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Holiday gift card: A gift with strings attached
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"Americans are speaking with their wallets," says Larsen. "There have been a number of trends in the gift card arena. We are observing that most people have either given a bad gift or received a bad gift, so these people are turning to gift cards because this allows complete satisfaction for both the giver and receiver."

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The stigmas of gift cards are no longer present.

"I think retailers are doing a great job at marketing gift cards as merchandise. They are no longer impulse buys, and consumers are purchasing gift cards for a variety of people, not just close friends and family," says Krugman.

Maybe it's the recognition that a gift card saves time and alleviates the stress of trying to find that perfect gift.

"Our grandparents certainly once thought that gift cards were impersonal, but now older generations are welcoming gift cards with open arms because they realize that they are not up on trends and want to give their children and grandchildren that perfect gift and what better way to satisfy your friends and family," says Horne.

Surveys conducted by numerous card-issuing companies show that on a 10-point scale, gift cards have a satisfaction rate of 9. Gift cards are designed to allow complete satisfaction when it comes to the amount a person wants to spend. Bankrate's study shows that denomination ranges are across the board, ranging from $5 to $5,000.

Data for this year show the average person will spend $44 per gift card.

Gift cards also satisfy retailers. The cards bring in more revenue, because most shoppers with gift card in hand spend, on average, 140 percent of the card's face value.

The trend shift in gift cards will also continue as time goes by. According to the National Retail Association, consumers will see more customized gift cards with personal pictures, music, movies and elaborate gift wrapping for the recipient.

Horne says he is already starting to see a niche in the gift card industry in the form of electronic gift cards. Amazon.com is starting to offer codes in which a string of numbers and characters are used to purchase a gift instantly online.

Horne also says that European countries are starting to develop gift certificates that are able to be sent to cell phones.

"The text message has a UPC code that the retailer can scan right from your phone and you receive your gift in just seconds. Gift cards will grow beyond paper and plastic."

The continual evolution of gift cards means enhanced gift giving ahead and a much lighter bag for Santa to carry.

For its annual gift card survey, Bankrate.com polled the top 20 retailers in the nation, and the top four credit card brands -- Visa, MasterCard, American Express and Discover.

Bankrate.com's corrections policy-- Posted: Nov. 23, 2005
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