Pay Later Reshapes How America Finances the Holidays

Pay Later plans are becoming a key part of how consumers afford meaningful moments amid rising financial pressure.¹ Costs are inflating, with necessities such as housing and medical bills showing disproportionate increases. One in two United States consumers is struggling to afford their daily living expenses. As budgets tighten, shoppers are increasingly spreading payments over time with installment plans, rather than paying up front. Nearly two in three consumers prefer Pay Later options for travel purchases, signaling a shift in how experiences are financed. More than half also favor these installment plans for events and entertainment, marking a sharp increase from earlier this year.

At the same time, credit card balances continue to rise, increasing by nearly $200 over November and December to $3,564 on average since April. This financial strain is most visible among consumers already struggling to pay monthly bills, many of whom can only afford minimum payments. Against this backdrop, Pay Later tools are filling a growing gap between desire and affordability.

These trends are transforming holiday spending as well. Nearly half of consumers plan to use BNPL for holiday purchases, including two-thirds of Generation Z and millennials. These payment options are reshaping spending decisions, influencing where consumers shop, travel and celebrate.

These are just some of the findings detailed in “Pay Later Reshapes How America Finances the Holidays,” a PYMNTS Intelligence exclusive report. This edition examines how Americans use Pay Later options and how financial challenges affect credit card balances. It draws on insights from a survey of 2,286 U.S. consumers conducted from Nov. 17, 2025, to Dec. 12, 2025.

• Pay Later for Travel and Experiences
• Credit Cards
• Pay Later and Holiday Spending
• Read More
• Methodology

Pay Later for Travel and Experiences

Consumers want to use Pay Later options when booking travel, paying for experiences and planning vacations.

Consumers are using deferred payment plans to purchase not just goods but also experiences. In fact, nearly two in three individuals prefer to use Pay Later methods to purchase travel or vacation bookings. Additionally, a growing share of consumers prefers these methods to pay for events and experiences, such as concerts, massages and more. As of November, the figure stands at 53%, which marks a 13 percentage point increase from April 2025, when it stood at four in 10.

Across purchase categories, individuals increasingly prefer Pay Later options, with marked increases even since September in all categories except utilities. Consumers use installment plans to fund experiences and nice-to-have purchases, indicating the normalization of short-term credit for discretionary spending. This growth presents an opportunity for travel, entertainment and hospitality providers to capture demand by offering flexible payment options.

Delving into where this growth comes from, consumers are specifically using BNPL options and credit card installment plans at elevated rates compared to April. The share using credit card installments to pay for events and experiences has nearly doubled since April. Additionally, more consumers are using BNPL for essentials such as food and groceries and home services.

Credit Cards

Consumers’ credit card balances are rising, and many can only afford minimum payments.

Consumer credit card bills are increasing. The average monthly balance has increased by nearly $200 since April 2025, rising to $3,564 from $3,366. While there is some variation across income brackets, with the highest-income individuals seeing, on average, a decrease, Americans of all financial lifestyles are seeing credit card payments rise. Those living paycheck to paycheck and struggling to pay their monthly bills saw a nearly $600 increase in their average credit card balances between April and November. Those who do not live paycheck to paycheck noted a $241 rise in the same period. This credit bill creep could in part be seasonal, with holiday spending ramping up, but it likely also has to do with rising costs.

Many consumers are struggling to pay off their credit card balances. Among consumers who have paid any of their credit balances, 15% paid just the minimum amount or less. For those living paycheck to paycheck and struggling to pay bills, that figure rises to 29%. Only 42% of consumers overall reported paying off their full balance. Among struggling individuals, just 28% did so.

Pay Later and Holiday Spending

BNPL is reshaping how consumers approach holiday spending.

BNPL is changing how shoppers approach the holiday season. Consumers still favor credit cards, with seven in 10 shoppers at least somewhat likely to use their general-purpose credit card for holiday spending. BNPL, however, is gaining ground. Forty-four percent of consumers are at least somewhat likely to use these payment methods to manage holiday spending.

Unsurprisingly, existing BNPL users lead the charge. Specifically, 84% of consumers who have used these payment options in the past three months for both regular and discretionary expenses report that they plan to use them again for holiday spending.

Younger generations are the quickest to adopt these payment plans. Approximately two in three Gen Zers and millennials are likely to use this payment option. By contrast, just 15% of baby boomers and seniors report the same.

Notably, higher-income consumers are more likely to use these plans than their lower-income counterparts. Nearly half of individuals annually earning $150,000 or more may do so, compared with just 40% of those earning less than $50,000.

BNPL users’ likelihood of using these payment options for holiday spending varies by financial lifestyle. Habitual users living paycheck to paycheck are considerably more likely than users with more savings to do so. Specifically, nine in 10 financially struggling consumers who already use BNPL for both necessities and discretionary expenses report being at least somewhat likely to divvy up holiday spending using BNPL. Moreover, 95% of habitual users living paycheck to paycheck without difficulty paying bills say the same. By contrast, fewer than two in three habitual users not living paycheck to paycheck are likely to use BNPL for holiday spending.

Additionally, 92% of financially struggling consumers who use BNPL just for essentials and monthly expenses are likely to use it for holiday spending. Only 59% of non-paycheck-to-paycheck individuals using BNPL just for expenses report the same.

BNPL usage may not just be a convenience. For many holiday shoppers, it may be a key financial strategy. Consumers who are at least somewhat likely to use these options for holiday spending have an average monthly balance across all credit cards that is $1,128 higher than that of consumers who are slightly or not at all likely to use BNPL. Those likely to use it average $4,231, 36% higher than the $3,103 balance of non-users. It seems that many shoppers may be using BNPL as a liquidity bridge rather than an optional budgeting tool.

Indeed, this idea is supported by discrepancies in credit balances between existing BNPL users and non-users. Consumers who use BNPL for both discretionary and essential expenses hold an average balance of $5,181, 60% greater than the $3,227 balance of non-users. The disparity is even starker among consumers who use BNPL just for monthly expenses and essential purchases. These individuals’ average balance of $6,911 is more than twice that of non-BNPL users.

While many BNPL users are using the method out of necessity or as a key planning strategy, it seems some are using it as an optional tool to give them a little more financial wiggle room. Consumers who use the payment option for occasional and discretionary expenses have average balances 23% higher than non-users. This gap indicates that at least some BNPL users may leverage these options to stretch spending on nice-to-haves once their credit limits have been reached.

As further evidence, the data shows that the availability of BNPL affects how people spend on indulgences. The majority—57%—of consumers report that the availability of BNPL at least somewhat influences their choice of where to book events and experiences. Similarly, 56% say it at least somewhat influences their merchant selection for travel or vacation bookings. This finding is especially relevant during the holiday season, when so many people travel for vacation or to visit family. Clearly, BNPL is not just a back-end payment choice or a minor factor in checkout optimization. Rather, it shapes demand, driving conversion and boosting providers’ market share.

Read More

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Methodology

“Pay Later Reshapes How America Finances the Holidays” is based on a survey of 2,286 U.S. adults conducted from Nov. 17, 2025, to Dec. 12, 2025. The report examines consumer use of Pay Later methods, such as BNPL and credit card installment plans. Our sample comprised respondents who made at least one type of purchase in the last three months. The respondent pool was 51.5% female, had an average age of 48.1 years and 24.9% earned more than $150,000 a year.

^{1. For the purpose of this series, Pay Later plans include credit cards, credit card installments, store-branded cards, store-branded card installments and buy now, pay later (BNPL).↩}