Consumers Use Rewards to Subsidize Holiday Spending

Consumers are using credit in strategic ways.

This year’s Black Friday data gleaned by PYMNTS Intelligence showed that financially stressed households, young shoppers and high-income earners leaned into rewards to cover seasonal spending.

PYMNTS Intelligence’s “ Black Friday on a Budget: How Discipline and Deals Shaped Holiday Shopping in 2025 ” found that consumers shifted from simply using credit to actively optimizing it as a reimbursement mechanism, and indeed as a form of income, for holiday budgets rather than as pure purchasing power.

Traditional credit card use remained stable year over year, according to the report. Other types of credit, including buy now, pay later (BNPL), showed a bit of positive movement, but installment features on credit cards became a go-to liquidity tool for the financially stressed. Among those living paycheck to paycheck with difficulty paying monthly bills, 58% used credit card installment features for their Black Friday purchases, up from 49% last year.

Rewards Become Reimbursement

Rewards proved attractive across income segments. More than one-third of struggling consumers used credit card rewards or loyalty points to cover holiday spending, while 52% of Generation Z did the same. In addition, 49% of Gen Z selected merchants based on reward value. High-income households leaned particularly hard into rewards, with 4 in 10 shoppers earning more than $150,000 using rewards to pay for purchases, the highest usage rate among income demographics.

The report revealed that 56% of Gen Z plan to use rewards or loyalty points to cover at least some of their holiday spending, and 49% choose where to shop based on where rewards deliver the greatest value.

Rewards are acting as a subsidy. Rather than treating points as an afterthought, consumers are building them into their spending strategies to offset inflation, tariffs and higher prices for everyday goods.

The strain that inflation continues to have on wages and consumer purchasing power continues. Shoppers are managing budget pressure through smaller carts, early purchasing strategies and rewards redemption. The report found that 37% of consumers bought fewer items than last year, a signal of disciplined budgeting amid inflation and cost-of-living pressures.

According to the report, 29% of struggling paycheck-to-paycheck consumers said items were more expensive than expected.

The Read-Across for Banks

Banks should expect rewards optimization to shape payment routing more aggressively than traditional brand loyalty. As consumers actively compare value and flexibility at checkout, real-time transparency into rewards balances becomes a core differentiator. Shoppers are demanding clearer redemption options, partial points payment capabilities and immediate visibility into accumulated rewards when they make decisions online.

A separate PYMNTS Intelligence report from July, “ Locking in Loyalty: Securing Top-of-Wallet Status in a Changing Economy ,” found that 60% of consumers said they wanted rewards customized to their relationship with card providers, yet only 45% were satisfied with the options they had.

The read-across is that for issuers, rewards are not just a retail season story; they are a platform design story. Rewards need to be visible at the moment of purchase, especially on mobile. Banks that can embed loyalty tools into digital checkout experiences stand to win top-of-wallet status without needing to compete on promotional credit alone.

The opportunity for banks and issuers is straightforward. Design flexible rewards programs that allow consumers to stretch their budgets, reduce friction at checkout, and feel a sense of control over holiday and non-holiday spending.

Flexible rewards benefit consumers by making spending feel more manageable in an inflationary environment where wages have not kept pace with rising prices. They benefit banks by improving engagement, reducing churn and capturing a greater share of transaction volume without necessarily increasing risk.