The Pay Later Reset: Data Shows Young Consumers Retreat, Cards Hold Firm

The Pay Later market is entering a new phase. In January, BNPL use declined among younger consumers, while demand remained steady among households living paycheck to paycheck. At the same time, credit card installment plans held firm, with more than three in 10 consumers using them—unchanged from the previous month.

Generation Z showed the sharpest pullback in BNPL use, while millennials and bridge millennials also declined to their lowest levels in nearly a year. But financially constrained consumers continued to rely on BNPL at similar rates as in December, highlighting its role as a liquidity tool rather than a discretionary one.

Together, these trends point to a shift in how consumers use Pay Later products. Adoption is no longer expanding uniformly. Instead, usage is becoming more segmented, with BNPL tied more closely to financial need and credit card installment plans emerging as a stable, embedded option in everyday spending.

• BNPL’s Generational Dip
• Card Installments Hold Steady
• Read More
• Methodology

BNPL’s Generational Dip

Younger consumers used BNPL less in January, but the Pay Later option’s use among paycheck-to-paycheck consumers held firm.

Younger consumers are driving the decline in BNPL use in January.

BNPL adoption fell from 14% in December to 12% in January, led by sharp pullbacks among younger generations. Gen Z usage dropped from 21% to 15%, the largest decline across age groups. Millennials and bridge millennials also declined, with all three cohorts reaching their lowest levels in the past 11 months.

This shift is not simply a post-holiday effect. The three-month lookback period still captures November and December spending, indicating a meaningful change in behavior.

Older generations did not follow the same pattern. BNPL use increased slightly among baby boomers and remained stable among Generation X. As a result, the overall decline in BNPL adoption is concentrated among younger consumers rather than broad-based across the population.

While younger consumers are pulling back on BNPL, usage remains steady among consumers living paycheck to paycheck.

Among those living this financial lifestyle and struggling to pay monthly bills, 18% used BNPL in the past three months, nearly unchanged from 19% in December. Consumers living paycheck to paycheck but not struggling saw a modest decline, from 17% to 14%, within typical month-to-month variation.

These patterns indicate that BNPL demand remains steady among financially constrained households, even as usage softens elsewhere.

Card Installment Plans Hold Steady

More than three in 10 consumers recently used credit card installment plans, and use of this Pay Later option increased for some generations.

While BNPL use is softening among some consumers, credit card installment plans remain steady.

Overall, 31% of consumers used credit card installment plans in the past three months, unchanged from December. Since September 2025, adoption has remained within a narrow range, indicating consistently strong demand across seasons, including the holiday period.

Usage increased among some generations in January. Gen Z rose from 38% in December to 42%, while Gen X increased from 27% to 31%. Millennials and bridge millennials declined slightly, offsetting those gains and leaving overall adoption unchanged.

These shifts fall within typical month-to-month variation. However, the increase among Gen Z bears watching as younger consumers adjust how they use Pay Later options.

Unlike BNPL, credit card installment plans held steady in January. Overall, 31% of consumers made a purchase using credit card installment plans in the three months through January, matching the level we saw in December. Since September 2025, adoption has varied only slightly, highlighting consistently strong demand across seasons.

Usage increased among some generations in January. Gen Z rose from 38% in December to 42%, while Gen X increased from 27% to 31%. Millennials and bridge millennials declined slightly, offsetting those gains and leaving overall adoption unchanged.

None of these movements stand out as anything more than normal month-to-month variation, though Gen Z, especially, will be a watch point in the coming months. Will we see a sustained shift from BNPL to card installments among these trendsetting younger shoppers?

Use of credit card installment plans is also stable across financial segments.

Among consumers struggling to make ends meet, 33% used credit card installment plans in the past three months, nearly unchanged from 34% in December. Those living paycheck to paycheck but not struggling declined slightly, from 38% to 37%.

This consistency across financial groups reinforces how embedded credit card installment plans have become in consumers’ payment behavior.

Read More

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Methodology

“The Pay Later Reset: Data Shows Young Consumers Retreat, Cards Hold Firm” features data from the latest edition of the Pay Later Series, a PYMNTS Intelligence exclusive series. Based on a survey of 2,980 adult consumers conducted from Jan. 14, 2026, to Jan. 29, 2026, the report examines trends in Pay Later use and the consumer motivations behind using it. Our sample was balanced to match the U.S. adult population by age, gender, education and income.