s actually enjoyable: Use all your gift cards as fast as you can.
Forget the fact that, instead of taking the time to figure out what gift would have been perfect for you, or even just “good,” your loved ones used the most expedient way to put a checkmark beside your name by opting for the laziest gift of all: a gift card.
That’s in the past now.
Okay, I realize that gift cards rank pretty high on people’s wish lists since they give you ultimate control on what you receive, but that’s a symptom of consumerism. Meir Statman, an expert in behavioural finance and author of the book What Investors Really Want, notes that when given gift cards, people tend to spend more than the amount received.
If you receive a $50 gift card to store XYZ, you are likely to spend more than $50 there. Personally, I hate leaving money on the table, and trying to spend exactly $50 is tough, so somehow my brain decides the only thing to do is spend at least $50. Additionally, purchases made with a gift card tend to be more frivolous than purchases made with gifts of cash.
Gift cards that act like cash, such as pre-paid VISA cash cards, come with their own issues.They can be used anywhere you can use a credit card, but they can rack up some pretty hefty fees. Depending on where you buy one, there can be an upfront fee to purchase it, a monthly maintenance fee for hanging on to it and an extra 2.5-per-cent charge on top of uncompetitive foreign exchange rates for using it across the border. Some cards even stipulate that if you don’t use them before expiry, an account closing fee equivalent to the remaining balance will be charged.
In some provinces and territories, gift cards are no longer allowed to come with expiry dates or monthly fees, but there are loopholes. Get one from a financial institution and you may have all the fees mentioned above. If you have a multi-vendor card that might be valid at any store in a particular mall, you might still be dinged with fees. It's worth checking the back of the card for fine print or doing a quick look online to see if there are “gotchas.”
One of the biggest problems with gift cards, however, is the shocking amount of them that go unused. According to CardSwap.ca, an online service that facilitates the buying and selling of unused gift cards, $1-billion worth of unspent cash on cards is thrown away every year by Canadians. CardSwap also estimates that there is an average of $300 in unused gift cards per household in Canada.
So for that New Year’s resolution, I propose you take a day or two and spend all your gift cards as best you can. Anything left over you could sell online, or give to charity. Laziness when it comes to utilizing free money (this is a resolution, after all) is a definite no-no.