More consumers intend to use buy now, pay later services for holiday purchases

Households often take on additional debt as they up their spending over the holidays. Buy now, pay later is poised to be an increasingly popular method for making those holiday purchases, according to new research.

Roughly half of those surveyed by the consulting firm TSG say they’ll use buy now, pay later this holiday season, according to Kelly Prange, an analyst with TSG.

“Twenty percent are planning to use it more often than last year, compared to 9% who are using it less often than last year,” she said.

Younger generations, she said, are more open to using the installment payment method to handle large or unexpected expenses.

“They know they can avoid interest while still paying that off over a few months,” she said.

But people are also using buy now, pay later to cover basic expenses. Roughly one in 10 working-age adults are buying groceries this way, said Kassandra Martinchek, a senior research associate at the Urban Institute.

“And among those who did, about one in three missed a payment,” she said.

On the one hand, access to buy now, pay later can be a lifeline for families in a bind. “However, over-relying on credit can lead to future financial instability if families have a hard time keeping up with debt,” Martinchek said.

And she added that’s something to keep in mind over the holidays as families spend more than normal on things like groceries.