Americans expected to spend $204 billion on gift cards this year.

A recent study by WalletHub predicts that Americans will spend a record-breaking $204 billion on gift cards in 2023. This would mark an increase from the $190 billion spent in 2022.

Gift Card Spending Continues to Rise

Gift card spending has been steadily increasing in the United States since 1999. According to the WalletHub study, spending has more than tripled in the past 20 years. Gift cards have become one of the most popular holiday gift items like Christmas, Hanukkah, etc. Their reusable value makes them an appealing choice for both gift-givers and recipients.

Factors Driving Increased Spending

There are a few key factors that analysts believe are contributing to the rise in gift card spending:

• Ease of online and mobile gift card purchases. More retailers offer digital gift cards that can be sent instantly by email or text. This has made gift cards more convenient to buy and give.
• Growing popularity of gift cards for special occasions beyond holidays. People use gift cards more frequently for events like birthdays, graduations, weddings and other life milestones.
• Expanded merchant acceptance. Major retailers like Amazon, Target, Walmart, Starbucks and others accept gift cards, appealing to a wide customer base. Recipients have the flexibility to spend at popular stores they already shop at.

With projections of over $200 billion in spending this year, gift cards have clearly become a holiday season staple in the United States.

Questions Around Sustainability

While gift cards have gained widespread popularity, some have questioned their environmental sustainability. The plastic and paper materials used to produce single-use gift cards ends up in landfills once redeemed. There is also a lack of transparency around unclaimed gift card balances.

Some retailers have begun addressing these issues by:

• Offering digital/email gift cards that avoid physical waste. However, this also enables “ghost” gift cards that go unused if not redeemed online.
• I am participating in gift card exchange programs that allow unused balances to be donated to charitable causes.
• They are disclosing annual unredeemed gift card totals and escheatment policies for funds to state governments.

As gift card usage grows, stakeholders call for standardized regulations and sustainability practices across the industry. Promoting digital options, expanding exchange programs and increasing transparency could help address environmental and financial concerns around this highly popular gift item. Striking the right balance will ensure gift cards remain a preferred gifting option for years to come.