The 10 best gift cards for your employees

Employee gift cards aren't just another perk. They're a smart investment that can increase employee engagement by 40%, and employee turnover rates are ~43% lower for highly engaged employees.

Companies are increasingly turning to gift cards to recognize and reward employees. And employees prefer them: our research shows that workers want rewards they can spend flexibly.

However, the magic of gift cards goes beyond simple spending power. Research from the University of Wisconsin shows that employees respond more positively to gift cards than to cash rewards of equal value. 

The reason lies in the psychology of motivation. People see gift cards as special "treat yourself" funds, encouraging recipients to buy something they want rather than something they need. Cash usually goes towards daily expenses, but gift cards lend themselves to more memorable and emotionally rewarding experiences.

Here’s a look at the best gift cards for your employees, as well as some best practices for employee recognition.

Types of gift cards you can give to employees 

It’s difficult to choose meaningful physical gifts for employees you may not know well. Shopping for and sending those gifts requires significant resources, making this approach difficult to scale. Plus, with physical gifts, employees often end up with items they don't want.

This explains why 65% of employees say they prefer cash rewards — they want flexibility. Gift cards offer the perfect middle ground, combining the freedom of cash with a more personalized touch. They're easy to distribute at scale, arrive instantly, and empower employees to choose rewards that matter to them.

Here are the main types of gift cards to consider for your recognition program:         

• Prepaid cards: Virtual Visa and American Express prepaid cards function like debit cards. They provide employees complete flexibility in how they use their reward, since they work virtually anywhere credit cards are accepted.

• Online retailers and marketplaces: Major e-commerce brands like Amazon, eBay, and Target combine vast selection with convenience. These cards give employees access to millions of products, from everyday essentials to unique finds.

• Food and beverage: From coffee shops to restaurant delivery services, these cards add a treat factor to recognition. They're ideal for frequent, smaller rewards or celebrating specific achievements. Starbucks and DoorDash are always a hit, but you can also provide more local options based on your employee locations. 

• Digital entertainment and services: Gaming, streaming services, and digital content let employees indulge in their personal interests. Options like Apple Music, Spotify, and Netflix can cover everything from apps to cloud storage to entertainment subscriptions.

• Beauty and wellness: Self-care-focused cards from retailers like Sephora and Ulta Beauty encourage employees to treat themselves. These options transform recognition into a personal care experience, offering access to specialty products and services.

• Tech and electronics: From Apple products to gaming consoles, these cards suit both tech enthusiasts and casual users. They're especially great for rewarding major accomplishments or team milestones.

The top 10 gift cards for employees

Based on search data, these are some of the top gift cards for employees.   

1. Virtual Visa gift cards

Virtual Visa cards offer the ultimate in versatility. They function like debit cards and are accepted by millions of merchants worldwide. Recipients can use them both online and in stores, making them ideal for all types of employees. 

Their digital nature means instant delivery, and employees consider them to be just about as valuable as cash itself. Most importantly, they give employees complete freedom to use the reward in whatever way matters most to them.

2. Amazon gift cards

Amazon gift cards have universal appeal and give employees access to millions of products across virtually every category imaginable, from everyday essentials to electronics, books, and retail items. With both website and mobile app options, employees can easily redeem their rewards whenever and wherever they prefer. 

3. Target gift cards

With physical stores in every state and robust online shopping, Target hits the sweet spot between household staples like groceries and specialty items that feel like a treat. 

Target gift cards let employees choose how to use their reward. And Target’s strong online presence means these cards work well no matter where your employees are located.

4. Starbucks gift cards

With over 40,000 locations worldwide, there’s practically a Starbucks on every corner. Odds are, there’s a store near every employee — especially if they’re based in the US.  

Starbucks gift cards are perfect for frequent rewards and spot recognition since most people visit coffee shops regularly. Plus, the Starbucks app makes redemption easy.

5. American Express gift cards

American Express (AmEx) gift cards provide similar flexibility to Visa prepaid cards and are widely accepted by merchants. They function like debit cards and can be used for both everyday purchases and special occasions. 

