BOSTON — Pay Later options are no longer a seasonal convenience tied to big-ticket travel purchases but are becoming a routine part of how many U.S. households manage monthly cash flow, according to a new report from PYMNTS Intelligence.
The findings are detailed in the PYMNTS Intelligence Pay Later Ecosystem Report, titled “Credit Card Installments Outrun BNPL in Summer Travel Surge.” While the report highlights a sharp increase in installment use during the summer travel season, it points to a broader shift in consumer budgeting behavior.
Rather than reacting solely to higher airfare or vacation costs, consumers are increasingly spreading payments over time as part of everyday financial planning, the report found. Fixed installment plans tied to existing credit cards are growing faster than buy now, pay later (BNPL) services, even as both options remain widely used, according to PYMNTS.
According to the PYMNTS report, consumers are not abandoning BNPL, the report said. Instead, they are switching between tools depending on the purchase and their financial priorities. The report states that credit card installments appeal to users because they remain within familiar accounts, preserve rewards and cash-back benefits, and avoid opening new credit lines at checkout. BNPL continues to attract users with flexible payment schedules and fast approval.
Together, the two products are forming what PYMNTS Intelligence described as a Pay Later ecosystem that increasingly competes with traditional revolving credit.
Surge in Installments
The report shows that use of credit card installments surged 46% in late spring and summer compared with April levels, while BNPL usage remained roughly flat at about 14% of consumers. Higher-income households are particularly active: consumers earning more than $100,000 a year were 57% more likely to use card installments than those earning under $50,000, underscoring that Pay Later is not limited to households under financial strain, PYMNTS reported.
Spending levels also differed, according to the report. Consumers who used Pay Later options for both essential and discretionary purchases averaged more than $1,000 in spending over three months, significantly higher than those who used the tools for only one category.
Standing Out
What stood out, the report said, how often Pay Later now appeared in routine expenses. Groceries, utilities, food delivery and subscriptions are increasingly paid through installments or BNPL, not just large discretionary purchases.
“For lower-income households, BNPL often functions as a short-term budgeting bridge,” according to the analysis. “More than half of lower-income BNPL users rely on it exclusively for essential spending. Higher earners, by contrast, tend to use installments and BNPL to manage cash flow while preserving liquidity and maximizing rewards.
Age also plays a role, the analysis found. Younger consumers lead adoption across both models, with Gen Z reporting the highest use of credit card installments at 45% and BNPL at 24%. Once Gen Z consumers adopt card installments, many continue using them regularly. More than six in 10 Gen Z installment users apply them to both essentials and discretionary purchases, suggesting habit formation rather than experimentation.
Structural Differences
The report also highlights structural differences between the products. Credit card installments are limited by existing credit lines, while BNPL often extends incremental credit at the point of sale. As a result, BNPL can fill gaps for consumers living paycheck to paycheck when card limits are constrained.
Taken together, PYMNTS Intelligence said the findings show Pay Later has become a durable feature of consumer finance, reshaping how households plan, spend and repay — and raising the stakes for issuers and merchants competing to remain top of wallet.
