Contrary to what many might think, it’s not the low-income consumers who are most inclined to take advantage of flexible payment options.
Data from a study of 5,000 consumers by Splitit and Pymnts found that baby boomers are the most likely demographic group to use pay-later options to purchase their holiday gifts this year, with nearly three-quarters, or 73 percent, planning to use split payments over time. Gen Xers followed at 68 percent and then millennials at 65 percent.
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Gen Z, at 60 percent, is the least likely generation to use pay later for holiday shopping this year. For this generation, the use of credit card installments outranked the traditional “buy now pay later” (BNPL) option. In fact, Gen Z had the highest increase of credit card installment usage across the demographic groups, and more than double the increase rate of boomers.
Another key finding is that higher-income consumers, those earning more than $100,000 per year, use pay-later options more often than their lower-income counterparts. Less than half, at 48 percent, of those earning below $50,000 a year said they have recently used a pay-later option.
Also, more than a quarter of consumers will pay full price if they know about payment options early in their shopping journey. About 68 percent of those surveyed—including 65 percent of Gen Zers—said they decide to use credit-linked installments before they get to checkout, while almost half of Gen Z respondents said they would prefer to be offered pay-later plans before deciding what to buy.
“Gen Zers are well known for being price-sensitive, so it’s quite surprising our research found that boomers are the age group planning to use pay later most often for when purchasing gifts this holiday,” Nandan Sheth, Splitit’s CEO, said. “That underscores the widespread demand for alternative payment options across all demographic groups.”
Sheth added that 44 percent of Gen Z respondents plan to use pay later to rationalize splurge purchases. “Our survey indicates they’ll rely on their favorite pay-later options more heavily to finance personal splurges, including entertainment and meals out at restaurants,” he said.
And more than half of millennial parents, at 67 percent of those surveyed, said they plan to use pay-later options to spread out their holiday purchases, with nearly half at 46 percent planning to use credit card installments for their toys and games purchases for holiday. They said spreading out the costs using pay-later plans help reduce the guilt of splurge purchases.