Gift cards have been a popular gift choice for many years. They provide the recipient the flexibility to purchase whatever they want from a particular store or restaurant. However, some wonder if gift cards are still as popular as they used to be or if other gift options are becoming more preferable.
What are the benefits of gift cards?
There are several advantages that make gift cards an appealing gift choice for many people:
- Recipient can choose what they want – With a gift card, the recipient can select their own item rather than the giver choosing for them. This gives them the flexibility to get something they really want or need.
- Works for different interests – Gift cards allow you to give a gift when you’re unsure what the recipient’s interests are. As long as it’s a store they like, they can pick something meaningful.
- Fits different budgets – Gift cards come in a wide range of values, making it easy to find one that aligns with your budget. You don’t have to spend too much or too little.
- Easy to buy – Gift cards are readily available at grocery stores, online, and in the shops they are for. They are a very convenient gift to purchase.
- Good for any occasion – Gift cards work for everything from birthdays to weddings. They are versatile gifts that recipients appreciate all year long.
The flexibility and universality of gift cards make them a simple but thoughtful gift. You don’t have to stress about selecting the perfect item. Just pick a store your recipient likes and let them do the rest!
What are some potential downsides of gift cards?
Despite their benefits, there are some potential disadvantages that may make gift cards less appealing for some givers and recipients:
- Can feel impersonal – Some people see gift cards as impersonal or lazier than picking out a specific gift. They don’t require knowledge of someone’s tastes.
- Easy to lose or forget about – When people receive gift cards, they don’t always redeem them right away. Cards can get lost or forgotten over time.
- May not use full value – Unless the balance is used up precisely, there is often some leftover amount on a gift card that never gets utilized.
- Fees – Some gift cards charge purchase fees or deduct amounts if not used within a certain timeframe. This can diminish the card’s value.
- Limit options – Gift cards restrict recipients to one store. They can’t use the value other places if their tastes change.
While the ease of gift cards is positive in many cases, they do lack a personal touch and present some potential hassles as well.
How much do people spend on gift cards?
Gift card spending has been on the rise for over a decade. From 1999 to 2014, gift card spending in the U.S. increased over 5000%! By 2021, projected gift card spending was forecast to exceed $200 billion.
The average consumer spends between $40-$60 on each gift card they purchase. But nearly 20% spend over $100 per card. Gift cards tend to have higher averages than most gift types. Even through recessions, gift card sales have mostly continued to grow.
Tech-savvy consumers are also purchasing digital gift cards more than ever. Many retailers now offer e-gift cards sent through email that recipients can redeem online. Digital gift card spending was estimated at $162 billion in 2020.
With spending increasing year over year, gift cards remain a top choice for gift givers, even with higher price tags.
Gift card spending over time
| Year | Estimated Spending |
|---|---|
| 1999 | $19 billion |
| 2009 | $90 billion |
| 2021 | $200 billion (projected) |
What types of gift cards are most popular?
While you can purchase gift cards from nearly any retailer, restaurant, or entertainment venue, some types of gift cards tend to be purchased more than others.
According to various surveys and spending data, the most popular gift card categories are:
- Restaurant gift cards – Used at fast casual chains like Starbucks or Olive Garden. A 2019 poll showed 87% of respondents hoping to receive restaurant gift cards.
- Department store cards – Allow flexibility so recipients can pick anything from clothing to home goods. Cards for stores like Target, Walmart, and Amazon are very common.
- Specialty retailer cards – For brand-specific stores in categories like apparel, books, hobby shops, or electronics. These allow fans to shop at their favorite spots.
- Grocery store cards – Help cover an essential recurring expense at supermarkets like Kroger or Safeway.
- Gas station cards – Give drivers a discount at the pump from brands like Shell or BP.
- Visa/Mastercard gift cards – Function as prepaid debit cards that can be used almost anywhere. The recipient can choose where to spend the balance.
Cards for dining, retail, and gas see particularly high gift card usage. But even smaller niches like bookstores, clubs, and travel have popular offerings. There are broad choices available no matter the recipient’s interests.
Do people prefer gift cards or cash?
Gift cards and cash are two common gift choices. Both provide spending flexibility instead of a specific physical item. But which do recipients truly prefer to receive?
Surveys indicate gift cards have a slight edge over cash:
- In 2021, 43% of people preferred gift cards vs. 36% who wanted cash.
- 70% would rather receive a gift card over cash for less than $100 gifts.
- For over $100, 56% favored gift cards compared to 44% wanting cash.
Some key factor that influence this breakdown:
- Gift cards feel more thoughtful – Choosing a particular store requires some extra effort over just handing out cash.
