Pay Later Moves Into the Monthly Budget

For a growing number of consumers, newer deferred payment tools like installment plans on mainstream or private-label (store) cards and BNPL plans have moved beyond being a checkout option for purchases during heavy shopping seasons or one-off splurges. They’ve become part of everyday money management, helping more consumers boost their financial flexibility and smooth everyday cash flows. As these Pay Later plans become more ensconced in routine spending, the lines are blurring between short-term financing and baseline budgeting behavior.

The latest data shows that millennials and bridge millennials are driving this shift. Both groups ramped up their use of credit card installments and BNPL plans in the last quarter. However, overall use of these tools cooled slightly with other age groups, including Generation Z, despite record levels of holiday spending.

Now a new hurdle is emerging: keeping track of the due dates, balances and remaining payment schedules for plans tied to individual purchases, instead of familiar monthly statements in credit card-logoed emails or envelopes. This suggests that credit providers must simplify consumer management of these plans without undermining the convenience that makes them appealing in the first place. Our latest research reveals that paying interest or fees on BNPL plans is more often a conscious choice than a financial distress signal, particularly for consumers seeking to budget their cash flows for predictable expenses.

These are just some of the findings in this edition of The Pay Later Ecosystem Report, “Pay Later Moves into the Monthly Budget,” a PYMNTS Intelligence exclusive report. This edition examines Pay Later use trends with a focus on tracking payments due. It draws on complete responses from a survey of 2,743 consumers conducted from Dec. 10, 2025, to Dec. 29, 2025.

• Millennials Ramp Up
• The Cost of Pay Later Convenience
• Tracking Troubles
• Read More
• Methodology

Millennials Ramp Up

Millennials and bridge millennials increased their use of credit card installments and BNPL in December, while other segments used these payment methods less.

In December, credit card installment plans and BNPL saw slightly lower adoption rates, despite record levels of holiday spending. The overall share of consumers who paid with credit card installments in the preceding three months slid from 33% in November to 31% in December. BNPL dipped from 15% to 14% during this period. While normal survey variation can partly explain these small swings, the fact that neither of these Pay Later tools saw a jump during year-end shopping sprees suggests that adoption may be hitting a wall.

There’s a big exception to that overall trend. Two crucial segments ramped up their credit card installment and BNPL purchases in the last quarter. Well over four in 10 millennials (45%) and bridge millennials (42%)—the overlap of younger Generation X and older millennials—paid with credit card installments. One-quarter of each cohort used BNPL.¹ The rates are substantially higher than those seen for Gen X or Gen Z, underscoring the special appeal of these options for millennials and their older “bridge” counterparts.

Whether a consumer lives paycheck to paycheck significantly impacts their Pay Later use. Among those living that financial lifestyle, 36% have used credit card installment plans in the last three months, and 18% used BNPL. Interestingly, the data shows very similar rates across those living paycheck to paycheck without issues paying their bills and the harder-hit group of those struggling to pay their bills. This suggests that spending constraints, not financial stress, are the main reason these cash-constrained consumers opt for these payment options. Meanwhile, consumers not living paycheck to paycheck are considerably less likely to have used credit card installments (25%) or BNPL (9%).

The Cost of Pay Later Convenience

Whether consumers use BNPL plans for monthly and essential expenses like groceries, utilities and subscriptions or for discretionary purchases like travel and home remodeling. paying interest or fees for the plans isn’t necessarily a personal finance stress signal.

Most traditional BNPL providers like Affirm, Klarna and Afterpay offer 0% interest as their standard product for short-term payment plans, usually four equal installments paid regularly over six weeks. The merchant typically pays a fee to the BNPL provider (akin to credit card processing fees), which is how these companies make money on the 0% plans. Meanwhile, longer payment plans that spread payments over six to 12 months or more may charge interest. Some providers offer multiple plan options at checkout (such as “Pay in 4” versus “Pay over 12 months”). Whatever the plan, late fees can apply if consumers miss payments, even on 0% interest plans.

Slightly more than three in 10 BNPL users (31%) paid interest on their plans at least once in the last three months. Roughly the same share paid other account or usage fees (28%). This makes them more like credit card users, most of whom revolve a balance at least some of the time.

