Pay Dirt: Forget gift cards, it's a green Christmas

Last year, as other journalists criticized gift cards, I wrote a column expressing why I love them so. I argued that store gift cards have evolved to be generally fee-free and user-friendly. And because practically every merchant under the sun offers them, it's easy to find gift cards that reflect the interests of everyone on your list. But this year, I'm humming a different tune. It's time for cash to make a comeback.

Here's why: In a year when many of us are having trouble getting into the holiday shopping spirit, what's wrong with some crisp bills tucked into a nice card? Unlike credit-card branded gift cards that appeal because they can be used like cash, the real deal doesn't expire, charge fees or get turned away by bankrupt retailers.

I know that, in our plastic society, cash feels gauche to many gift-givers. But it's no secret that the appeal of gift cards and cash is the same. Both are simple and practical, allowing us to stop fretting about whether a gift is "right" so that we can get back to what's enjoyable about the season.

This year, two-thirds of Americans surveyed by GfK Roper for Western Union said they would rather receive $100 in cash than a $100 gift card. Several holiday polls have found that one reason recipients like cash is because it can be used for practical needs such as gas, groceries or paying bills.

Another reason to give money as a holiday gift? Tough times are toughest for the most vulnerable among us. Research from the Center on Philanthropy at the University of Indiana found that in recessions, giving declines slightly when adjusted for inflation. Given the year we've had, it's more important than ever to remember the charities that do good work in our neighborhoods. When so many of us look around the house at all of our stuff and think "enough," cash is a gift we can feel good about giving away.

Finally, the reason for the cash comeback that's getting the most attention is fear of store bankruptcies.

Several household-name retailers and restaurants have filed for bankruptcy in 2008. With consumers hugging their wallets tightly to their chests, there's no doubt that others will follow. News about Circuit City Stores Inc. and other retailers has 46 percent of consumers planning to buy fewer gift cards this year, according to the new America's Research Group/UBS Christmas Survey.

Dan Horne argues that gift cards will maintain their value because no struggling retailer wants to be the next Sharper Image. "The first thing they do when they go into bankruptcy proceedings is say, 'If we're going to keep operating, we can't alienate our customers,' " said Horne, a marketing professor at Providence College in Rhode Island who studies gift cards.

Both Linens n' Things, which is liquidating, and Circuit City, which is reorganizing under Chapter 11, are still accepting gift cards. And several groups, such as Consumers Union and the Retail Gift Card Alliance, are working to ensure that gift cards will retain their value for consumers.

I've still purchased a few gift cards for Christmas this year because I'm confident that dot-com bubble survivor Amazon.com and my neighborhood coffee shop will be in business come 2009. Plus, the Amazon gift is a yearly tradition and I want to support my local java dealer.

If, like me, you decide to buy a card or two, reading the daily business headlines will help you to assess a store's financial health. If in doubt, pass on the card, and head to the bank.