‘Buy now, pay later’ is everywhere this holiday season. Here’s how to avoid a debt hangover |
Each holiday season brings a predictable surge in consumer spending, but the way shoppers finance that spending is changing rapidly. While credit cards once dominated online checkouts, the growing popularity of buy now, pay later (BNPL) arrangements is changing how households manage short-term expenses.
BNPL refers to a short-term payment plan that retailers offer to shoppers at the point of purchase. The most common model is “pay-in-four” — rather than paying the full amount up front, the shopper pays 25 per cent immediately and the remaining 75 per cent over three equal instalments, typically debited automatically every two weeks.
This structure makes BNPL feel relatively frictionless and, for many shoppers, deceptively inexpensive.
Read more: The hidden risks of buy now, pay later: What shoppers need to know
In 2024, BNPL accounted for five per cent of e-commerce transactions, a proportion expected to increase by 58 per cent by 2030. In comparison, credit cards accounted for 20 per cent of e-commerce transactions in 2024, and this share is projected to increase by only three per cent by 2030.
With half of consumers planning to rely on BNPL for their holiday purchases in 2025, understanding this shift has never been more timely.
As households prepare for another holiday season of spending, BNPL will appear across many checkout pages with promises of convenience and flexibility. But before clicking “pay later,” consumers should recognize that these loans carry real financial consequences.
Two factors explain BNPL’s appeal. First, the time value of money........