Skip to content
D Digilifetrends

Debt Relief

More Americans Are Using Buy Now, Pay Later for Holiday Spending, and Payment Problems Are Emerging

Digilifetrends Published 3 min read

More than one-third of Americans who plan to shop for the holidays say they will use installment payment plans, and many already expect trouble keeping up. A NerdWallet survey conducted with Harris Poll found that 38% of holiday shoppers expect to use buy now, pay later (BNPL) options, and among those planning to use them, 38% think they will not make every payment on time.

At a brightly lit supermarket checkout, a man in a dark blue jacket uses his smartphone to pay, while a cashier in a red and white checkered shirt and dark green apron scans a small watermelon. Behind the paying customer, a woman with long brown hair and glasses stands alongside a man in a denim jacket and black beanie. The checkout counter features a payment terminal and a conveyor belt, with blurred grocery aisles in the background.
Shoppers at a grocery store checkout engage in a transaction, emblematic of the rising service prices affecting retail experiences for consumers.

The mood among shoppers is already strained. The University of Michigan’s consumer sentiment index slipped to 48.1 in September, down 3.6 points from August and below the 60 level often associated with recessions. In a study sponsored by the Electronic Transactions Association, 44% of consumers said they feel more financially stressed than a year ago, up from 27% in the prior survey.

Holiday installment borrowing will add to debt that many lenders cannot fully see. Signs of stress are likely to appear in checking accounts well before they show up in the credit data watched by Wall Street.

Cash App Highlights the Pace of App-Based Lending Growth

Block provided a fresh snapshot of that growth when it released third-quarter results. Consumer lending originations reached $19.0 billion, up 40% from a year earlier. Cash App had 60 million active users in September, and Afterpay Post-Purchase volume more than tripled.

Although growth has slowed from 82% in the first quarter and 59% in the second, the company is preparing to accelerate again. Management expects to start increasing Borrow limits once more. The average Borrow limit is about $300, with a maximum of $1,500.

Block is only one part of a much larger shift. Federal Reserve researchers estimate that six major fintech providers issued $156.7 billion in U.S. consumer credit in 2025. Volume in pay-in-four products rose nearly 80% from 2023.

Lenders Are Making Decisions Without the Full Picture

Federal Reserve research found that most BNPL lenders do not report these loans to credit bureaus. That means every lender, including a card issuer approving holiday credit, may be guessing about what a borrower already owes. Multiple loans are common. The Consumer Financial Protection Bureau found that 63% of BNPL borrowers had more than one loan at once in 2022, and 33% borrowed from more than one company. TransUnion began sharing limited BNPL data with one lending partner, but says the information still does not provide a complete picture.

That blind spot helps explain why traditional credit measures can appear stable. The share of credit card balances at least 30 days past due fell to 2.85% in the latest quarterly reading, down from 3.08% in late 2024. Even so, CFPB research shows BNPL users are much more likely than non-users to revolve credit card balances from month to month and to rely on overdraft, payday, or pawn loans.

Late payments have remained fairly steady. The Fed found that a little more than one-quarter of BNPL users paid late, roughly unchanged from the previous year. But 11% said a payment led to an overdraft or insufficient-funds fee. That points to a cash crunch that hits households before it reaches lenders.

What to Watch as Holiday Bills Arrive

A typical pay-in-four loan lasts about six weeks, which means purchases made during the holiday shopping rush can come due alongside rent and post-holiday credit card bills. Demand continues to rise. In a LendingTree survey, 52% of Americans expected to apply for a BNPL loan within six months, up from 46% in the previous survey.

The key test will come with Block’s next earnings report. Management expects growth in transaction and loan losses to slow in the fourth quarter. If that happens while Borrow limits rise, app lenders may have priced holiday risk correctly. If losses accelerate again, the financial strain consumers reported this fall could start to show up at lenders as well. Investors should also watch whether TransUnion broadens BNPL reporting beyond a single partner lender. Until that happens, much of the holiday installment debt will remain out of view.

More from Digilifetrends