The American Express brand carries a premium feel that can make the reward seem more special. These cards can work particularly well for significant achievements or higher-value rewards.

6. eBay gift cards

Employees can shop both new and unique items with eBay, one of the world's largest online marketplaces. Recipients can find everything from electronics to collectibles, often at significant savings. 

The platform's mix of new, used, and rare items helps employees maximize their reward value. Another plus: The treasure-hunt nature of eBay shopping adds an element of fun to the reward experience.

7. Apple gift cards

Apple gift cards have evolved far beyond music purchases, so they’re among the best gift cards for employees. Recipients can use them for Apple TV+ subscriptions, apps, games, extra iCloud storage, and more.

With iPhones holding 57% market share in the US, these cards have broad appeal for your workforce. They're especially valuable for those who use multiple Apple services or devices.

8. Sephora gift cards

Sephora gift cards provide access to over 340 beauty brands and 45,000 products. They're particularly effective as reward options because beauty and self-care purchases often feel like a treat. 

By providing a Sephora card, you're giving employees permission to treat themselves. The retailer's robust online presence makes redemption easy for remote workers.

9. Best Buy gift cards

Best Buy gift cards are ideal for tech-savvy employees. The retailer offers everything from smartphones to gaming systems to home theater equipment. 

These cards work particularly well for significant recognition moments where larger reward amounts are appropriate. Best Buy's support and installation services add extra value to the reward so your employees get the most out of their reward.

10. DoorDash gift cards

Food delivery services have become essential, especially for remote workers. DoorDash partners with thousands of restaurants, giving employees plenty of dining choices. 

The convenience factor makes these cards particularly appealing for busy employees.

Dos and don'ts of employee gifting

Implementing an effective gift card recognition program isn’t just about choosing the right gift cards for employees. It also requires thoughtful planning and execution to provide a great experience. 

Here are a few best practices to follow, plus some common pitfalls to avoid:

Employee gifting dos:

• Keep recognition timely and specific: Nearly 60% of employees say that rewards are more motivating when given immediately after a major milestone rather than as a once-a-year bonus. Document specific achievements and deliver rewards within days, not weeks or months.

• Allow employees to choose their preferred gift card: More choices can increase employee engagement and increase the perceived value of your rewards.

• Maintain consistent recognition across teams: Establish clear criteria for rewards and ensure all departments follow the same guidelines. This builds trust and prevents any perceptions of favoritism.

• Document your gifting policies: Create transparent guidelines describing when and how you award gift cards. Clear policies help managers implement recognition consistently and fairly.

Employee gifting don’ts

• Wait too long to reward achievements: Recognition loses impact over time. With a flexible rewards platform, you can ensure instant reward distribution every time. 

• Give everyone the same gift card: Different employees have different preferences. Offering choice in rewards shows you respect individual preferences.

• Create unfair disparities between departments: Inconsistent practices can damage morale. Regular audits of your recognition program can help identify and correct imbalances.

• Skip proper record-keeping: Good documentation helps you measure program effectiveness and stay tax-compliant. Track metrics like engagement and retention to demonstrate ROI.

Tax implications for employee gifts

Gift cards are considered taxable income by the IRS. When an employee receives $600 or more in gift cards or other rewards within a calendar year:

• The employer must request a W-9 form from the employee

• The income must be reported on Form 1099-MISC during tax season

• The employer should maintain documentation of all rewards distributed

For amounts under $600 annually, no tax forms are required, but tracking rewards is still a smart idea. Employees are technically responsible for reporting all gift card income to the IRS, regardless of amount.

Key takeaways

Employee gift cards can significantly impact engagement and retention when implemented thoughtfully. Successful gift card programs empower employees to choose their own rewards, offer options that align with their personal preferences, deliver rewards in a timely fashion, and reinforce a fair and consistent approach to employee recognition.

Up next: Employee recognition platform Caroo taps into digital rewards to achieve $1M in top-line growth

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