Gift Cards

Gift cardWhy would anyone give a gift card instead of a check? Why purposely limit the use of a gift? The store gets to use your money until the card is redeemed, and if the card is lost, they get to keep it all. The card and purchase never exactly match, so the receiver either has to buy something more expensive, or lose the small amount left over. All of the advantages seem to be with the store, yet the cards are popular with consumers. Why?

Dan Ariely, who I mentioned before, whose column, “Ask Ariely” appears in The Wall Street Journal, explains it in a way I understand.

People prefer to receive gift cards because they are a guilt-free way of spending on themselves. We see many things we would like to have, but the guilt of selfishly spending that much on nonessentials stops us. It is not even the total amount, but the “luxury premium” that causes the problem. Yes, we would like that fountain pen, and we could afford it, but we feel guilty about the cost when free ballpoints can do the job. With a gift card, however, the cost seems much less. Irrational, yes, but now we have something that we want. A check would just be deposited in a bank and forgotten.  What fun is that?

I have often used a gift card to buy a book I would have thought too expensive. $60! Never! But with this gift card, it is only $10. What a bargain.

A dollar without guilt is worth more than a regular dollar, points out Dan.  Yes, I understand.


About Roger Walck

My reasons for writing this blog are spelled out in the posting of 10/1/2012, Montaigne's Essays. They are probably not what you think.
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