- Cards are easier to spend on extras – People may save cash for necessities but splurge with a small windfall on a gift card.
- Gift cards have less fees – Cashing or depositing physical money sometimes incurs fees but redeeming a gift card does not.
- Cards won’t get lost – Cash can be misplaced but gift card numbers can often be retrieved if a physical card is forgotten.
However, convenience and broad applicability still make cash a top gifting choice as well. Overall both options remain popular depending on the situation.
Do people end up using all the value on gift cards?
With nearly $100 billion in gift cards going unused in the U.S. alone, it’s clear many gifts cards do not get fully spent down. Various surveys report what portion of each gift card goes unused:
- 27% of recipients have leftover balances of less than $10 on their gift cards.
- 11% report leaving $10-$25 unused on cards.
- 64% say they have less than $5 still outstanding on multiple cards.
Reasons people fail to use up gift cards fully include:
- Odd remaining balances – When a balance like $3.72 is left, it’s unlikely to get used.
- Lost or forgotten cards – Unused gift cards get abandoned in wallets or drawers over time.
- Changing tastes – Recipients may no longer like shopping at that store by the time they use a gift card.
- Saving the card – People hang onto gift cards intending to use them for a special purchase sometime.
While most try to spend down the balance, the majority of gift cards see at least a few dollars go to waste.
Typical leftover gift card balances
| Remaining Balance | Percentage of Recipients |
|---|---|
| Under $10 | 27% |
| $10-$25 | 11% |
| Under $5 on multiple cards | 64% |
Do gift cards continue to be popular with millennials and Gen Z?
As the two youngest adult generations, millennials and Gen Z are important demographics influencing current gift card trends. Research shows these groups do appreciate and use gift cards, with some caveats:
- 72% of millennials and 80% of Gen Z received gift cards in 2020.
- Members of Gen Z prefer gift cards to cash at a 4 to 1 ratio.
- But just 29% of millennials rank gift cards as one of their favorite gift choices.
- Younger shoppers are very interested in digital gift cards to redeem online.
- Custom or personalized card designs resonate more with these demographics.
Key reasons gift cards appeal to younger consumers include:
- Ability to choose own gifts
- Purchasing power for small luxuries
- Convenience of mobile redemption
However, some traits of traditional plastic gift cards are less popular like:
- Generic designs
- Physical cards that can be misplaced
- Restrictions to just one retailer
As digital natives, millennials and Gen Z still appreciate the flexibility of gift cards. But they hope to use them in more customized, convenient, and practical ways.
How has gift card usage changed during the COVID-19 pandemic?
The COVID-19 pandemic radically altered shopping and gift-giving behaviors starting in 2020. For gift cards, some notable impacts included:
- Digital gift card use surged, rising 45% in 2020.
- People bought more gift cards to support local businesses that were struggling.
- High demand led to gift card shortages early in the pandemic at some retailers.
- Restaurants saw fewer gift card redemptions as dining rooms closed temporarily.
- Consumers leaned into online redemption options as stores had restrictions.
- Virtual gifting became popular for celebrations and events held remotely.
Gift cards saw big changes but remained sought after during uncertain times. They provided flexibility along with a safe, minimal contact gift-giving option. Retailers also promoted gift cards heavily to drive revenue during lower in-person sales.
Year-over-Year Growth of Digital Gift Cards
| Year | Growth |
|---|---|
| 2019 | 22% |
| 2020 | 45% |
Are any new gift card innovations emerging?
Gift card offerings continue to evolve in a few key ways:
- Digital-first experiences – More convenient virtual and mobile options for purchasing, gifting, and redemption.
- Customization – Adding personalized photos, videos, or messages to digital gift cards.
- Subscription cards – Auto-replenishing gift balances monthly for consistent gifting.
- Personalization platforms – Services that allow choosing from tons of merchant options for custom, unique gift cards.
- Shoppable greeting cards – Paper cards with scannable codes that unlock gift card values.
New technology is also tackling gift card problems like unused balances. Apps can track balances across multiple cards and facilitate easy transfers or exchanges of remaining values.
Overall the industry continues modernizing to align with how consumers want to purchase, personalize, receive and redeem gift cards today.
Conclusion
Despite some drawbacks, gift cards show no signs of declining in popularity any time soon. Sales continue setting new records annually, with billions spent on both physical and digital options. Consumers love the flexibility of letting recipients choose their own items. New innovations are also enhancing convenience and customization. While cash and other gifts certainly have their place, gift cards are likely to remain a holiday shopping staple. Their versatility and flexibility allow givers to easily brighten someone’s day with the gift of choice.
