Christmas is when the affluent West engages in the annual orgy of shopping. The cultural and economic significance of this event makes it a subject matter of anthropological research. One such effort is a research paper by Joel Waldfogel titled, The Deadweight Loss of Christmas, published in the American Economic Review.
He says that the utility of the Christmas gift in the hands of the receiver is less than what the gift costs. Writes Waldfogel, who has studied gifts and their giving and receiving for more than 15 years, in his book Scroogenomics: “When other people choose for us, they do a poor job compared with when we choose for ourselves.”
In India, the urban mass affluent has come a long way from gifting knitted sweaters and embroidered handkerchiefs to each other. Buying gifts for Diwali and Christmas and other festivals is now part of the convention. One way is to pick up the gift packs available at various stores and fulfil your obligation, another is to try and gift something meaningful. But thinking about what would be useful for each person you know may not be as simple as it sounds. But you can make it simple and useful, by helping the person choose his own gift.
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For those of you who may not want to stuff currency notes into somebody’s hand, gift cards are an option. These are not vouchers for shopping that tie you to a particular store, but cash-filled cards that work as pre-paid debit cards. These can be swiped in any store like a debit or credit card.
What you get
Gift cards are designed for particular occasions. The card gets activated as soon as the bank receives cash from you
Shopping experience: These cards have service providers such as Mastercard and Visa and, therefore, can be used at any retail store, mall, restaurant or even petrol pumps. Gift cards of Central Bank of India and Axis Bank Ltd even enable online shopping.
Flexibility: The card can be used multiple times. It is not necessary that the entire amount is spent through a single swipe or at a single shop.
The user can even find out the balance left in the card by simply walking into an automated teller machine (ATM). Few banks provide ATM and Internet personal identification number (PIN) for these cards. Even phone banking facilities are available with some gift cards. But, according to the Reserve Bank of India’s guidelines, these cards can’t be used to withdraw cash from ATMs.
Value of the card: The amount you can put in a card varies from bank to bank. Usually, the minimum is Rs500 and the maximum Rs50,000.
Validity: Most of these cards are valid for two years. Some banks even allow redemption of unutilized balance within a specific time period after the expiry of the card. Manju Srivatsa, president (retail banking), Axis Bank, says, “The cardholder can claim the balance from the bank. The bank deducts redemption charges and returns the remaining value to the cardholder.”
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In case of HDFC Bank Ltd’s gift card, the purchaser can request for a new card which has the balance amount. Central Bank of India’s card can’t be used once the validity period gets over. Thiaga Rajan, chief manager (card division), Central Bank of India, says, “Our cards are valid for three years, which is longer than most others.”
Cost/transaction fees: You need to pay a nominal issuance fee to buy a gift card. Axis Bank’s Srivatsa says, “There are no transaction charges (subsequently), except at the petrol pumps that are authorized to levy surcharge on payment through cards.”
Stolen or lost cards: In case of loss or theft, you would need to file a report with the police and submit a copy of the same to the bank. The available amount on the card will be repaid to the original buyer after deduction of some charges. Some banks reissue a replacement card if you pay a fee. The PIN is also regenerated at a cost.
Nomination facility: If the cardholder dies, the balance is passed on to the legal heirs. Navtej Singh, head (direct payment products), HDFC Bank, says, “A new card with the residual balance can be issued to the nominee or legal heir of the deceased cardholder.” All banks do not offer this facility.
Watch out for
If you have a savings account with the bank from which you intend to buy the card, life would be easy. But if you plan to buy it from a bank you don’t have a relationship with, you will have to submit some documents before you get the card.
Another thing you should remember is that if the person you gift the card to forgets the PIN, you will have to get involved in getting a new PIN for him. The bank will give a new PIN, but only to you.
Then there’s always the risk of forgetting about the card after using it once or twice. You can’t be sure that your gift is being put to good use.
Graphics by Ahmed Raza Khan / Mint
Illustrations by Shyamal Banerjee / Mint