Gen Z Drives Notable Growth in “Pay in installments” Options
A recent report reveals a considerable increase in the use of installment payment plans, with store card installments experiencing a particularly dramatic surge of 19.6% as 2023. This growth is largely fueled by Gen Z consumers,alongside increasing adoption across all generations.
68.3 million consumers utilized some form of “pay in installments” plan in May, representing a 13.8% increase year-over-year. While Buy now, Pay Later (BNPL) remains the fastest-growing segment, conventional credit cards are adapting to meet consumer demand for flexible payment options.
Installments on general-purpose credit cards rose from 47.2 million users in 2023 to 47.8 million in May, a slower growth rate of 0.8% annually, but still representing a significant user base. During the three months ending in May, one in seven Gen Z and millennial consumers utilized card installments.
The report also highlights a growing trend of consumers combining payment methods, with nearly 22 million using both a private-label card and a general-purpose card for installment payments - a 5.3% increase since 2023.
Beyond the numbers,the research points to a consumer preference for predictable payment schedules,irrespective of income. Many shoppers desire fixed monthly amounts over variable credit card bills, particularly for expenses like travel, concerts, home goods, and groceries.
BNPL is also broadening its appeal, attracting a wider range of users, including high earners with existing credit cards.Growth rates are consistently positive across every generation, ranging from increases of more than 6% to nearly 13% depending on age group.
Card issuers are responding by offering their own installment plans, such as “Pay in 3” or “Pay in 4,” mirroring BNPL terms and allowing cardholders to convert purchases into installments post-transaction. Store cards are also benefiting, often offering 0% promotional rates or extended payoff windows, particularly for larger purchases. These incentives are especially attractive to younger consumers with shorter credit histories who may find it easier to qualify for store card financing.
The increasing popularity of installment plans suggests a shift in consumer expectations, demanding financing options that are simple, predictable, and aligned with individual budgets.Payment providers will likely need to adapt their product structures to meet this evolving landscape.
