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Much as you pride yourself on finding Uncle Jerry the perfect gift, chances are he would have preferred a gift card. For this holiday season, gift cards are the most popular wish-list item, requested by 53% of consumers, according to the National Retail Federation.
But retailers take note: Consumers are growing increasingly aware that not all gift cards are created equal, and before you slap a fee on them or decline to offer significant discounts, know that those choices won’t go unnoticed.
At least not by WalletHub, which recently rated 50 of the most popular gift cards, primarily from chain retailers and restaurants, on several factors, among them whether the cards charge shipping or purchase fees, and the average buyer discounts and resale value.
The carder they come: Tied for the top spot, all with a ranking of 65 out of a possible 100, are gift cards from Amazon, Target, and Sephora; they’re followed by Walmart, with 61, and Starbucks, with 60.
None of those at the top of the list charged shipping or purchase fees, and the steepest of those fees that WalletHub calculated were for Visa and Mastercard gift cards, both charging $6.90; followed by American Airlines and American Express, both charging $4.95; and Taco Bell, charging $2.50.
When it comes to resale value, Costco is tops, with the average resale value for a $100 gift card of $87.10, followed by Home Depot ($85.50), Best Buy ($84.31), and a tie between Whole Foods and Disney ($84).
One way to “prevent people from exploring the resale market,” WalletHub analyst Chip Lupo wrote in an email to Retail Brew, is to offer “discounts or rewards for gift card purchases.”
The biggest average buyer discounts on WalletHub’s list are Sonic, with 16.3% off, followed by Cinemark (9.89%), Netflix (9.18%), and Michaels (8.5%).
While the reason for discounting gift cards might not be obvious, Lupo notes that retailers can more than make up for the discount when the gift card recipients show up to redeem them.
“Customers who visit retailers to redeem their gift cards tend to spend more than the gift card’s original value,” Lupo said. “Plus, gift cards can be used to attract new customers who otherwise would not have visited the store.”