Consumers Plan to Rack Up Credit Card Debt by Employing Buy Now, Pay Later Services for Holiday Spending
The upcoming holiday season is set to see a shift in consumer spending behavior, with a growing emphasis on debt and buy now, pay later (BNPL) services, heightened price sensitivity, and strategic spending adjustments amid economic uncertainty.
According to a recent survey by Inmar Intelligence, nearly half of U.S. consumers plan to spend the most on holiday purchases this year. However, many are relying more on debt and pay later plans to manage their expenses[1]. This trend is further reflected in the 19% of millennials and 20% of Gen Z who plan to use BNPL services for holiday expenses, and the 25% of respondents who will utilize these services for holiday spending[2].
Price sensitivity is strong among consumers, with 50% stating they won't shop with retailers that increase prices[1]. Discounts remain important, but 42% would still be incentivized by free shipping/returns, and loyalty programs also strongly influence buying decisions[1]. In response, brands and retailers are divided on raising or maintaining prices for the holiday season. Some, like E.l.f. Cosmetics, plan to increase their prices by $1, while others, such as J.C. Penney and The Home Depot, have opted to hold their prices steady[3]. Walmart and Lululemon, however, have warned of higher prices due to tariffs.
In an attempt to free up funds for holiday spending, consumers are cutting back on essentials. The majority of survey respondents plan to reduce their spending on groceries and other necessities to cover holiday expenses[2]. This prioritization of gifts and holiday experiences despite tighter budgets is a testament to the importance of the holiday season in consumers' lives.
Economic uncertainty from tariffs, supply chain issues, and inflation is leading 69% of consumers to report their shopping habits are impacted. This has resulted in more intentional, value-conscious spending, with gift cards emerging as a key financial tool to manage holiday budgets[2]. Although holiday sales growth is expected to be modest (around +1.2% YoY), consumer confidence remains fragile with budgets tight, leading shoppers to be more selective, wait for promotions, and split shopping between physical and digital channels[4][5].
The growth of mobile commerce is another key trend, expected to account for over 56% of online holiday retail sales, emphasizing convenience and speed in shopping[5]. In the midst of these changes, some forces shaping online retail include pivots in digital strategies and challenges retailers must overcome with reverse logistics.
Despite the economic challenges, consumers are still valuing convenience and rewards that enhance their purchasing power during the holiday season. Nearly a third of respondents will shop at big-box retailers like Walmart and Target this holiday season, while nearly 18% plan to shop with small businesses[1][3]. The impact of AI tools like ChatGPT on holiday spending is mentioned but not further elaborated.
In conclusion, consumers are more financially cautious, more price sensitive, and more willing to finance holiday purchases through BNPL and credit than before. However, they still value convenience and rewards that enhance their purchasing power during the holiday season.
[1] Inmar Intelligence Survey, 2025 [2] Invoice Home Survey, 2025 [3] Unspecified survey, 2025 [4] Deloitte Holiday Retail Forecast, 2025 [5] Adobe Analytics Holiday Shopping Predictions, 2025
- The holiday season is seeing a shift towards debt and buy now, pay later (BNPL) services, reflecting consumers' increasing reliance on these options to manage expenses.
- On the other hand, price sensitivity is strong among consumers, with many refusing to shop with retailers that increase prices.
- To free up funds for holiday spending, consumers are cutting back on essentials like groceries, prioritizing gifts and holiday experiences over immediate needs.
- Economic uncertainty has led to more intentional, value-conscious spending, resulting in gift cards becoming a key financial tool for managing holiday budgets.
- Consumers are more selective with their spending, waiting for promotions, and shopping across both physical and digital channels.
- In contrast to the economic challenges, consumers still value convenience and rewards that amplify their purchasing power during the holiday season, with big-box retailers and small businesses equally popular destinations for this season's shopping.
