WalletHub ranks best gift cards for 2020 holiday season

2020’s best gift cards

10 tips for getting the best gift card

There are a handful of things we can count on every holiday season: time off from work and school; an overweight, bearded out-of-towner breaking into homes through the chimney; tone-deaf neighbors singing at your doorstep; overeating; and, of course, gift cards. They’re everywhere this time of year, and for good reason: people generally love them.

But you don’t want yours to be just one gift card among many received by your intended recipient(s) this year. You’d probably prefer it to be enjoyed rather than forgotten in a drawer full of clutter. And you certainly want to get a good deal, because who doesn’t?

Given that your gift card strategy can make or break the holiday season, particularly the budget part, WalletHub compiled a list of 10 great tips for gift card success. You can find them below. Shop wisely!

1. Look for a discount. You might assume that sales and savings don’t apply to the gift card market, since gift cards are more like currency than retail products with traditional product margins. That’s not the case, however, as the best gift cards can usually be bought for less than face value. You can learn where to look for deals from WalletHub’s article on the best gift card exchanges.
2. Avoid card-network gift cards. Gift cards from Visa, Mastercard and Discover might seem like they’re as good as cash, since they can be used anywhere, but they’re actually quite inferior. While retailers make money immediately when one of their gift cards gets purchased, these card-network gift cards make money from fees. So if you want the versatility of cash, why not just use cash instead? It will certainly be cheaper. That’s why WalletHub didn’t include any card-network gift cards in its list of the year’s best gift cards.
3. Don’t confuse gift cards and prepaid cards. Despite often being displayed next to each other in stores, gift cards and prepaid cards are very different animals. Gift cards are designed to be used only until the original balance is gone. Prepaid cards, on the other hand, are reloadable and designed to serve the same purpose as a checking account with a debit card. Prepaid cards also have a lot of different fees associated with them. So giving one to someone instead of a gift card could result in the recipient not getting as much value as you intended. In fact, the average prepaid card has nine separate fees, according to WalletHub’s Prepaid Card Report, and the wrong prepaid card could cost an individual up to $300 per year if used incorrectly.
4. Beware loyalty cards. A loophole in the law allows non-reloadable prepaid cards (aka gift cards) that are received through a loyalty, award or promotional program to expire with no restriction. For context, normal gift cards cannot expire until five years from the date of issuance. So it’s important to verify that you are indeed buying/receiving actual gift cards this holiday season and to read any applicable fine print.
5. Resale is always an option. If you don’t end up using a particular gift card or the recipient doesn’t like it, you’re not out of luck. You can sell it on a gift card exchange or simply swap gift cards with a friend or family member.
6. When in doubt, just give cash. Cold, hard cash might seem a bit less personal than a gift card, but it completely eliminates guesswork from the equation and is the most versatile gift anyone can give. Plus, you might be able to give your recipient more value without shipping fees or shopping trips to worry about.
7. Tap into unredeemed value. Have you contributed to the billions of dollars in gift cards that have gone unredeemed in recent years? Check your drawers and find out. Any gift card from the past five years is most likely still good. You have three basic options when it comes to unlocking the value of unused gift cards. First, you can sell unwanted gift cards for cash. Second, most stores allow you to trade in old, unused gift cards for new ones, which is great news for re-gifting cards that have developed noticeable wear and tear as a result of sitting idle for years. Finally, most states have programs that allow you to recoup unused funds from expired gift cards under unclaimed property laws.
8. Buy gift cards with rewards. Most credit card rewards programs allow you to redeem your points/miles for gift cards from a wide variety of major retailers. In many cases, you can garner more value from this type of redemption strategy than redeeming for cash.
9. E-gift cards are great in a time crunch. E-gift cards have been gaining traction in recent years, and increased mobile functionality stands to foster greater use of such products this holiday season. That’s good news for time-crunched shoppers who want to avoid the shipping fees that many major retailers charge for physical gift cards ordered online.
10. Avoid using gift cards as an excuse to overspend. When redeeming gift cards, two-thirds of consumers spend more than their cards’ face value, according to Consumer Reports. This is likely due to the same psychological factor that leads consumers to spend more with credit cards than cash: the money somehow seems less real. While gift cards can be quite useful in subsidizing the cost of large purchases, you should be especially aware of your spending when using a gift card, so as to avoid unnecessary expenses.

Gift card popularity over time

The following gift cards are projected to be the most popular among consumers this holiday season, according to WalletHub data. You can also see how the most popular gift cards have changed over the years.

Methodology

To identify the year’s best gift cards, WalletHub compared the cards affiliated with the country’s 50 largest retailers in five categories that speak to their appeal and overall value. Each gift card was scored on a 100-point scale, with 100 representing the best option. Below, you can find the grading rubric that WalletHub used to calculate these overall WalletHub Scores. Cards for which discount, resale or store-rating information was not available were given 0 points in those respective categories.

Gift card popularity rank (30 points max): WalletHub used the number of people who search for each gift card online as a proxy for its popularity.

• 30 points: Ranks 1 to 5
• 25 points: Ranks 6 to 10
• 20 points: Ranks 11 to 15
• 15 points: Ranks 16 to 25
• 10 points: Ranks 26 to 50
• 5 points: Ranks 51 to 75
• 0 points: Ranks 76+

Average buyer discount (30 points max): WalletHub checked the major gift card exchanges to see what kind of discount buyers can get on each card. For sites that don’t buy gift cards directly, WalletHub used their recommended selling price.

• 30 points: 15.00%+
• 20 points: 10.00% to 14.99%
• 10 points: 5.00% to 9.99%
• 5 points: 2.00% to 4.99%
• 0 points: < 2.00%

Average resale value (20 points): To account for the potential that you don’t end up using a gift card that you purchase or receive, WalletHub determined how much a seller could get for a $100 gift card from each retailer on the major gift card exchanges.

• 20 points: $80+
• 15 points: $75 to $79.99
• 10 points: $70 to $74.99
• 5 points: $60 to $69.99
• 0 points: < $60

Retailer rating (15 points): The customer experience at a given retailer obviously affects the intrinsic value of its gift cards. So we obtained user ratings for each retailer from a number of popular review sites and averaged them to provide a broad sense of how well–liked each is.

• 15 points: 4.0 to 5.0
• 10 points: 3.0 to 3.99
• 5 points: 2.0 to 2.99
• 1 point: 1.0 to 1.99
• 0 points: < 1.0

Shipping or purchase fees (5 points): Any amount spent on fees for purchasing and shipping a physical gift card reduces the amount you can allocate to the gift itself and eats away at any discount you were able to obtain.

• 5 points: No fees
• 3 points: $0.01 – $1
• 1 point: $1.01 – $2
• 0 points: $2+