We see them everywhere. Racks full of Olive Garden, Home Depot, Amazon, etc.
So, the idea is that I take $100 of U.S. Currency, valuable all over the world, including at Olive Garden, and exchange that $100 for value only at Olive Garden.
I could see the point if I paid $97 for $100 worth of value at Olive Garden. But why would anyone, seemingly for no value, buy a gift card that limits the purchase power of the money spent?
The thing about cash as a gift is that it’s likely to get folded into daily expenses, which have a habit of expanding to suck up whatever spare money is around. That can be helpful, but not a lot of fun. And if you are not struggling financially, it doesn’t really improve your life in any noticeable way.
A gift card can provide an experience- such as the experience of picking out an item or going out to dinner. And if it’s for a store, at the end the giftee has an item they can point to and think “My uncle got me that!”
And that’s often what a gift giver wants. They want the giftee to receive something a little indulgent, not necessarily fill a practical need.
They’re also good for situations where you might give a cash gift, but have to mail it and prefer not to mail cash.
Sometimes there are promotions where if you buy $100 in gift cards to one place you receive a bonus $20 or $25 card.
I think even sven gave the best answer. But I will add that, as a gift receiver, when someone gives me a gift, I think fondly of that person, not only when I receive the gift, but also when I use it. But that doesn’t work as well when the gift is cash.
sven is right. Limiting the recipient’s choice sort of is the point.
so in this context is the gift card a gift or cash? personally i remember the card but i don’t associate the item with the giver.
So you can give people a gift but make sure they don’t spend it on something unsavory like drugs or alcohol
We give my husband’s folks gift cards to restaurants. They like to eat out but like many retirees, they’ve got limited funds. We live 800 miles away, so we can’t take them out ourselves. So a gift card to a restaurant we know they like is really ideal. Plus they don’t need any more knick-knacks or doo-dads around the house.
Same deal when our daughter was away at college - a check would end up going for bills. A gift card to a book store or a restaurant ensured she’d have something fun and not feel guilty about it.
Oddly enough, I don’t like to *get *gift cards myself, mostly because I hate to shop. Plus you can buy my love with chocolate. 
THIS…it’s how I look at it. I know you like to go to Home Depot when you are sober and working on your house, so I will buy a $100 gift card for Home Depot, but I won’t give you cash because you will spend it on liquor, whores, cigarettes, drugs, and other unsavory stuff. I will control the outcome of my gift!!! Hear me roar! 
I love gift cards for the exact reason sven mentioned. Cash will either go in the bank or be frittered away on coffee, gas, garage sales, and other miscellany. A gift card to a place I like, even a gift card to Target, and I’ll go shopping with the intention of buying something frivolous for myself. I have a gift card right now that I’m sitting on for a day when I’m blue and need a some shopping therapy.
I recently sent Amazon.com gift cards to two co-workers of mine, as a thank you for some extra work they did. I’m in the USA, and they are in Canada. I was able to buy from Amazon.ca to lock in the value, and not have to worry about getting Canadian money to send.
I usually buy gift cards for myself to take advantage of credit card rebates.
For example, I have one credit card that is offering 5% cash back at drug stores. I can go to CVS and buy a Home Depot or Sears gift card with the credit card and get, essentially, a 5% discount at Home Depot or Sears/Kmart/Lands End (the gift cards for those three stores are interchangeable). And before anybody says that gift cards don’t earn credit card rewards: your credit card company has no idea what you bought at CVS.
Similarly, one of my credit cards is always offering a 20% discount on Lands End gift cards if you choose one of those instead of the straight cash back. Well worth it since I shop at KMart and Lands End regularly.
And during the quarter they are offering 5% cash back on grocery store purchases up to $1500, since I can’t spend $1500 on groceries in one quarter, I just stock up on grocery store gift cards during that quarter.
The reason why the gift card craze is so big…profit
Statistically something like 1/3 of those cards are lost or discarded with value still on them. Give someone a $50 Applebees gift card and they use $40 of it but only went because they had the card…the other $10 is still in Applebees pocket. A lost or accidentally discarded card easily becomes pure profit. Sell $100K in cards and only have to pay out $65K in bills = printing money.
There is another part of it too that As I understand it, the company with the outstanding card shows a liability on the books until the card is spent allowing them to offset income for some period of time for tax purposes.
You can resell & buy Home Depot gift cards on Ebay. Usually if you try to return something without a reciept you’ll be given store credit in the form of a gift card and some customers turn around and sell the cards for cash.
I also agree with even sven. I like getting gift cards because I won’t use them to pay bills. The gifter knows that, and she may not know what size I am, so a gift card is safe. If I get a gift card to a clothing store, I can choose what I like, what works with the rest of my wardrobe, etc. I know people feel that gift cards can be impersonal, but I too will redeem one and then remember that the item(s) I bought with it are a gift from Aunt Marie. I may take a picture of myself wearing the sweater and email it to her with my thanks.
Same here- cash or checks invariably get sucked away to pay bills or end up being spent on daily purchases. Also, I give them to some nieces and nephews because their parents have a history of either putting cash or checks in the college funds or buying things like pajamas and underwear leaving the parents’ money free to spend as they want. (different sets of parents)
Yeah, I got $300 as a gift from my grandfather at Christmas, and while I certainly appreciate having some extra money I didn’t really “do” anything with it. I’m lucky enough not to be living paycheck to paycheck, so I deposited it into my savings account. By the time it gets spent, most likely on my ordinary living expenses, I probably won’t even remember where it came from.
Had I received a gift card for a bead store (my hobby is jewelry making) then I would have used it to buy some more expensive items that I’ve looked at longingly but would normally feel guilty about buying. I realize this isn’t logical, I could have just cashed my grandfather’s check and gone shopping with the money, but a gift of money goes into the same mental category for me as my paycheck and I’m reluctant to spend it on something frivolous.
As for gift cards vs. gifts of purchased items, I’ve received plenty of gifts from well-intentioned but clueless relatives that I wound up just returning to the store. A gift card would have saved me the time I spent in line at Customer Service and allowed me to go straight to picking out something I’ll actually wear/use.
Of course, the best is a gift from someone with a clue about the recipient’s needs and interests, and with taste… giving the recipient no choice at all.
I was always taught the giving cash as a present means you are too lazy or insensitive to think about what the person really wants. I try to avoid giving cash as a gift whenver possible.
However, for some people–particularly serious hobbyists–getting a good present can be very difficult. Do you know whether your gamer friend has Game X? Do you know if your chef friend has kitchen tool Y? I my specific case, my brother is a serious marksman and I know nothing about guns and ammo; I couldn’t possibly get him a useful present.
So, I split the different. Serious gamer? Game Stop card. Chef friend? Sur La Table certificate. Brother? I know plenty of sporting good stores with plenty of tools and accessories he can use. It’s a way to show I know the person, and am thinking of them, without risking saddling them with something crappy or redundant out of my own ignorance.
I’m an electronics hobbyist, the chances of someone who isn’t in my exact realm and level of nerd-dom knowing what type of tool or part I want that I don’t already have, approaches absolute zero. But if you gave me a mouser/digikey/amazon gift certificate, I could finish one or more projects without any out of pocket expenses. WIN!