BRENTWOOD, Tenn. — A new survey out from a gift card issuer suggests that credit unions cannot afford to not offer their members some sort of gift cards, particularly if the members are younger or have teenagers.
The news comes in the results of a recent survey by Comdata, a leading payment card issuer. If the results are accurate, the card issuer's data
suggests almost every teenager in the U.S. has either purchased or received a gift card.
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According to the survey, 98% of youths ages 14-19 have received or purchased a gift card and that they purchased over 75% more cards so far in 2007 than they did in the same period of 2006. That translates into each teen buying 7.6 gift cards in 2007 versus 4.3 cards in 2006, the issuer said.
Comdata Stored Value Solutions commissioned the survey.
"As our young people gain more financial freedom, we get a good idea of how they choose to spend their own money," said Bob Skiba, general manager of CSVS. "Teens are growing up with gift cards, receiving them, gifting them and using them for personal purchases. So gift cards continue to gain popularity with this sought-after group of consumers, and are becoming synonymous with their gifting culture. The information in this survey represents very good news for retailers."
The survey found that while cash is mentioned most often as the preferred gift, 81% ranked cash and 79% ranked gift cards first or second, compared to the 40% who prefer receiving actual items. This indicates that gift cards have taken the preeminent position among teen gift recipients, Comdata suggested.
Furthermore, once they get a gift card, teens are ready to spend. Sixty-two percent of teens say that they hold on to their gift cards for one month or less before using them. Only 11% says that they keep a gift card for more than two months before using it the first time.
The cards also prompt further spending, Comdata said. When using gift cards, teens also spend more than the card's value. Eighty-nine percent of teens add some of their own money when making a purchase with a gift card and once they have drained a card, a growing number of teens said they will add money to the card and use it again.
Comdata called this a "growing trend", but reported that 20% of respondents said they have reloaded a gift card, on average with $24 more. Comdata said convenience is the driver of the reloading.
"From a parent's perspective, it's a great way to control where your teen spends his or her money," Skiba said. "From our young people's perspectives, it's a way to maintain financial freedom when making purchases–especially when they don't have their own credit or debit card yet."
Where Is Your CU Gift Card?
One obstacle that many CUs might need to overcome if they want to break more clearly into the gift card space is location. Many teens increasingly buy their gift cards not in bank or credit union branches, but instead in convenience stores or shopping malls, the survey found.
The percentage of teens who said they have purchased a gift card at a mall, convenience or grocery store jumped from 29% in 2006 to 45% so far in 2007, Comdata said. Further, 21% said they prefer to buy them there.
But what if the cards aren't available in the mall, would they then buy them in a bank or credit union branch? No. If the gift card a teen wished to purchase was not available at a gift card mall, 49% would have gone to the specific retail store to purchase a gift card. Over 40% would have simply chosen to purchase a different gift card at the gift card mall.
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