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ROCKVILLE, Md. — Gift cards have become an acceptable substitute for more traditional gift options and, in fact, are increasingly expected and eagerly used, especially among older millennials, according to a new report from market research firm Packaged Facts.
In the last 12 months, U.S. adults spent $46 billion on gift cards. The majority of those gift card purchases ($28 billion) were for others, while $11 billion went toward gift cards consumers gave themselves. The remaining $7 billion represents gift cards received from employers.
In both dollar and percentage terms, older millennials (those falling within the 25-34 age range) are the heaviest gift card givers, spending more than $7 billion on gift cards for others — 26 percent of the total. They are followed closely by adults aged 35-44, who spent $6 billion on gift cards for others in the past 12 months. Consumers aged 18-24 spent the least on gift cards for others, Packaged Facts' research found.
Similar results were seen with gift cards purchased for self-use. Older millennials (25-34 years old) and adults aged 35-44 each accounted for roughly $3 billion of the $11 billion spent in total.
In addition to age, income also plays a role in gift card spending: Those with a household income of $100,000-plus accounted for just 29 percent of the survey respondents, but 47 percent of the overall amount spent on gift cards purchased for others. This income group also comprised 48 percent of the total amount spent on gift cards purchased for themselves, according to the report, Prepaid and Gift Cards in the U.S., 5th Edition.
By giving occasion, the Christmas season tops the list — accounting for $9 billion of spending, or 33 percent of the gift cards purchased for others in the past 12 months.
After Christmas, the most popular occasions for giving gift cards are birthdays, accounting for $7 billion. Another 26 percent of gift card spending falls outside holidays, for reasons such as "doing something nice," "rewarding someone,” or "to say thank you."