I frequent this electronic boutique and because I bought this new tv, I was given a gift certificate, for let’s say $100. This store has items that are hard to find at a pretty good cost.
I want to buy a gift for my cousin. I see it selling regularly on ebay and amazon for like $45. At this store, it costs $78. I plan on using the gift cards that I plan on accumulating and buying a home theater system that may be more difficult to buy elsewhere (and not necessarily cheaper).
Is it more economically efficient to pay cash than to use gift card? If so (or not), is this always the case?
In general, a gift card will always be worth less than the cash value printed on it because it restricts your buying decisions in a way that cash does not. However, if you regularly spend money at the store to which you have the gift card, then the value approaches equivalence to cash; you were going to spend it anyway. If you frequent this store, the second case probably applies.
So if you’ll spend the gift card anyway, it’s probably better to take the cheaper price for cash (assuming you’re not strapped for cash). If not, it may be better to get a good use out of the gift card by using it on something you know you want, instead of waiting for a long time and maybe using it something you wouldn’t otherwise buy, just to get some use out of it. In this case, if most items are sold at a good price, but this particular one isn’t, it will be better to buy this item elsewhere, and use the card on items with better prices.
Also, realize that by holding onto gift cards, you are essentially giving the issuer a 0% loan of the money on the card, and some gift cards get slowly drained by bullshit charges after 12 months or so if you don’t use them.