Bridge millennials stand out as the likeliest to pay interest, with 39% of BNPL users in this age group doing so in the last three months. Millennials (34%), Gen X (31%) and Gen Z (29%) follow relatively closely behind. However, baby boomers are substantially less likely to pay interest, at 14%. The trends for paying account fees are similar, though here we see millennials (34%) take the lead over bridge millennials (31%).

The choice to pay interest isn’t necessarily a sign of financial stress.

BNPL users who don’t live paycheck to paycheck are 1.5 times more likely to pay interest than those living paycheck to paycheck and struggling to pay bills (36% versus 24%, respectively). This suggests that many may be opting for interest-bearing plans as they are offered at the point of sale. That said, consumers who use BNPL for essential or recurring expenses are much more likely to pay interest (32%) than those who use it only for discretionary or occasional purchases (25%). When consumers use BNPL for both types of expenses, they are even more likely to pay interest, at 40%.

Tracking Troubles

The more the newer Pay Later tools become part of everyday spending, the more complicated they can be to manage within an overall personal budget.

Unlike traditional monthly billing cycles for credit cards, BNPL plans are linked to individual purchases, each with a separate monthly statement showing the number of payments owed and due dates, with the initial payments often delayed for weeks or months. For heavy BNPL users, this can make the experience feel like a record-keeping burden, eroding the very convenience that helped draw them to these payment methods in the first place.

Banks that offer credit card installment plans typically consolidate those often interest-free balances onto the cardholder’s monthly card statement, sometimes with a fee. With some card issuers, missing any installment payments can cause the installment balance to get rolled into the interest-bearing regular balance.

Nearly four in 10 consumers who paid with credit or store card installment plans find it at least somewhat challenging to keep track of the payments they have due on those plans. This is nearly twice the rate seen among those who made traditional credit card purchases. Across payment types, younger consumers are much more likely than average to experience friction. Gen Z struggles the most, with 56% of those who used store card installment plans and 47% of those who paid with credit card installment plans reporting difficulty.

Tracking BNPL payments and due dates can also complicate managing personal budgets.

Shifting the focus to BNPL, the survey delved deeper, asking users about tracking their due dates and the number of payments remaining. Overall, one-quarter of BNPL users said that they’re usually or always unsure about their next payment date or how many payments remain in their plans. Roughly half have trouble keeping track of each of these details at least sometimes. Gen Z and millennials struggle the most to stay on top of their BNPL plans, with more than half of each cohort indicating that they at least sometimes feel unsure about their due dates and remaining payments.

The type of BNPL purchase a consumer makes also significantly influences whether they find it difficult to keep track of payments. Six in 10 of those who made essential or recurring purchases say they at least sometimes felt unsure about due dates, and more than two-thirds (68%) said the same about remembering how many payments were left. These are roughly double the rates seen among BNPL users who purchased discretionary items. Paycheck-to-paycheck status is a major factor as well, with consumers who live paycheck to paycheck much more likely to report difficulty tracking due dates and payments, especially those struggling to pay their bills.

Read More

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Methodology

“The Pay Later Ecosystem Report: Pay Later Moves into the Monthly Budget” is based on a survey of 3,743 U.S. adult consumers conducted from Dec. 10, 2025, to Dec. 29, 2025. This edition examines Pay Later use trends with a focus on the challenge for consumers of tracking payments due. Our sample is based on a census-balanced survey of 2,743 respondents who made at least one purchase in the last three months. Respondents in the sample were 51% female, with an average age of 48.4 years and 44.8% earned more than $100,000 annually.

^{1. PYMNTS Intelligence uses the following birth approximate dates and age ranges in 2026 for generational cohorts: baby boomers: born in 1964 or earlier and now aged 62 or older; Generation X: born between 1965 and 1980 and now aged 46–61; millennials: born between 1981 and 1996 and now aged 29–45; bridge millennials: born between 1978 and 1988 and now aged 38–48; zillennials: born between 1991 and 1999 and now aged 26–35; and Generation Z: born in 1997 or later and now aged 29 or younger.↩}