Gift cards are more popular than ever. Over the holidays, even young kids can expect to receive a bounty of plastic from well-meaning friends and family members. They can be a great way for your child experiment with plastic in a controlled way and help them begin to understand how to budget. Here are some tips to help you guide your kids on how to use their cards responsibly.
Treat cards like cash
Kids generally understand that a gift card represents a specific amount of money. They may need your help, however, to fully comprehend that keeping track of those cards and using them wisely is also no different than managing cash.
Just as cash gifts are immediately transferred to either a wallet, piggy bank or other safe place, encourage your kids to find a similar “home” for their gift cards to prevent loss or damage. Also make it clear that it is their responsibility to bring the card along on shopping trips – and resist the urge to make the purchase for them if they forget.
Consider cardholder caveats
Retailers like gift cards because shoppers tend to spend more than the value of the card – or never use them at all. In fact, a survey conducted by Consumer Reports found that 27% of gift card recipients had not used their gift cards 11 months after receiving them.
Make sure your junior consumers are aware of these trends and help reinforce the lesson by encouraging them to spend only what’s on their gift card and to keep track of balances and expiry dates (for cards that have one). For bigger purchases, suggest saving the difference of what the card will cover, rather than giving them the extra amount. Also remind your kids to check that their gift card covers the total purchase price of the item they want to buy, including any taxes or additional charges.
Stay focused on value
When using a gift card, consumers of all ages are often less price-conscious than they would be if they were spending cash. So it’s important to talk to your kids about seeking good value, even when the money they’re spending came from a gift – not savings. Try not to get overly involved in the purchase decision, however. Your son or daughter may learn to make wise choices by first making some poor ones.
But if your child receives a card from a store that doesn’t interest them, review the options with them. They can exchange with friends or family, regift, or use it to buy gifts for others. They can also consider selling it online. Web sites such as CardSwap buy unwanted gift cards (typically for 50%-80% of their face value) then donate the money to one of its eligible charities, and send you a tax receipt.
Award-winning writer, Kris Wallace credits her daughter and investment specialist husband for providing her with the “real world” insight she brings to the BMO SmartSteps for Parents team. Kris and her family live and (weather permitting!) ski and golf in B.C.’s Okanagan Valley.
