– Gen Z Fuels 19.6% Surge in Store Card Installments
The Shift in Pay Later: Credit Card Installments Rise
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A significant shift is underway in the pay later economy, adn it’s not the one most expected. The real growth isn’t solely within buy now, pay later (BNPL) services, but in the rapid adoption of installment plans tied directly to credit cards. This change signals a potential realignment in how millions of U.S.consumers borrow for everyday purchases.
The PYMNTS Intelligence report, “Split Shift: How Card Installments Are reshaping the Pay Later Landscape”, reveals that installment options offered by both private-label and general-purpose credit cards are gaining traction, especially with middle-income shoppers, as well as younger and older generations. The study, based on a survey of 8,250 U.S. adults conducted between late March and late May, demonstrates that while BNPL providers continue to expand, card-based installments are broadening across more categories and attracting a wider range of consumers. The report paints a picture of a pay later ecosystem where shoppers increasingly combine customary credit, store cards, and BNPL, frequently enough prioritizing predictability and control.
Key Data Points: The Numbers Behind the Shift
The PYMNTS Intelligence report highlights several key data points:
- Private-Label Card installment Usage: Grew from 27.9 million adults in 2023 to 30.3 million in May 2024, representing a 4.8% compound annual growth rate. This growth is particularly driven by middle-income shoppers and Generation Z, with Gen Z experiencing a 19.6% growth rate – the highest among all generations.
- General-purpose Credit card Installments: Increased from 47.2 million users in 2023 to 47.8 million in May 2024, a slower 0.8% annual growth rate, but still a significant user base. One in seven Gen Z and Millennial consumers utilized card installments in the three months ending in May.
- Combined Usage: Approximately 22 million consumers used both a private-label card and a general-purpose card for installment payments in May 2024, a 5.3% increase since 2023, signaling a trend towards mixing payment methods.
| Installment Type | Users (2023) | Users (May 2024) | Annual Growth Rate |
|---|---|---|---|
| Private-Label Cards | 27.9 million | 30.3 million | 4.8% |
| General-Purpose Cards | 47.2 million | 47.8 million | 0.8% |
| Combined Usage | N/A | 22 million | 5.3% |
Drivers of the Trend: Predictability and Broadening Appeal
Several underlying currents are shaping the pay later market. One prominent factor is the increasing desire for predictable payment schedules. Consumers, nonetheless of income level, frequently enough prefer fixed monthly amounts over variable credit card bills, particularly for expenses like travel, concerts, home goods, and groceries. This desire for budgetary control is a key driver of the shift.
Moreover, BNPL’s customer base is expanding. The service now attracts a diverse range of users, including high earners who already possess multiple credit cards. BNPL growth rates demonstrate consistent gains across all generations, with increases ranging from over 6% to nearly 13% depending on the age group.
Card Issuers Respond: Integrating Installment Options
Card issuers are actively responding to these trends. Many banks now offer “Pay in 3” or “Pay in 4” plans that mirror BNPL terms, providing cardholders with the option to convert purchases into installments after the transaction. This strategy aims to retain spending on traditional cards while accommodating consumer demand for clarity and structured payments.
Store cards are also benefiting from this trend. Their installment plans frequently feature 0% promotional rates or extended payoff windows, especially for significant household purchases.Retailers, such as furniture chains, leverage these incentives to attract financing volume. Younger consumers, who may have limited credit histories, often find it easier to qualify for store cards, further contributing to their adoption.
Looking Ahead: Adapting to the New Landscape
While BNPL remains the fastest-growing segment, the increasing prominence of private-label and general-purpose card installments is altering the dynamics of consumer credit. If this trend persists,payment providers will need to re-evaluate how they structure their products to cater to shoppers who increasingly expect financing to be simple,predictable,and aligned with their budgets.