Are gift cards better than cash for Christmas?

Giving gift cards and cash at Christmas isn’t a sign you’re out of ideas. It can let friends and family get something they really want and save on time and guesswork, as well as waste. If you’re not sure which to go for, here are the pros and cons of each.

Holly Bennett Last updated on 04 December 2021.
Are gift cards better than cash for Christmas?

Giving gift cards or cash at Christmas is hands down a better option than buying someone something they don’t want or need. It can also make life easier if you’re short on time and inspiration and don’t want to get it wrong. Far from a last resort, they can be a Christmas saviour for all concerned.

Gift cards might have the edge when it comes to feeling like you’ve put more thought into the present. But don’t think of cash as second-best. It means you’re not tethering someone to anything specific, and the sky’s the limit when it comes to what they spend it on.

It’s perfectly fine to take either route, depending on what works for you, and who you’re buying for. To help, here are the pros and cons to help you decide if cash or gift cards are the way to go this year.

The case for gifts cards

If you’re familiar with someone’s likes and hobbies – and even if you’re not – there will be a Christmas gift card for them. The UK gift card market is worth around £7 billion, so it’s a popular option. Here are some of the reasons why:

Gift cards can be personal without being too specific

The big retailers provide a more generic option, where the recipient can buy just about anything from them. It shows that you know where they shop and the kind of things they like, but still want to leave the choice to them.

With a multi-store gift card, they’ll be able to choose what to buy from a large range of high street stores and outlets. Or you can go for smaller, more specialist stores and small businesses if you know they already shop there, or would like to.

According to the Gift Card & Voucher Association (GCVS), during Christmas 2020, 56% of UK gift cards bought were for single retailers. So people are prepared to take a more targeted approach.

You can buy them an experience, instead of more stuff

In an effort to be a more conscious consumer, and because most of us probably have enough stuff, experience gift cards might sit better with you.

A bigger budget can get supercar track days, flying lessons and spa days that someone would be unlikely to splash out on for themselves. But there are plenty of niche, more affordable options too, including pet photoshoots, forest Segway rides, paddle-boarding, alpaca trekking, afternoon tea and meal kits.

If you’re going to be the plus-one in this, you might want to make sure it’s something you have a passing interest in too. Yes, it’s a gift for them, but they’re likely to get more out of a carp fishing experience for two if you’re not repeatedly saying you’re cold while checking your watch.

Gift cards can be quick to buy and send for last-minute shoppers

If you’re not keen on being elbow to elbow with fractious festive shoppers, or tend to leave things until the last minute, they’re a gift for the giver, too.

You can buy physical cards in stores and supermarkets, but the ease of digital gift cards and the ability to personalise them is hard to argue with. You can usually schedule it to send whenever you like, without having to worry about the post.

GCVS research in 2021 suggests that 42.7% of gift card buyers prefer to buy gift cards online and nearly half (47%) of people prefer redeeming them online. During December 2020, as many as one in four Brits bought a gift card for someone, partly because it was a relatively Covid-safe and easy way to give presents during lockdown restrictions.

While you may think a 12-digit serial number doesn’t exactly shout Christmas, you’ll be saving single-use plastic that some physical gift cards are made from. Most stores let you pick a fitting design or animation on e-delivery for free, if that helps things feel more customised.

Gift cards encourage the recipient to treat themselves

While some generic gift cards could technically be used for the weekly shop, gift cards are designed to encourage people to treat themselves.

Some people don’t like to, or can’t afford to, spend money on items they don’t technically need but would love. With a gift card, you’re giving them permission and the means to do that, guilt-free.

The case against gift cards

Almost convinced to go the gift card route? Before you do, it’s worth knowing that:

There are restrictions on where they can use them

There will usually be limits on where gift cards can be redeemed and what they can be spent on. So if you’re going specific, make sure it’s a store the recipient does really like or it may never get spent or, at best, could end up on a gift card marketplace.

Gift cards usually have an expiry date

According to Cardyard, a gift-card exchange site, every year in the UK, gift cards worth £300 million expire, unspent. That’s an awful lot of money wasted.

Though most gift cards come with a fairly long period to use them, unlike cash, there will be a time when they’re no longer valid. This varies, so read the terms before you buy. You might want to mention it to the recipient, too.

Bigger retailers, such as John Lewis, ASOS, Boots and GAME, give 24 months after the date of issue as the expiry date, with Amazon gift cards in it for the long-haul, lasting 10 years. National Book Tokens last for eight years, but if you don’t use it in that time, you can ask that it’s replaced with a new one.

Check the terms of the card, so you know when it expires. If it’s an experience, be clear about when bookings must be made by, and bear in mind the gift card terms may be different from the terms of the venue.

If they lose it, you’ll be lucky to be offered a replacement

That string of numbers or card with a scratch-off panel can be easily lost or deleted. If this happens, it’s worth contacting the store to ask if it can be re-issued, so all may not be lost.

But unless the terms and conditions say a retailer will do it, you’re relying on their goodwill. You’re also relying on the recipient admitting they’ve lost it, which for some may be more awkward than it’s worth.

Retailers and providers can go out of business

The list of high street stores that have gone out of business, including Topshop and Debenhams, may be enough to ring a small warning bell.

When a company goes bust, the administrators decide the fate of gift cards in circulation. When it comes to creditors of a retailer, gift card purchasers are considered unsecured creditors, who are treated as a low priority, behind secured and preferential creditors. So you'll be lucky to get the full amount you paid back.

