Note: This is an updated report for 2017. Scroll to the bottom of this report to see our results from 2016. All methodology was kept the same from last year.
Gift cards are the perfect last minute gift. Gift cards make gift-giving easy, quick, and reassuring to those who may worry about the recipient’s tastes and needs. In short, gift cards are a safe and simple bet during the holidays.
The first gift card was launched in 1994 by Blockbuster and since then, the gift card industry has bloomed into a $120 billion+ annual business. Merchants love gift cards too. Gift cards improve cash flow, promote upselling, and are a very profitable business. In 2016, roughly $1 billion in gift card value went unused, despite gift cards being the most popular present to purchase.
But with so many gift cards on the market, and so many gift cards going unused, what is the best gift card to give (or get) this year? In short, what is the best gift card?
At LendEDU, we decided to answer that question by studying 101 of the most popular gift cards in the market. In our research we compared these gift card options using five different pieces of data:
- Gift card popularity
- Average purchase discount for buyers
- Average resale value for sellers
- Happiness of receiving a gift card (Note: we conducted a survey for this)
- Shipping charges
Here are the Best Gift Cards for 2017:
After conducting our research, we created the Total Number of Points column to combine five pieces of data into a single ranking. Each gift card was ranked using a 100-point scale, with 100 points representing the highest score possible. Alternatively, a gift card earning 0 points would be achieving the lowest score possible.
Full Survey Results from 2017 Gift Card Poll:
LendEDU conducted a poll of 1,000 adult American consumers on a series of questions pertaining to their usage of gift cards this year.
1. Do you intend on buying gift cards this holiday season for a loved one or friend as a present?
a. 78.70% of respondents answered “yes.”
b. 9.10% of respondents answered “no.”
c. 12.20% of respondents answered “unsure.”
2. Would you rather receive a gift card or an actual gift? (note: both the gift card and the actual gift would be of equal value)
a. 75.60% of respondents answered “I would rather receive a gift card.”
b. 24.40% of respondents answered “I would rather receive an actual gift.”
3. Have you heard of gift card exchanges (ex. CardPool, Raise) as a way to sell or buy gift cards from a third-party at a discount?
a. 47.90% of respondents answered “Yes, I have heard of gift card exchanges but have never used one.”
b. 14.70% of respondents answered “Yes, I have heard of gift card exchanges and have used one before.”
c. 37.40% of respondents answered “No, I have never heard of gift card exchanges.”
4. This holiday season, what will be the most coveted gift card?
a. 37.20% of respondents answered “tech-industry gift card (ex. Amazon, Best Buy, GameStop).”
b. 21.80% of respondents answered “clothing-industry gift card (ex. Target, Macy’s).”
c. 9.90% of respondents answered “food or restaurant gift card (ex. Chipotle, McDonalds).”
d. 31.10% of respondents answered “pre-paid multi-purpose gift card.”
5. Have you ever re-gifted a gift card?
a. 33.80% of respondents answered “yes.”
b. 66.20% of respondents answered “no.”
6. Would you rather receive a gift card or cash? (note: both the gift card and cash would be of equal value)
a. 49.80% of respondents answered “I would rather receive a gift card.”
b. 50.20% of respondents answered “I would rather receive the cash.”
Our Methodology
For each ranking catagory, we used percentile ranges to form the ranking scale.
1) Gift card popularity (25 points max): Using SEMRush we determined the number of people who search for each specific gift card using Google’s search engine. After collecting the search interest data for each gift card, we created point ranges using the highest 25th percentile, 50th percentile, 75th percentile, and the 100th percentile. Cards with a high search interest received a high score. Card with a low search interest received a low score. We assigned point values to each card using the following scale:
- 25 points: 76th percentile to 100th percentile
- 16.67 points: 51th percentile to 75th percentile
- 8.34 points: 26th percentile to 50th percentile
- 0 points: up to the 25th percentile
2) Average purchase discount for buyers (25 points max): Did you know that you can purchase gift cards on third party resale sites? We collected the average secondary market price of each gift card using the major gift card exchanges. In other words, if you wanted to buy this gift card on a resale site here is how much it would cost on average. Cards with high purchase discounts received a high score. Cards with low purchase discounts received a low score. Note: some sites were sold out of specific gift cards, so we used the projected discount.
- 25 points: 76th percentile to 100th percentile
- 16.67 points: 51th percentile to 75th percentile
- 8.34 points: 26th percentile to 50th percentile
- 0 points: up to the 25th percentile
3) Average resale value for sellers (25 points max): We collected the average secondary market price of each gift card using the major gift card exchanges. In other words, if you wanted to sell this gift card on a resale site here is how much you would get on average. Cards with high resale values received a high score. Cards with low resale values received a low score. Note: you may be wondering why the buyer price and the seller price are different, right? Well the third party gift card exchanges take a spread, or a cut of the action.
