The news: Hobbies are getting more expensive.

Spending on arts and crafts, hobby shops, and outdoor recreation increased 7.9% YoY in August, more than double the rate of transaction growth, per the Bank of America Institute.

In comparison, transaction growth outpaced hobby spending last August by nearly a percentage point. And in 2024, hobby spending growth fell nearly -4% as transactions grew about 1%.   

Why this matters: Issuers are actively trying to acquire younger consumers. Targeting their key interests for reward categories and experiences may offer a pathway for their loyalty.

• Gen Zers and millennials devote more spending on outdoor recreation than Gen Xers and baby boomers, per Bank of America.
• The same cohorts also spend more on arts and crafts than their older counterparts.
• Across all generations, video game spending remained robust.

Implications for issuers: Despite “funflation,” as the Bank of America Institute calls it, millennials and Gen Zers are dedicating room in their budgets to hobbies. 

To convert younger consumers’ desire for fun into cardholder loyalty, issuers need to:

• Embed experience-driven rewards that mirror their hobbies. This includes making sure travel opportunities reflect their home interests—like  outdoormanship, artisan craftsmanship opportunities, or cooking classes.
• Offer rewards categories in essential categories. Younger adults with cost-of-living concerns may spend more freely on discretionary items if they feel like they’re getting adequate rewards on gas, grocery, and housing categories. This frees up issuers from having to target multiple niche categories for select cards and direct resources to beef up general purpose cards that can be used in all spending categories—driving top-of-wallet behavior.

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