Some gift cards are greatly appreciated by their recipients, while others end up forgotten and unused in drawers. Which are the best gift cards to give? Bottom Line Personal asked WalletHub analyst Chip Lupo how to pick the perfect gift card and which ones are the best.
Six Tips for Buying Gift Cards
To increase the odds that your gift of a gift card will be well-received…
Pick a gift card that shows how well you know the recipient
One common complaint about gift cards is that they suggest a lack of effort on the part of the giver—no time was taken to choose a specific gift that the recipient would like. Best: Select a card from the recipient’s favorite retailer or restaurant. That shows you put thought into the gift.
Seek out discounts
Another common gift card complaint is that they offer no upside to the recipient over receiving cash—if the gift giver pays $50 for a $50 gift card, he/she is simply transforming $50 that could have been spent anywhere into $50 that can be spent only at one business. But a gift card does have an upside for the purchaser if it’s purchased at a discount. Best places to find discounted gift cards: Warehouse clubs such as Costco and Sam’s Club…credit card rewards programs…and online. Some companies’ gift cards are more likely to be available at discounts than others. Examples: Gift cards issued by fast-food restaurant Sonic (average discount of 16%), movie-theater chain Cinemark (up to 13%), streaming service Netflix (9%), arts-and-crafts retailer Michaels (9%)…movie ticket provider Fandango (8%)…gaming retailer GameStop (8%)…casual restaurant Olive Garden (8%)…retailer Old Navy (8%)…and home-improvement store Lowe’s (7%).
Flee from fees
Some gift cards impose fees when the cards are purchased, activated, used and/or reactivated following a period of dormancy. Significant fees are particularly common with gift cards that utilize credit card networks—Visa, Mastercard or American Express. Be wary of gift cards that feature credit card networks’ logos, and look for fees in the fine print on the gift card before buying.
Be wary of expiration dates
By US law, most gift cards cannot expire for at least five years following their activation date—even longer in some states. But many gift cards don’t expire at all. If a gift card expires, expiration date details should be printed on the card or its accompanying package. Note: Gift cards issued through loyalty programs, as awards or as promotional items can legally expire in less than five years.
Consider resale value
Check how much a particular business’s gift cards fetch on secondhand markets such as CardCash.com or GCX.raise.com before buying—this can be a clue to how desirable the cards actually are. Gift cards that tend to sell for relatively high prices relative to their balances include those issued by Costco, The Home Depot, Best Buy, Disney, Whole Foods, Walmart, eBay, Chick-fil-A and McDonalds. Cards that typically sell for modest amounts include those issued by Sonic, Cinemark, Smoothie King, Fandango, Red Lobster, Dairy Queen, Olive Garden, Subway, Old Navy and GameStop.
Watch out for signs of tampering
Don’t buy a gift card if the code number on the back has been exposed, such as by scratching off the coating that’s supposed to cover it. Scammers sometimes do this, put the cards back on retailer display racks, call the retailers’ number or log on to the gift card websites to confirm when the cards have been activated, then steal the money off the cards. Cards located near or behind store registers are less likely to be tampered with than those located in parts of stores that are less closely monitored by employees.
Best Gift Cards Now
Of course, the best gift card to give depends on the recipient’s shopping and dining habits, but certain cards tend to be better than others. Gift cards issued by Amazon, Target and Sephora have dominated the top spots in WalletHub’s annual gift-card rankings based on the retailers’ popularity, the gift card’s resale value, lack of fees and availability of discounts—buyers often can find discounts in the 5% range on Amazon and Sephora gift cards…and 2% to 3% with Target.
Also scoring highly in WalletHub’s rankings are gift cards for Walmart, Starbucks, Disney, REI and The Home Depot. The REI gift card impresses in part due to discount size—often around 7%. Starbucks cards tend to be purchased with discounts of around 5%…Walmart, Disney and The Home Depot cards, between 2% and 4%.
There’s a significant drop off in scores after those elite gift cards, according to WalletHub’s calculations, but two more notable cards that score reasonably well include Sonic’s gift card, with its 16% average discount…and eBay’s gift card, which is rarely available at a meaningful discount but tends to be very well-received by passionate eBay shoppers.
