We all know that companies benefit from offering gift cards, which is probably why there are so many of them. People spend their money much more readily when they use a gift card rather than cash, and they also tend to spend a higher amount of money in the store overall. Professor Dan Horne of Providence College, also known as the “Gift Card Guru,” estimates that people on average spend 40 percent over the face value of the card. So basically, if you gave me a $100 gift card right now, it’d actually be more like reaching into my wallet and taking forty bucks (if you can even find that much, but that’s another story). Some gift.

But why exactly does this happen? Well, there are actually two reasons. The first one should be fairly obvious. When you buy something using a gift card, you rarely use exactly the amount on the card. People tend to spend more than the face value of the card just to clean out its balance.

The second reason is much more interesting. Researchers Priya Raghubir and Joydeep Srivastava found in a study that the more transparent the form of payment (cash being the most transparent), the more painful it is for people to spend it. They conducted an experiment in which two sets of people were given the option of buying a Starburst candy at $1. The first set was given a gift certificate that they could exchange for either $1 in cash or the Starburst, while the second set was simply given a dollar to spend. Only about 10 percent of the people spent their dollar on the Starburst when it was given in cash, whereas almost 50 percent spent it when it was given as a gift certificate. The gift certificates, which are a less transparent form of payment than cash, were essentially treated like play money, thus numbing the pain of payment in the minds of the buyers and allowing people to spend more (and more frivolously) than they would if they were using cash.

Some companies may be offering these cards as a service to their customers, but I tend to think it is probably just a good way to increase profits. Either way, in the end, it’s my problem—or rather, my brain’s problem—for falling prey to these Jedi mind tricks. But having taken responsibility for my mind, I’ve publicly declared my preference. Gift cards suck. Which is why if I get a gift card from you, I’ll just assume that you hate me.

update: This article was included in the Carnival of Personal Finance #180 which is hosted this week by Living Almost Large.