When Arcadia went into administration in November 2020, only 50% of the value of a Topshop gift card could be redeemed. And Debenhams stopped accepting gift vouchers in December 2020 after its demise.

If you buy a gift card with a value of £100 or more by credit card and it’s not honoured by the retailer, you may be able to make a claim under Section 75 of the Consumer Credit Act or use the chargeback scheme if you paid with a debit card – though, unfortunately, there are no guarantees.

You still have to put some thought into it

While you can express your own interests and values, such as a gift card for a sustainable brand, make sure you’re focusing on their interests more than yours. And consider that some hobbies, such as gaming, will need a gift card specific to the console they use.

Not everyone wants to go on a bushcraft course, even if these skills might come in handy one day. So unlike when you give cash, you may still need to have a word with their nearest and dearest, or the recipient themselves, to find out what sort of thing they enjoy doing.

What they want probably won’t exactly match the card’s value

When they’ve found what they want, it’s unlikely to fit into neat divisibles of the total. So it’s possible there will be a few pounds wasted, or that they’ll have to make up the difference.

After one transaction, if there’s less than a fiver on there, the tendency may be to forget to use it or find out the remaining balance.

On average, UK shoppers spend 35% more than the value of the gift card, according to the GCVA. So in some respects, they may encourage overspending and using their own funds.

The case for cash as a gift

There is little doubt that cash is the more straightforward choice. If you can get past any idea that it’s impersonal or involves less thought, the pros are strong:

It can be used almost anywhere, any time

There is no clock ticking and there is no limit to what they can spend it on. And while treats are probably the intention of the gift-giver, they can save or invest it, if that’s what they want to do.

And is it so bad if it does end up being a helping hand towards other expenses when finances are tight? With cash, the recipient has the freedom to decide.

You can leave out the guesswork

Even a generic gift card makes assumptions that they like that store and could find anything they want there.

Cash removes that second-guessing. It also means that this year you won’t have to send that annual message to your brother asking what your nephew is into these days. Not everyone is able to spend enough time with loved ones to pick up on hints about what they love, which is why the flexibility of cash can be a winner.

And for some, giving cash can be a lot easier than getting to grips with what exactly younger members of the family are actually asking for.

No transaction, no fuss

If you’re seeing them in person over the festive period, you can hand over crisp banknotes without interacting with retailers or considering postal charges. This can be a relief for some gift-givers who, for a variety of reasons, aren’t keen to buy online.

You can use a bank transfer

Now that fewer consumers are using physical cash in transactions, what could be easier for both parties than a bank transfer of the cash for a specific gift? It’s quick, costs nothing within the UK, and you don’t have to find an ATM and hope it kicks out fresh new notes rather than crumpled specimens.

While there is a risk transferring money into their account means it is more likely to end up going on bills – and you can’t exactly wrap a bank transfer in a festive ribbon – there are ways to earmark the amount for something specific.

You could ask them what they would like from you and transfer the amount you want to put towards that. They can then buy it from the best source and arrange delivery convenient for them. Past research from Stanford University suggested that people enjoyed receiving gifts they asked for more than those they didn’t, so this is a roundabout way of doing this.

While cheques are declining in use, they are still an option, and some banks can process digital images of cheques through their app to make the process easier and quicker.

Most people prefer to receive cash

A handful of surveys suggest that generally, people prefer to receive cash as a gift from friends and family, even if they prefer to give gift cards. The present of choice for 35% of people in a 2021 US Cardtronics survey was cash, with just 6% choosing gift cards.

While this doesn’t mean people don’t want gift cards, it may suggest that we’re after an easier spending experience without feeling obliged or restricted. Not only can we get what we want, but there are no terms and conditions or balance checking required.

The case against cash as a gift

Generally, cash is a pretty failsafe option, for all the reasons stated above, but there are some drawbacks:

Cash can seem impersonal

With cash, it’s hard to personalise the gift or show that you know what they love and want to share in that. But does that matter? Getting over this is half the battle, and nothing says that you don’t know someone better than giving them a gift card they will probably never use.

Added to that, people are probably just as likely to feel awkward querying the amount that’s on the gift card, if it is not stated.

It’s tricky to send

If you need to send it to the recipient instead of by hand or bank transfer, Royal Mail advises sending it via Royal Mail Special Delivery Guaranteed mail.

Make sure it can’t be seen through the envelope and don’t send coins, as they can cause trouble with sorting machines and damage the envelope.

But bear in mind that the definition of money includes vouchers, coupons and cards, so the same postal method applies to gift cards.

It’s possible to send money abroad using international tracking but there are some countries, including Italy and Poland, where you can’t send money from the UK, so always check.

Wrapping up

There is no right or wrong way to give someone a gift at Christmas. Both cash and gift cards are a savvy option if you want to reduce waste and give the recipient the flexibility to choose what they buy, and when.

And if you’re a last-minute or reluctant festive shopper whose present wrapping leaves a lot to be desired, you can’t really go wrong with either.

While cash has fewer drawbacks, if it’s not for you, there are plenty of gift card options to choose from. Just give the recipient a nudge to spend it before it expires, or the only present you’re buying will be for the retailer.

Image source: Getty Images

About the author:

Holly champions clear, jargon-free writing. She’s been creating finance content for leading organisations for over 10 years. Read more

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