Consumers are constantly adjusting how they shop and pay as innovative financial products and technological advancements create fresh ways for money to flow from pocketbook to merchant. Likewise, the payments industry is undergoing a little-noticed change in how millions of shoppers complete their purchases. While much attention has focused on the rise of buy now, pay later (BNPL), a quieter trend is emerging: Some shoppers are increasingly using their private label credit cards from individual retailers and merchants and general-purpose credit cards to pay in installments over a predefined time frame.
Private label card installment payments are growing at a much faster pace than traditional credit card installment payments. But they’re doing so from a smaller base of users, particularly with certain demographic and socioeconomic segments. Still, that’s a potential wake-up call for issuers of traditional cards that now offer those same installment arrangements, as well as for BNPL providers. Meanwhile, credit card installments are outpacing BNPL for specific goods and services, including travel, vacations, experiences like concerts, and groceries, the latter a traditional BNPL stronghold.
This report, based on 8,250 complete responses to a survey of adult consumers in the United States conducted March 25, 2025, to May 22, 2025, delves into the story behind this ascendant phenomenon by examining its key drivers, offering strategic insights for card issuers, BNPL providers, merchants, marketplaces and the consumer credit industry.
Now and Later
Installments emerge as the new consumer credit battleground.
Installment payments on private label cards and credit cards are a relatively new spoke in the Pay Later industry flywheel, which consists of multiple ways for consumers to buy and receive goods or services at the point of purchase, sometimes after, while paying for them over time. The center of the wheel is the ubiquitous general-purpose credit card, with 70% of all U.S. adult consumers, or roughly 183 million people, actively using on average roughly three cards, according to PYMNTS Intelligence data. Nearly half those holders have three or more cards, known as “open loop” because they’re offered through Visa, Mastercard, American Express and Discover, and are usable anywhere accepting those payment networks.
General-purpose cardholders either pay their balances in full each month or partially from one month to the next, either making minimum payments or more than the minimum but less than their full balances. The cards, which include ones co-branded with major retailers that are usable everywhere, like Chase’s Amazon Rewards Visa Signature, are the workhorse of American consumer credit, at nearly $1.2 trillion in debt held by U.S. consumers in the second quarter of this year and $4 trillion in credit still available for use, according to the latest data from the Federal Reserve, Experian and PYMNTS Intelligence.
The value proposition of the traditional credit card industry has long been simple: Settle the bill when you can by making at least the minimum monthly payments. The value proposition for installments and split payments with private label cards, credit cards and BNPL puts a twist on things by offering deferred payments over a defined period of time, with a set monthly payment schedule and lower interest rates than a regular credit card.
Credit ‘Hunger Games’
BNPL’s rise forces card issuers to fight for every transaction.
To understand why trends with installment payments on private label cards and credit cards are important, it’s key to grasp how BNPL has shaken up the Pay Later industry.
Through providers including Affirm, Klarna, Sezzle, Zip and Afterpay, BNPL began as an easy way for consumers with little or no credit history to afford smaller purchases of essentials, with interest charges and fees often significantly below those of traditional credit cards. But it’s rapidly become a favorite of more financially stable shoppers seeking cheap financing to even out their cash flows. Just over six in 10 of all U.S. consumers who use the payment method out of convenience, most often to balance out their monthly cash flow, are in households earning more than $100,000 a year, making those shoppers the top users of BNPL. New PYMNTS Intelligence data shows that high earners spend 40% more on BNPL than low-income shoppers with annual household incomes of $50,000 a year or less.
Higher-income BNPL users typically have multiple general-purpose credit cards, which means the rise of BNPL has likely cut, at least in some measure, into a core revenue line of banks and other card issuers. But it’s not like those issuers have leaned back and watched the new Pay Later world evolve. Instead, many are taking a leaf out of BNPL’s playbook by offering the same kinds of terms BNPL does, typically Pay in 3 or Pay in 4 plans that split a purchase into three or four equal installments over a concrete set of time, due biweekly and often at no interest. These issuers make their installment terms available either at the point of purchase or, more commonly, post-purchase, through follow-on offers to convert a full payment already made into chunks.
The massive growth of BNPL has brought in new Pay Later competitors.
Estimated by PYMNTS Intelligence to total $175 billion in the U.S., BNPL is a tiny slice of the overall Pay Later ecosystem and a competitor to general-purpose credit cards. But its massive growth in recent years—BNPL purchases totaled just $2 billion in 2019, 88 times less than now—signals that shoppers increasingly want payment alternatives, a message all credit providers are listening to. Two years ago, 34.6 million U.S. adult consumers used BNPL in the prior three months, PYMNTS Intelligence estimates. By May 2025, 40.3 million had a compound annual growth rate of 9%.
But BNPL is no longer the only new Pay Later game in town.
Private Label, Flexible Pay
Store cards outpace credit cards in installment growth, but from a smaller base.
