75% of Financially Pressured Consumers Turn to Pay Later Plans

The use of pay later plans has grown as consumers seek more flexible payment options.

The PYMNTS Intelligence eBook “10 Impact Statements: The 2024 Pay Later Report” explored how these installment plans are being used, who benefits from them and the reasons behind their adoption. The findings revealed key trends in consumer payment preferences and offered insights into the future of financial flexibility.

For many consumers, pay later plans are a tool for managing day-to-day expenses. Among those living paycheck to paycheck, 75% have turned to these plans within the past year. This trend is not limited to low-income households. Even consumers earning more than $100,000 annually are turning to installment plans, signaling that these options appeal across all financial levels.

Consumers who face difficulty paying bills were four times more likely to use these plans than those with a more stable financial situation, per the eBook. This suggests pay later options are not only a financial lifeline, but also a preferred choice for many consumers looking to manage their budgets.

While pay later plans are often a necessity for those facing financial hardships, they are also appealing to more financially secure individuals. According to the eBook, 18% of non-paycheck-to-paycheck consumers used these plans primarily for convenience, with 15% also seeking rewards.

The desire for easy, budget-friendly payment options is impacting how consumers approach large and small purchases. Many consumers, regardless of income level, used installment plans to streamline spending and preserve their cash reserves, the eBook found. These plans were seen as an effective way to manage spending without sacrificing immediate needs.

When it comes to using pay later options, timing plays a role in consumer satisfaction. According to the report, 47% of consumers who used general-purpose credit card installment plans learned about them before completing their purchase. Thus, merchants who present pay-later options earlier in the purchase process can increase use.

Buy now, pay later (BNPL) plans, which are typically presented at checkout, received higher satisfaction rates, as 76% of BNPL users reported being very or extremely satisfied with the service.

According to the eBook, more than 60% of consumers preferred to know about these options before they decided what to buy, emphasizing the importance of visibility in driving consumer engagement.

Many consumers expressed the intention to continue using pay later services. The demand for flexible payment solutions across different income groups is expected to rise, making it important for businesses to adjust to changing consumer expectations.

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