The hottest holiday shopping trend? Buy now, pay later

‘Tis the season for eggnog, mistletoe and — increasingly — buy now, pay later programs.

Online shopping financed with buy now, pay later services, which let you pay typically via a multiweek installment plan, hit $940 million this past Cyber Monday. That’s an all-time high, according to Adobe Analytics.

Buy now, pay later, or BNPL for short, really started getting popular during pandemic lockdowns. But more recently, inflation and higher interest rates on credit cards have kept consumers using the services across pretty much anything you can buy online.

“So electronics, apparel, home furniture, but we’re also seeing buy now, pay later being used for grocery orders, and that’s kind of indicative of consumers having to manage the inflation with food costs,” said Adobe’s Vivek Pandya.

BNPL users typically buy more stuff than other shoppers, which is why retailers are fans. Traditional BNPL programs don’t charge interest, which can be especially luring to low-income consumers.

But late fees can make those deals pretty expensive, noted Consumer Reports’ Jennifer Chien, and the BNPL model is evolving.

“Increasingly, many buy now, pay later providers are now also offering longer-term interest-bearing loans,” Chien said.  

Consumers may not know even know what type of BNPL plan they’re in, she added, until they miss a payment.