Gift cards are a popular choice when it comes to gifting. They are easy to buy and can be a great last-minute present for friends and family.

In this article, we’ll look at how to choose gift cards, tips to maximize them, and three alternatives to consider when shopping for a gift.

Let’s start with the basics.

What Is a Gift Card?

A gift card is a card that works just like a debit card but with some limitations. You buy it either at a retail store or online, and it usually has a predefined amount of money already loaded.

These cards are mostly used for shopping and paying bills, and are divided into two main types:

1. Open-loop gift cards – also known as open or universal gift cards, you can use these to make purchases anywhere the card is accepted. For instance, if you buy a Visa-branded gift card, you can use it anywhere Visa cards are accepted.
2. Closed-loop gift cards – also known as locked gift cards, these are usually brand-specific and you can only use them for purchases at the store they were bought from.

Between the two types, an open gift card is better since it gives you more convenience. you might even find one that allows you to withdraw the funds at an ATM.

How to Choose the Right Gift Card

To choose the right gift card, you need to think about the recipient’s preferences.

If you’re buying one for yourself, that’s easy. But if you’re buying it for someone else, consider these tips for choosing the right gift card for them:

1. Open vs. locked gift cards – if the person you’re gifting loves shopping at a specific retailer, buying them a gift card locked to that retailer might be a good idea. But if they love flexibility and shop at different places, then an open gift card will be the better option.
2. Physical vs. digital gift cards – while most gift cards are physical, more businesses are embracing the digital versions. If the recipient is tech-savvy, get them a digital gift card that is open to various merchants.
3. Expiry date – another factor to consider when buying a gift card is its expiry date. If the person you’re gifting doesn’t shop very often or is prone to forgetting, it’s best to buy them a gift card with a long expiry period.
4. Terms and conditions – always ask about the terms and conditions of the card to avoid unpleasant surprises. For instance, if you’re buying a universal gift card, ask whether it’s truly universal or only open to well-known retailers.

Benefits of Using Gift Cards

There are several benefits of using gift cards. These benefits are what make them a great choice as opposed to buying physical gifts. These benefits include:

1. Convenience – gift cards are easy to buy and deliver. Compared to physical gifts, gift cards don’t need elaborate wrapping, nor do they incur high delivery costs.
2. Budget control – gift cards can help with budgeting. Whether you buy it for yourself or someone else, it’s easy to set money aside in a gift card and use it for a specific purchase.
3. Flexibility – instead of buying someone a gift you’re not sure they’ll love, choosing a gift card makes life easier for both of you. They’ll appreciate it more since the card enables them to buy whatever they like.
4. Widely available – getting your preferred gift card is easy. Whether you want to buy one from your favorite restaurant, grocery store, or even shopping mall, gift cards are widely available.

Disadvantages of Using Gift Cards

Even with their benefits, gift cards have disadvantages that you need to be aware of.

Here are the biggest ones:

1. Hidden fees – while not always the case, some gift cards have fees that may not be communicated. One common fee you should ask about when buying a gift card is the activation fee.
2. Limited delivery options – since most gift cards are physical, there’s always the cost of delivering the cards to their recipients.
3. Lack of personalization – personalizing a gift card often involves simply adding someone’s name. If you want more personalization, you need to look for gift card alternatives.
4. Scams – scammers are increasingly targeting gift cards using different means. Many people lose their funds when shopping online using gift cards, while others are scammed when buying the actual cards. To be safe, only buy gift cards from reputable stores and learn how to avoid gift card scams.

Gift Card Alternatives

The growing number of gift card alternatives shows that there’s a search for more convenience.

The best gift card alternatives are those that offer more flexibility and convenience, without extra costs or risk of loss.

Here are the top three gift card alternatives for both businesses and individuals:

1. Experience-based gifts – instead of buying a gift card, you can pay for a holiday or online course and then give that to someone as a gift. Such a gift is likely to stay in the recipient’s memory for longer than if they bought consumables such as home shopping.
2. Charitable donations – another alternative to gift cards, especially useful for boosting customer loyalty, is giving a portion of sales to a charity organization the customer cares about. This gives customers a sense of purpose and can create a deeper connection with a business.
3. Digital vouchers – digital vouchers are several steps ahead of traditional gifting solutions. They give you much more flexibility when redeeming and can be bought online. A good example of this is giftpesa digital vouchers. These vouchers don’t expire, are delivered through SMS, and can be redeemed at over 3,000 outlets.

Takeaway

Gift cards are prepaid cards that you can use to shop or pay bills. Their convenience has made them a popular choice for both personal and corporate gifting.

Over time, however, gift cards have attracted scammers and superior alternatives have emerged, including the award-winning GiftPesa digital vouchers.

GiftPesa has integrated with M-Pesa for a simple redemption process at supermarkets, fueling stations, and over 3,000 other outlets.

While individuals can buy, redeem, and share vouchers using their phones, corporates can easily run employee reward programs, enrich their customer loyalty programs, and generate reports for analysis and audit. You can start rewarding with GiftPesa or request a demo to learn more.