Posted on 01/07/2007 7:23:43 AM PST by shrinkermd
What do a gym membership, a bottle of prescription pills and a holiday gift card have in common? Each of them is a thing that is bought and then often goes unused.
In their recent paper “Paying Not to Go to the Gym,” the economists Stefano DellaVigna and Ulrike Malmendier showed that people who buy an annual membership to a health club overestimate by more than 70 percent how much they’ll actually use it. Many people, therefore, would be better off buying monthly or daily passes.
...As for gift cards — well, let’s just say there is good reason that they are known within the retail industry as a stored-value product: they store their value very well, and often permanently. The financial-services research firm TowerGroup estimates that of the $80 billion spent on gift cards in 2006, roughly $8 billion will never be redeemed — “a bigger impact on consumers,” Tower notes, “than the combined total of both debit- and credit-card fraud.” A survey by Marketing Workshop Inc. found that only 30 percent of recipients use a gift card within a month of receiving it, while Consumer Reports estimates that 19 percent of the people who received a gift card in 2005 never used it.
Considering that two-thirds of all holiday shoppers in 2006 planned to give someone else a gift card, you most likely received one yourself in recent weeks. Perhaps you are among the exceptional minority, and you have already spent it, or soon will. But the odds say that it has instead wound up in your sock drawer.
(Excerpt) Read more at nytimes.com ...
I put all of my gift cards in my wallet, and carry them as if they are credit cards - and use them asap.
Although, I was told I could not use my Starbucks gift card at a Las Vegas store. I guess that's a good deal for them...
I think we need to take a close look at all the leftovers people put in their refrigerators and let sit there until it sprouts green hair, at which point they simply throw it away. This practice costs consumers billions each year, while the wasted food could feed the entire African continent. Since with the new Congress it's now Morning in America, I think this would be a worthy thing to do. And I'm only 54.
This past year I tucked almost all of my gift cards away until this Christmas, and then used them to buy presents for other people. Well, except for a $50 liquor store card that I misplaced....darn! I call it "regifting with a twist"!
It's the "nickel and dime ya" economy. And has been.
Instead of paying as you go for a service, America has accepted monthly payments (although the service provided is not unlimited).
Whether it is for internet, cellphone, tv(cable), radio(digital sat.), video rentals, gym membership, ez tags for the tollroad, etc.
Everyone wants to reach into your pocket for a monthly fee whether or not you use the service that month.
And with divided priorities, you may find that you can't even get much use out of all the services (certainly entertainment) that you pay for in a month. "But it's only a dollar a day".
Those dollars add up.
tell that to my wife
You can sell them on ebay fast and get 90% value back in cash in most cases.
The businesses who push gift cards are doing it simply because they do not want to stock their stores.
The text of the article estimates that 80% to 90% of gift cards wind up being used. Hardly an "exceptional minority." Are the authors really that mathematically illiterate?
How can I get them into a poker game?
"Everyone wants to reach into your pocket for a monthly fee whether or not you use the service that month."
We have to decide not to subscribe to services we don't use, then? Netflix is something I hedged on subscribing to, but finally did and have been very happy with the service. At first I wanted to rent as many films as possible to "get my money's worth". After a while, though, I just settled into enjoying movies when I'm good and ready, and returning them likewise.
Couple that with an unprecendented back catalogue of films at my fingertips (including almost the entire Criterion Collection) and I haven't missed wasting time at Blockbuster since.
I have every intention of using the gift cards given to me, and am pretty sure everyone I gave one to will as well. Still, you can never go wrong with giving cash.
We used to have a Hollywood Video MVP subscription, but we got socked by their ridiculous late fees every time something was five minutes late (which happened once in a while). Netflix was actually less expensive, less hassle, and we could watch the latest movies too!
I used a gift card from Best Buy and now have $9 left on it. I think that's where they get you. It can be so easy to put the card away and never spend the balance.
"I was told I could not use my Starbucks gift card at a Las Vegas store"
I've never heard of a Starbucks not accepting giftcards. I've sent them to people in different states and out of the U.S. I would call the corporate office and find out about the policy.
"I've never heard of a Starbucks not accepting giftcards."
It was in a casino, so maybe that had something to do with it.
Mailorder DVD rental offers a wider selection, but if you don't return immediately, you are paying to keep that title at home, even if you keep it two weeks.
And if you rent too frequently, they slow down processing. They got caught in this and I observed it. So it is not unlimited service.
If you paid a fee (lower than the "standard" $2-3 a rental per film) would you find monthly fees to be such a good deal?
And if you have cable and pay radio and highspeed internet, all of these media are competiting for your attention. You "can" watch that DVD while surfing the internet (but not while wwatching a streamcast). If you have a large family with multiple tvs/radios/etc. you might be able to get more "use" out of the monthly services, but you are still paying for the convenience of ready access. You pay whether you are actively using it or not.
Yes. Painful, isn't it?
Oh, that's possible.
Yep, used to be if there was less than $5 bucks remaining on the card, some places would just give you money back, but now, even if there's less than $1 buck, you don't get to cash it in, so I make sure I use every penny on the card.
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