Why Holiday Shoppers Are Turning to Pay Later Options in 2024

As the holiday season approaches, shoppers are increasingly relying on pay later options to make their spending more manageable. A new report from Splitit and PYMNTS reveals that 38% of consumers plan to use installment plans for self-gifting this year, reflecting the growing popularity of flexible payment solutions.

Millennials and parents are leading the trend. The report shows that 38% of Millennials intend to use pay later plans more frequently during the holidays compared to the rest of the year. Parents are even more enthusiastic, with 67% planning to finance their holiday purchases using pay later options. These groups see installment plans as a way to justify larger purchases while keeping their budgets on track.

Pay later options are not just for self-gifting—they are also shaping holiday gifting habits. Two-thirds of shoppers who plan to use pay later solutions this season say they’ll do so to buy presents for others. Clothing and accessories dominate as the most popular categories for these purchases, accounting for nearly 60% of holiday shopping. High-ticket items like furniture and electronics are also trending, as shoppers look to spread out payments on premium products.

For merchants, this trend presents a significant opportunity. The availability of pay later options can directly influence shopper decisions, with nearly half of Millennials and parents saying it impacts where they choose to shop. Additionally, 62% of consumers prefer to see these payment plans early in the shopping journey, suggesting that merchants who highlight installment options upfront can attract more customers.

As 28% of holiday shoppers plan to use pay later solutions more this season than throughout the rest of the year, these payment plans are poised to redefine holiday shopping. For retailers, integrating and promoting pay later options now could be the key to a successful holiday season.