- 25 points: 76th percentile to 100th percentile
- 16.67 points: 51th percentile to 75th percentile
- 8.34 points: 26th percentile to 50th percentile
- 0 points: up to the 25th percentile
4) Happiness factor of receiving the gift card (15 points max): It has happened to all of us. That time when grandma gave us a gift card that we will never use. We decided to conduct an online survey of 1,000 consumers from the United States. The survey was conducted randomly to consumers over the age of 18. We asked our respondents to rank their expected happiness of receiving a gift card from each specific retailer. Respondents could choose the following: “I really wouldn’t like it”, “I probably wouldn’t like it”, “It is OK I guess, thanks”, “I would probably like it”, and “I would really like it”. We assigned point values 1-5 for these options, the higher the score the better. Average score was used when calculating the percentile ranges.
- 15 points: 76th percentile to 100th percentile
- 10 points: 51th percentile to 75th percentile
- 5 points: 26th percentile to 50th percentile
- 0 points: up to the 25th percentile
5) Convenience factor, does it ship for free? (10 points max): Who was the first retailer to offer free shipping on gift cards? We have no clue. But if you are going to be giving a lot of last minute gift cards free shipping matters. The gift card market has become pretty competitive for retailers. We found that almost all (over 98%) of the retailers offer some sort of free shipping on gift cards. We included e-gift cards as free shipping because you could print them out and wrap them up just fine.
- 10 points: retailer offers free shipping on gift cards
- 0 points: retailer doesn’t offer free shipping on gift cards
All together, we believe that these 5 factors create the overall best gift cards. Our rankings factor in data for both the gift givers and the gift receivers.
11 Tips for Getting the Best Gift Card
The best feature of a gift card is that you don’t have to know the recipient’s tastes – you can give the perfect gift in blissful ignorance. However, not all gift cards are equal. Here are 11 factors to consider to help you give the best gift card this year:
1. Consider a gift card exchange: One of the smartest sources of the best gift cards is an online exchange. The cards are available at a discount of 2 percent to 25 percent or more. Furthermore, most exchanges do not impose a shipping fee. Check out our list of gift card exchanges and save a little money this year.
2. Avoid the old standbys: Many folks give cards from the big three: Discover, MasterCard, or Visa. These cards are certainly the most versatile, but they come with hefty fees. It generally costs about $4 to buy one of these cards, and possibly even more. If the card doesn’t get used after a year, you’ll have to fork over a monthly inactivity fee of $2.50. Yikes! If you want to give this kind of card because it can be used almost anywhere, you might as well give cash and save on the fees.
3. Take advantage of rewards: A gift card from a reward program, say from a credit card issuer, can be a good deal. The best gift card can in some cases be redeemed for fewer number of points than would the equivalent cash-back reward.
4. Loyalty card pitfall: Prepaid, non-reloadable cards from promotional, award or loyalty programs may expire prematurely due to a quirk in the law. Normally, the best gift cards are good for five years, but the cards issued from loyalty programs can expire early. Always read the fine print when you buy or receive a loyalty card – no one likes to be embarrassed on the checkout line.
5. Avoid prepaid cards: Although superficially similar to gift cards, prepaid cards can be reloaded with additional cash. Think of them as debit cards without the checking account. Though prepaid cards can be useful in certain contexts, they don’t always make good gift cards because they are often saddled with a variety of fees. Rather than spending time researching the prepaid cards with the least fees, you can simply avoid them altogether and use gift cards as they were meant to be used – as gifts.
6. Avoid multi-vendor racks at retail stores: You’ve probably seen freely accessible racks of gift cards for sale in many different retail stores, so what’s the problem? Be careful. Thieves can and do empty the value from these cards before they are sold. For instance, a scammer might steal the card number by peeking down the card sleeve, then use the number for online purchases. They might even scratch off the area hiding the card number and then return the card to the rack. Worst of all, there is no recourse when these cards are compromised – no one will give you your money back. If you want to buy a gift card from a retail rack, make sure the rack in secured or placed in a protected area, such as behind a customer service desk.
7. Don’t buy a gift card for a store on life support: A single-store gift card might be a nice way to add some specificity to your gift. For example, if the recipient is an avid fly fisherman, the best gift card may be from a sporting good store. For a foodie, the best gift card may be from an all-you-can-eat Argentinian steakhouse. However, if you’ve heard rumors or read news that a retailer or chain is in financial trouble, don’t buy its gift cards. The store might expire before the card!
8. Check out warehouse clubs: Many of the warehouse clubs sell gift cards at a discount. For example, you might be able to buy a $50 restaurant gift card for only $45. That’s a good deal, especially if the recipient likes to eat.
9. Tell recipients about gift card exchanges: There is always the chance that the recipient can’t or won’t use the gift card you so thoughtfully gave. Why not include a note with the card identifying some card exchanges where recipients can unload or swap cards? These exchanges are not known to everyone, so a little info can go a long way toward pleasing gift card recipients.
10. Give an e-card: Who needs plastic anyway? So many consumers now shop online that an electronic gift card may be the perfect gift. The gift is immediate (attention procrastinators!) and avoids any shipping fees. All the big online retailers, including Amazon and Target, offer e-cards.
11. Check out Groupon: Groupon and other marketing outlets work with stores, event venues, and restaurants to offer valuable discount coupons. Often, these marketers offer deals on discounted gift cards. For example, Groupon at one time teamed up with Starbucks to offer $15 gift cards for just $10. These deals come and go, but if you can catch one, you can save a nice chunk of change, especially if you have a dozen friends who love coffee.
See more of LendEDU’s Research