It’s the time in the holiday shopping season when, if you haven’t already got it, there’s a better than average chance that you ain’t ever gonna. It’s the time to exhale and acknowledge that you might be into gift card territory.

But this writer thinks that gift card territory is always the wrong place to be. Kind of like The Friend Zone.

Noted finance guy and CNBC commentator Barry Ritholtz opines:

Nothing says “I am both thoughtless and inconveniencing” like a gift card. They let the recipient know that you couldn’t be bothered actually picking out a present, so here is a cash equivalent — only so much less convenient than the crisp paper kind of cash. And, you can only spend it in one place.

How much do gift cards suck? Each year, $5 billion in gift cards go unclaimed, forgotten about or lost. That’s how much people value them — they throw away $5 effen billion dollars worth every year!

They are an expensive and inefficient way to say “I feel obligated to get you something, but don’t know what.”

The New York Times article that Ritholtz links makes some fair points. 10-15% of most gift cards will go unredeemed… which is basically you putting money in the pockets of the retailers. (I don’t know about you but I have a drawerful of these things: Starbucks card with 57¢ left on it… Barnes & Noble card with $4.03 left on it.) Compare that to cash, which of course would never go unspent, down to the penny.

But for some us (and I know I’m one), giving cash is just unthinkable. I can make exception for newlyweds and kids, but I just couldn’t hand money to someone, even inside a cute card. To me, it says, “This is exactly how much I think of you.”

So, what’s a Savvy shopper to do? We all know there are times when sending a gift card is just preferable. Last night, Savvy reader Kathleen was mentioning that, for relatives who live far away, she can give a larger amount in a gift card, than she could spend on the same person if she had to physically buy, wrap and mail the present… because she has to consider shipping.

And not everyone thinks gift cards suck. The Savvy teen in my house adores gift cards… because you’ve also given her the opportunity to shop. And for myself, I tend to not shop very much, so gift cards actually drive me out into the particular store to browse and try on and buy. So I also enjoy the experience that comes with a gift card.

The Savvy Solution

The key to successful gift card giving, then, is to know your audience. My relatives who live out-of-state have this down to a fine art, and send gift cards to special shops that they know we really love. There’s one under my tree that I am sure contains a gift cert to Lush; I can tell just by the smell!

And if you aren’t sure what shops your giftee really loves, err on the side of a pre-paid credit card. Amex, Visa and Mastercard all offer plastic in pre-set denominations, or that you can charge up with a particular amount. This avoids the problem of your cash going to waste in the hands of a store the giftee doesn’t like or won’t use. And these can be used in stores or online, allowing the giftee a million options for redemption.