Eventually, it happens to most of us. There's one name left on your holiday shopping list, and you can't come up with any good ideas for that person. You wait and stall in the hope that inspiration will strike, but it just doesn't seem to happen. And now, you've only got a few days left, and the malls are mobbed and Amazon (NASDAQ:AMZN) will only promise on-time delivery if you cough up the big bucks for express shipping. What to do?
"I'll just give a store gift card," you say, feeling like you've given up. Or "I'll just give some cash," or maybe one of those gift cards from Visa or American Express (NYSE:AXP). Sure, it feels kind of tacky and uncreative to give a gift like that, but at least you can cross the obligation off your list. But which of those options is the best?
The pros and the cons
Retailers, of course, have been applying their ingenuity to the problem of the last-minute gift for ages, and every year brings new options. You can still go to your local Nordstrom (NYSE:JWN) or Best Buy (NYSE:BBY) or most any other major retailer and pick up a gift card, of course. But in recent years, virtual gift cards, delivered via email, have gained popularity. Offered by everyone from Target (NYSE:TGT) to Hewlett-Packard (NYSE:HPQ) via online retail storefronts, e-gift cards can be purchased in a few seconds at any time of day -- even on Christmas morning, for the truly last-minute shopper.
But while there are more options every year, they all boil down to this: You're giving money. As someone who prides himself on picking out just the right presents, that's like admitting defeat. Store-specific gift cards take some of the sting out of the defeat, especially if the card is from a specialty store connected to a special interest or particular need of the recipient, but you're still giving money. And as a recent column from our Motley Fool Green Light personal finance service noted in more detail, the flip side of a gift card is that it has constraints on how you use it.
So what are the ups and downs of each of these options?
Store-specific gift cards:
- Are a tangible gift -- you can wrap it and hand it to the recipient;
- Can show some connection to the person's interests, needs, or passions;
- Are in some cases the best way to give a particular gift. If I wanted to give someone a Mac, for instance, I'd almost certainly give them an Apple (NASDAQ:AAPL) gift card and let them pick out the specific computer they wanted.
- Usually can be used both online and at a bricks-and-mortar store -- though some stores impose restrictions on online use.
- Often expire after a set period, or start charging exorbitant "maintenance" fees against the card's balance.
- Can be ordered online, albeit (usually) for an extra fee.
Electronic gift cards:
- Can be bought instantly, usually at any time of day or night, and get delivered automatically;
- Recipients have to log in to receive their gift -- it won't be under the tree.
- Aren't tangible, but share the other advantages (and disadvantages) of a plastic gift card, except:
- Are often only good at the vendor's online storefront.
Credit card-type gift cards (from American Express, Visa, etc.):
- Theoretically can be used anywhere;
- Generally allow the recipient to "cash out"-- receive the remaining balance in cash, though a steep fee is often deducted;
- Don't show any connection to your recipient's interests.
And last, but certainly not least, giving cash:
- Is often seen as tacky and less thoughtful than a specific gift, but:
- Is accepted everywhere;
- Is useful for everyone;
- Can make a particularly nice gift for a child you're not close to; and
- Has no tax consequences unless the gift exceeds $12,000.
For more on the ups and downs of these last-minute gifts, check out these articles:
