Giving pre-paid credit cards as gifts

I have to be honest- until I started researching this topic, I had never heard of prepaid credit and cash cards. Vouchers were an established part of my birthday and Christmas takings, but the idea of credit cards given as a gift with a certain amount of money on them was not one that had entered my universe.

They usually have a twelve-month expiry and, like a voucher, if lost then the balance is forfeit. ANZ introduced the first card into the market and it was successful. The advantages are that it can be used in any store a person should wish, so it doesn’t have the drawbacks of giving someone a Bunnings voucher only to realise that their version of hell would be never-ending DIY. So is it a good gift to give?

Survey says

55.2% of adults in America would be happy to receive a prepaid gift card as a present. In the same survey, however, it was revealed that 22.1% felt it to be too impersonal and another 10% felt they would rather save money by buying items on sale. This is an important element o the prepaid gift card debate- they are an item of convenience as opposed to money saving, If you want to save money, you can invest the time in combing flea markets and finding the perfect gift for the perfect price.

Break it down

The obvious money being made is by anyone who issues the cards. The ANZ card costs $6.50 to buy, the Westpac card costs $4.95 or the Canvas Visa costs $19.95 to buy. Personally, I don’t really understand why you would pay money to give money. The advantage of the card as a present is that people without credit cards can use it online to buy concert tickets or books from Amazon, but be aware that its not a money saving gift.

You can give cash without having to shell out $10 bucks upfront and cash can be as widely used as credit cards. After all, this is $81 billion market. The people making money off it are not the consumers in this instance.

Use it or lose it

Prepaid gift cards can be a major money drain if they get lost- check when you purchase them that they can be replaced should they be lost, and encourage the recipient to use it quickly as often they issuer won’t have a replacement policy. Expiry dates can be pesky things, and always crop up much earlier than you seem to remember.

I’m pretty old-fashoined when it comes to gifts. I like getting vouchers, but not as much as I like getting personal gifts. Great presents have no need to be expensive. If you can invest some time, it’s possible to get wonderful presents very cheaply. A second-hand Agatha Christie, some crazy $1 jewellery or a framed picture are cheap and meaningful.

If someone is hard to buy for, give cash. That way you can avoid fees, expiry dates and they can spend it wherever they would like.

Do you use prepaid cards as gifts? What do you think are the pros and cons of prepaid gift cards?

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