The general term “split payments” gets used in two ways by the consumer credit industry. One refers to using a card or BNPL to break up a purchase into set monthly sums due over a set period of time. That is the focus of this report. The other refers to putting a single purchase on multiple cards.
PYMNTS Intelligence data reveals that installment payments made through private label cards, sometimes called store cards, are a meaningful area of recent growth and adoption. The number of adult Americans using those cards for set installments was 27.9 million in August 2023, PYMNTS Intelligence estimates. By May 2025, it was 30.3 million, a compound annual growth rate of 4.8%.
Leading the trend are middle-income consumers with annual household income between $50K and $100K. They boosted their use of private label card installments by 10.4% over August 2023 and May 2025. Also driving the upswing: younger consumers, particularly Gen Z, and boomers. Adult Gen Zers, now age 18–28, boosted their usage by nearly 20% over 2023 and 2024.1 Millennials also contributed positively, growing 0.8% per year. By contrast, Gen X showed -0.6% CAGR, and boomers and seniors grew at 11%.
Private label cards have gained popularity.
One striking point is that while private label cards are often considered the traditional province of older shoppers, younger consumers use them. The “closed-loop” cards, meaning they can be used only at the stores and websites of the merchants to which they’re tied, became popular in the early 1900s as consumer credit expanded and big department stores and oil companies issued their own cards to nurture brand loyalty and drive repeat customers. One reason for their growing popularity with both middle-income and younger shoppers may be that they’re easier to obtain, especially for individuals with little or no credit, a life-cycle stage many younger shoppers may find themselves in.
Another big draw of private label cards is that they offer promotional loyalty benefits, with installments available on purchases meeting minimum thresholds and 0% financing. For example, Value City Furniture’s Designer Looks credit card offers installment plans ranging from 12 to 40 months at no interest, terms generally not available on general-purpose cards.
The takeaway is that while a much smaller base of consumers use private label cards compared to general-purpose credit cards (30 million vs. 183 million, respectively), their use of installment purchases is growing at a faster rate. The smaller base makes sense given that store cards can only be used at a single retailer or group of related retailers. But their faster growth suggests that their distinct features are capturing a slice of the Pay Later industry. Those features include often-better installment options on high-dollar purchases of specific items in the retailer’s inventory, such as refrigerators and surround sound systems. Consumers opting to use those cards instead of a general-purpose credit card for such purposes are diverting dollars away from banks and other traditional card issuers.
Credit Cards on Notice
Traditional card use loses ground as younger consumers shift to installment payments.
Use of traditional credit cards for split installments is growing far more slowly compared to the 4.8% rate for private label cards over nearly two years. PYMNTS Intelligence estimates that 47.8 million U.S. adult consumers used their general-purpose cards for installment payments over three months through May 2025, up only 0.8% per year from 47.2 million in August 2023. While ordinary credit cards have a much larger user base, their holders are changing how they use them at a much slower rate compared to private label cards and BNPL.
At the same time, regardless of income level or whether they’re parents, consumers are putting more dollars on credit card installment plans than on BNPL, but less than on traditional credit cards. Rewards and cashback, both tied to special, big-ticket offers by the card issuer, are the top drivers.
PYMNTS Intelligence data reveals that one in seven, or 14%, of both millennial and Gen Z consumers reported utilizing store card and credit card installments over three months through May 22. This figure indicates younger consumers’ comfort and preference for the structured payment method, signaling their early and strong adoption of these flexible credit options. It’s no longer just about revolving credit, meaning using a general-purpose credit card in the traditional way. It’s about using those cards to segment larger purchases into manageable, interest-free or low-interest installments, just like one does with BNPL products.
Credit card split payments have gained a specific toehold. They’re used more frequently than BNPL for specific goods and services, including travel, vacations, experiences like concerts, and groceries, the latter a traditional BNPL stronghold.
Consumers use different Pay Later options for various reasons.
Consumers use split payments on credit cards mostly because they want to buy something while maintaining a cash cushion, find the card application process easy and/or trust the card issuer. By contrast, the top motivations for using BNPL are slightly different, and include the ability to choose a budget-friendly payment frequency, not pay interest and/or maintain a cash cushion.
Parents with children under their care stand out as the only demographic to use credit card installments more, in terms of dollar value of purchases, than regular credit cards or BNPL. They put $1,076 on credit card installment plans in the last three months through May 2025, compared to $1,061 on traditional credit card payments.
Predictable-Payment Economy
Consumers demand control and certainty—and they’re reshaping how credit works.
Demand by consumers for more ways to pay in equal payments over a defined period of time is rooted in their desire, regardless of their credit history or income levels, for greater clarity and more control over their day-to-day spending, whether for necessities or discretionary items. Whether it’s groceries, a new sofa or a vacation abroad, shoppers want to be able to turn over their money in set, predictable timeframes that fit their personal finance lifestyles and income flows.
