A surge in the number of Americans choosing “buy now, pay later” payment methods for their holiday shopping is raising concerns that many lower-income consumers will find themselves struggling to pay their bills in the new year.
Usage of the modern-day layaway plan — in which payments are typically made in instalments with no interest except to the merchant — has hit an all-time high this holiday season. BNPL contributed to $10.1bn of online spending since the start of November, up 17 per cent from the same period of 2022, Adobe Analytics calculated.
The payment methods are gaining in popularity as US household savings fall below levels recorded before they were boosted by government stimulus during the Covid-19 pandemic. Consumer sentiment has sunk to a six-month low.