BNPL Consumer Debt And Credit Cards Are Reshaping Holiday Spending

U.S. consumers are expected to spend near record levels this holiday season, underscoring the resilience of consumer spending even as inflation remains elevated and borrowing costs stay high. Adobe Analytics expects U.S. online holiday sales to exceed $250 billion in 2025, underscoring the sector’s steady seasonal growth despite ongoing pressure on household budgets.
But beneath those strong topline figures, the way Americans are paying for their purchases is shifting, particularly at the digital checkout. An increasing share of holiday spending is being financed through installment plans and revolving credit—balances that, in many cases, are likely to extend beyond December and into 2026, reshaping household balance sheets after the season ends.
Spending Is Holding Up—How Consumers Are Funding It Is Changing
Retail traffic and promotional performance suggest consumers remain willing to spend. Yet, per Adobe Analytics, shoppers will put more than $20 billion of online holiday purchases on buy now, pay later (BNPL) plans this season, an increase of roughly 11% year over year.
BNPL usage has been particularly pronounced during peak shopping days. Cyber Monday BNPL purchases approached $1 billion, driven largely by mobile commerce, evidence that installment options have become embedded into mainstream checkout experiences rather than remaining a niche payment tool. In that sense, BNPL resembles a modernized version of layaway, with one crucial structural difference: consumers receive goods immediately while repayment is pushed into the future.
For fintech platforms, installment payments function less like retail perks and more like real-time credit products. Unlike traditional bank credit, BNPL platforms see consumer payment behavior in near real time—often revealing shifts in household cash flow well before those patterns surface in bank earnings or Federal Reserve data. That immediacy helps explain why installment usage can expand even when topline spending appears healthy.
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BNPL, once concentrated in discretionary e-commerce, is now widely used across categories such as electronics, apparel, and gifting, allowing consumers to smooth cash flow amid elevated prices and higher interest costs. As installment usage scales, it is drawing scrutiny not just from merchants and investors, but from the broader credit system itself.
BNPL Moves From Checkout Tool To Credit Infrastructure
The scale of BNPL adoption is evident in provider growth. Affirm reports more than 24 million active users and tens of billions of dollars in annual transaction volume, making it the largest U.S.-based BNPL platform, a scale that positions BNPL as a meaningful component of consumer credit, not a niche payment option. Klarna has also reported strong growth in the U.S. market, reflecting how installment financing continues to gain traction among both merchants and consumers.
As these platforms scale, investor and regulatory scrutiny has intensified, particularly around underwriting standards, repayment behavior, and credit transparency as installment products increasingly resemble traditional consumer credit. One of the most consequential developments this year is how BNPL is being incorporated into the broader credit system. Over the summer, FICO unveiled that newer credit-scoring models can include BNPL loan data, allowing installment activity to factor into consumer credit profiles for the first time.
For fintech lenders, this transition matters because BNPL underwriting often relies on transaction-level data and behavioral signals rather than the backward-looking metrics banks have traditionally used. As BNPL becomes more visible to credit bureaus, those models are beginning to intersect. That feedback loop could influence both pricing and access to credit, as fintech underwriting increasingly reflects repayment behavior observed at the point of sale. At the same time, BNPL reporting to credit bureaus remains inconsistent, complicating risk assessment as installment usage expands.
What Credit Data Is Signaling For 2026
Installment plans are only part of the picture. Recent Federal Reserve data shows that revolving consumer credit—driven largely by credit cards—continued to rise throughout 2025. According to the Federal Reserve Bank of New York, total U.S. credit card balances surpassed $1.2 trillion in the third quarter of 2025, reaching a new all-time high.
Importantly, credit card delinquency rates remain relatively contained at around 3%, even as revolving balances rise and average APRs exceed 20%. That suggests many households are keeping current on payments while carrying larger, more expensive balances—using credit to manage cash flow as opposed to pulling back on spending outright. Surveys of holiday shoppers indicate that many expect to carry some form of holiday-related debt into 2026, rather than paying off balances immediately after the season.
Historically, consumer spending tends to hold up longer than household balance sheets, with consumers using available credit to maintain consumption even as financial flexibility narrows. The current mix of strong spending, rising BNPL adoption, and higher revolving balances fits that pattern. Rather than an abrupt downturn, it reflects a slower accumulation of pressure—one that shows up first in payment behavior rather than in sales data.
For banks and fintech lenders, the challenge heading into 2026 will be balancing growth with signal quality, leveraging high-frequency consumer data without letting transaction growth outpace credit discipline. For policymakers and economists, the evolving payment mix complicates how consumer resilience is measured, as traditional indicators focus on spending rather than funding.
The holiday season often amplifies these dynamics. Promotions and payment flexibility help sustain demand, but the financial impact lingers long after the decorations come down. As 2026 begins, early-year data on repayment behavior, delinquencies, and credit usage may offer a clearer read on consumer health than December sales headlines ever could.
Holiday spending may look strong, but BNPL consumer debt, credit usage and repayment behavior, not sales totals, will ultimately define consumer health in 2026.