Buy Now Pay Later Loans Surge Ahead of 2025 Holiday Season

Buy Now Pay Later loans rise ahead of holiday 2025

As holiday shopping 2025 begins, more American shoppers are turning to Buy Now, Pay Later loans to manage their budgets and take strain off wallets. In a recent study completed by Talker Research and made available exclusively to USA TODAY, the conclusion was that 60% of survey participants were feeling greater financial stress entering the holiday season — and flexible payment is an option that's picking up steam.

According to the study, close to 80% of customers who have used or attempted to use Buy Now, Pay Later loans are likely to employ them for holiday shopping this year, showing that once a niche service has now entered the financial mainstream.

"Buy Now, Pay Later has emerged as a well-known, trusted option for shoppers looking to maintain their budgets while still having the ability to enjoy the holidays," said Michelle Gill, PayPal General Manager of Small Business and Financial Services.

What Are Buy Now, Pay Later Loans?

Buy Now, Pay Later loans (BNPL) allow consumers to purchase now and pay later by splitting payments into instalments — sometimes without paying an interest rate or undergoing credit assessment. The schemes are integrated onto checkout pages on top e-commerce sites, with providers such as Affirm, Klarna, Afterpay, and PayPal offering convenient access to split payments.

Depending on the retailer, consumers can choose shorter-term installment loans or longer payback periods, often avoiding typical credit card APR rates. However, while experts advise consumers to be careful to manage multiple outstanding BNPL loans without negatively impacting financial health and credit ratings when major bureaus begin including them in their calculations.

Younger Shoppers Driving BNPL Growth

The findings of the survey are in line with broader industry trends that point towards younger generations being the driving force behind the Buy Now, Pay Later boom. Bank of America says it estimates around 10% of Millennial and Gen Z consumers are using BNPL products.

"Convenience for some, and a lifeline when budgets are very tight, for others," said David Tinsley, Senior Economist at Bank of America Institute.

The attraction is simple: easy availability, interest-free propositions, and flexibility. For the majority of young professionals and small business proprietors, BNPL enables them to acquire essential technology and home items without feeling the bite of up-front costs.

True Stories Behind the Trend

Take the case of Thane Armbruster of Missouri, who uses BNPL services in both personal and professional transactions. "I paid off a few Buy Now, Pay Later loans on laptops and furniture at 0% interest," he said. "It allowed me to buy good equipment without damaging my savings."

For customers such as Armbruster, the Buy Now, Pay Later loan model is a cheap compromise between desire and financial ability, especially in a world where inflation continues to squeeze family budgets.

 PayPal's New Holiday Promotions

To meet increasing demand, PayPal is widening its BNPL schemes. Its "Pay in 4" plan divides payments into four fortnightly instalments with no interest, whereas the "Pay Monthly" facility pays for shopping of up to $10,000, repayable over 3–24 months with interest.

For the holiday season of 2025, PayPal has launched two special offers:

·         5% cashback on BNPL transactions from October 6 to December 31.

·         Expanded in-store BNPL functionality, allowing customers to access PayPal Monthly from within the PayPal app.

These offers reflect PayPal's attempt to take on competition from players like Klarna and Affirm, both of which offer app-based in-store payment convenience.

A Growing Part of Holiday Shopping

While inflation concerns persist and shoppers seek ways to make their budgets stretch further, Buy Now, Pay Later loans will be in the limelight when holiday shopping takes place in 2025. With 80% of shoppers ready to use BNPL, the service is expected to rival credit cards as the most accepted form of payment during the busy shopping period.

Regardless of whether it's to fund income flow, earn a reward, or simply make the holidays brighter without conceding money sanity, Buy Now, Pay Later loans are poised to be one of the biggest retail trends this season.