Credit Cards

What Is Gift Card Used For

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 6 minute read

Gift cards are always a great option when you don’t know what to get someone. They provide a practical approach to giving a unique present that still gives the receiver some say in the matter.

To help you get the most out of your gift card purchases or personal use, this article will discuss the various card formats, explain why businesses issue them and offer advice on how to maximize their value.

Basics of Gift Cards

Make sure you know the difference between the two types of gift cards before you go any further.

Cash Cards

Companies like Visa, MasterCard, Discover, and American Express back reloadable prepaid debit cards that can be used worldwide.

  • In addition to being accepted virtually anywhere other credit cards are, prepaid cards provide unparalleled freedom of movement. Having this is equivalent to carrying around cash. They can be used for anything, including online bill payments. They spare their recipients the trouble of replacing an unwanted gift or returning a book they already own, such as a sweater that is too small.
  • Gift cards lack personal touch compared to cash or other forms of payment. Even though it will be appreciated, this isn’t the finest present to give to a close friend because it’s actually simply a stand-in for cash.

Store Cards

Gift cards from Macy’s, Banana Republic, or Victoria’s Secret are not accepted at any other store.

  • In its favor is the fact that these cards allow you to add a personal touch to your present. A gift card to the recipient’s favorite store is a thoughtful and convenient alternative to a traditional birthday, graduation, or just because gift.
  • Though it’s nice that so many retailers accept gift cards, the fact that each one has its own set of rules for using them is a drawback. Expiration dates should be especially carefully monitored when shopping at local stores. Some gift cards and certificates, for instance, expire after a certain amount of time, typically between 30 and 90 days. The monthly depreciation of the card’s value is due to the demurrage policy that is often hidden in the fine print. The recipient of a $50 gift card may be astonished to hear that after four months, its value has dropped to $40 due to a monthly loss of $2.50.

Who Loves ‘Em?


Gift certificates are always appreciated by merchants. Gift cards can be purchased at nearly every retail establishment, from the most well-known chains to the tiniest mom-and-pop shops. 

The logic behind this is straightforward:

  • Whether or whether a customer actually uses the card, the store still benefits from the sale. To avoid spending the final few dollars, some people just misplace their cards or forget about them. This is like manna from heaven for a shopkeeper. It’s a win-win for stores because they get the money right away. Either you’ll spend the entire amount, leave some of the money on the table, or spend the rest on more items.
  • It usually results in increased sales. In most cases, the recipient of a gift card will spend more than the card’s face value upon redeeming it. They are more likely to make an additional purchase, and they may even become repeat customers.

Banks and Credit Cards

There has been participation from credit card firms for some time. By easing the burden of administration and advertising, they inspire retailers to launch more extensive gift card programs. Financial institutions benefit because they receive a portion of the fees charged by retailers when customers use their cards.


Gift cards are a lucrative business for merchants and financial institutions, but customers aren’t always on the losing end. Get the upper hand on yourself if you don’t want to end yourself on the losing end of things. 

Don’t let the full value of gift cards you give or receive slip through your fingers. Here are some other suggestions that will increase your chances of winning a gift card.

How to Win the Game of the Gift Card

You should exercise good judgment as a present provider and recipient of gift cards. When buying and using gift cards, keep in mind these three things:

1. Flexibility

A cash card receiver can use the money at any store that accepts major credit cards. Store gift cards, on the other hand, can only be used in that store. Furthermore, it is uncommon for stores to accept store cards as payment in other forms of currency.

2. Cost

Gift cards can be used at any store for the entire purchase price without any fees. However, fees are typically associated with the issuance of currency cards like Visa. When purchasing a card with a $50 face value, the buyer will be charged an additional $1 to $5.

After the first 12 months, cash cards will begin collecting a monthly maintenance fee of between $2.50 and $5. The card’s value can be quickly depleted in this manner. Avoid losing money by using gift cards within the first year of receiving them.

3. Expiration

The use of a store card is preferable here as well. Gift cards often have no time limit and can be used at any time at the store they were purchased from. If the store where you purchased the card closes down, however, you will not be able to use it.

Cards that can be exchanged for cash often expire five years after they were first issued. That may seem like a lot of time, but if you lose the card or let it get buried behind some clothes, you may find that you have lost a lot of money.

Selecting the Best Gift Card

Think about whether or not the person you intend to give a gift card to will actually use it before you buy one. Even while a massage or new shoes sound great in theory, are these things that people actually desire or need? Before deciding on a gift card, it’s important to think about the recipient and what they enjoy doing.

Do they like to dine in restaurants, for instance? Then perhaps a gift card to their go-to eatery would be perfect. To the person who is extremely difficult to shop for or who already appears to have everything, I suggest a simple cash card accompanied by a touching note. They will value the independence to use it whatever they like.

Using Up Unwanted Gift Cards

Many of us have received a gift card we didn’t want and were at a loss as to how to redeem its worth. Remember that due to its adaptability, cash cards typically fetch the highest resale prices. 

Some helpful suggestions are provided below:

  • Selling it at auction. The online gift card market is thriving. Gift cards can be sold on eBay and other specialized websites like There are websites that will buy your gift card for a large proportion of its value.
  • Give it away or sell it. Selling gift cards online typically includes the option to trade the cards for other goods and services. If you’re looking for alternatives, you might want to check out bartering websites.
  • Just give it to someone else. Your opinion will determine whether you think this is a wonderful way to spread love or a terrible societal taboo. Please use discretion if you decide to regift and only utilize a gift card that has not been used or is still valid for its full face amount.
  • Give it to a good cause. Make sure your chosen organization will take your gift card by calling them first. If so, you may deduct the money from your taxes as a contribution to a charity.

Bottom Line

When shopping for someone who is particularly difficult to buy for, a gift card can be a lifesaver. That being said, you should give some consideration to the card you get so that it doesn’t go unused and your money isn’t lost.

The best way to avoid losing a gift card is to use it as soon as possible, but if you’d rather not spend it right away, you can always visit one of the companies listed above to exchange it for anything else.

Perhaps most essential, check the back of any new cards you receive to see if there is an expiration date or if there are any yearly fees for keeping them active. You should also inform the receiver of a gift card of any expiration dates.

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