That’s why the Pay Later industry offers multiple ways to do that. Its ecosystem is polymorphic, with different forms that are united by a single concept. (For a concrete analogy, think of festivals during Brazil’s Rio Carnival, New Orleans during Mardi Gras and the Trinidad and Tobago Carnival.) That same variety tied together under one concept describes how consumers shop. They keep stashes of credit cards in their wallets. They use a variety of wallets (old-school billfolds or pocketbooks, digital ones like PayPal, mobile ones such as Apple Pay). And they use varying entry points to shop with a merchant (personal computer, mobile phone, physical store, social media).
Likewise, shoppers also use different methods to split up their payments for their purchases, blending split installments on store cards and credit cards with BNPL products. And they do so frequently. Events, travel and vacations, subscription services, home services and medical bills are the top purchases consumers use a Pay Later product for. For these, consumers used Pay Later 64%–71% of the time, depending on the nature of the purchase. Groceries come in last, but still at more than one in two consumers.
More consumers are now splitting payments between card types.
However they break things up, things can get complicated. Amazon, for example, lets shoppers split a payment between a credit card and a debit card, but not between two cards of the same type. But with its Amazon-branded cards, which consumers can use at Amazon-owned Whole Foods, shoppers can split purchases into equal monthly installments, with no interest as long as payments are made on time. Meanwhile, not all private label cards always allow installment payments. Target, for example, won’t let holders of its Target Circle credit card pay in installments. But its BNPL partnerships with Affirm and Sezzle do allow that.
Nearly 22 million consumers used both a private label card and a credit card to make installment payments in May 2025, PYMNTS Intelligence data shows. That’s a 5.3% CAGR on August 2023’s 19.8 million consumers. And it’s faster than the growth rate for shoppers using only private label cards (4.8% a year) or only traditional credit cards (0.8% per year) for payment installments. The growth rate for shoppers using both types of cards to split up payments is second only to BNPL’s 9% growth rate over the same period.
Unlike private label cards’ popularity with middle-income and younger consumers, BNPL stands out as the one Pay Later service showing increasing popularity with all generations. Over August 2023 through May 2025, PYMNTS Intelligence data shows, BNPL usage grew by 6.7% among Gen Z, 11.5% for millennials, 12.9% for Gen X and 6.3% for boomers and seniors, underscoring its broad appeal.
Splitting Up and Mixing Up
Gen Z and boomers drive the installment and split payment revolution.
Still, younger consumers tend to drive trends. Their engagement across the credit infrastructure underscores their active pursuit of diverse ways to pay in predictable chunks over a set period of time, suggesting a fundamental shift in how they manage their expenditures. Gen Z demonstrates the most robust growth in adopting various Pay Later methods, highlighting their active pursuit of installment options. Their 19.6% growth rate for installments on private label cards over two years is the highest among all generations. They also show substantial growth in using credit card installments, at 8.7%, and BNPL, at 6.7%.
Millennials also show healthy growth in their use of Pay Later services. Their BNPL adoption grew by an estimated 6.6%, while their use of private label card installments increased only 0.8%.
By contrast, Gen X shows a mixed picture regarding their Pay Later preferences. While their BNPL usage grew by 11.5% over two years, they experienced a decline in the use of both credit card installments (-2.1%) and private label card installments (-0.6%).
The boomer and older seniors demographic also show strong growth rates among the generations for Pay Later services. Their BNPL usage grew by 6.6%. Their use of credit card installments and private label card installments each swelled 11%.
The big picture: Both younger and older consumers are significantly influencing the growth of installment-based payment methods across BNPL, credit card and private label card options.
To sum up, the payments industry is currently experiencing a fundamental shift in which consumers increasingly favor installment payment options on both private label and general-purpose credit cards. While BNPL has grown significantly, private label card installments are expanding at a faster rate, albeit from a smaller base, indicating a strong and emerging preference among certain consumer segments, including middle-income and younger shoppers.
This trend is driven by a universal desire for greater clarity and control over spending. Consequently, traditional card issuers are adapting by offering similar installment terms, and credit card installments are now outpacing BNPL for specific categories such as travel, experiences and even groceries.
For professionals across retail, banking and payments, recognizing this diverse Pay Later ecosystem, where consumers actively blend various payment methods, is essential for strategic positioning and meeting the changing demands of today’s shoppers, as well as tomorrow’s.
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Methodology
This PYMNTS Intelligence special report is based on 8,250 complete responses to a survey of U.S. adult consumers conducted from March 25, 2025, through May 22, 2025. It examines an emerging shift in the Pay Later industry in which installments on private label credit cards are growing at a faster pace than those on traditional credit cards. It also reveals that credit card installments are outpacing BNPL.
1. PYMNTS Intelligence uses the following birth dates and approximate age ranges in 2025 for generational cohorts: baby boomers: born in 1964 or earlier and now age 61 or older; Generation X: born between 1965 and 1980 and now age 45–60; millennials: born between 1981 and 1996 and now age 28–44; bridge millennials: born between 1978 and 1988 and now age 37–47; zillennials: born between 1991 and 1999 and now age 25–34; and Generation Z: born in 1997 or later and now age 28 or younger.↩
