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Consumers’ concerns about incurring credit card debt this holiday season is pushing many shoppers to consider buy now, pay later loans as a budget-management option, according to a report from the payments firm Klarna AB.
Some 53% of respondents expressed concern about incurring credit card debt during the holiday season. Among Gen Xers and Gen Zers that percentage rose to 58%. In addition, 47% of respondents believe they will be unable to pay their holiday credit card bills in full.
As a result of consumers’ concerns about credit card debt, 81% of all respondents and 89% of Gen Zers said they find the BNPL option—splitting a purchase into four equal payments that do not incur interest or an additional fee—appealing. Klarna surveyed more than 15,000 consumers across 15 markets, including more than 1,000 in the United States.
“Over half of U.S. consumers are wary about credit card debt this season, with nearly 1 in 2 doubting their ability to pay off their holiday credit card bills entirely,” Kristina Elkhazin, head of North America for Klarna, says in a statement. “Given this backdrop, it’s no surprise that 81% of shoppers find interest-free payment options like BNPL appealing as they also lean into budget-smart choices, harnessing tech-savvy tools like AI to nab the best deals, and shopping sales events like Black Friday to save money on big purchases.”
Despite their growing reluctance to take on credit card debt, U.S. consumers are planning to budget more for gifts compared to consumers in other countries. U.S. shoppers are planning to budget an average of $740 for gifts this holiday season, compared to $560 for consumers in the United Kingdom, $371 for consumers in Germany, and $396 for consumers in France.
Millennials are planning to budget the most this holiday season ($1,169), while Gen Zers have the smallest budget at $462. Gen X shoppers and Baby Boomers have set aside budgets of $575 and $525, respectively, the report says.
One reason U.S. consumers may be planning to spend more than consumers in other countries is that 61% of U.S. respondents say inflation has altered their holiday shopping approach. That sentiment is especially strong among Gen Xers (67%), Gen Zers (63%), and Baby Boomers (63%), while some 56% of Millennials note inflation as a concern.
In related news, BNPL provider Sezzle has partnered with Sportsman’s Warehouse to make its BNPL offering available at the outdoor sporting-goods retailer’s 144 stores and online.
Making a BNPL payment option available to Sportsman’s Warehouse customers will help holiday shoppers budget better for their gift purchases and build up their credit scores, as Sezzle payments are reported to the credit bureaus, Sezzle says.
“We are excited to join forces with Sportsman’s Warehouse, a respected name in specialty outdoor retail, to introduce our flexible financing solution to their loyal customer base,” Sezzle president and cofounder, Paul Paradis, says in a statement. “This partnership reflects our dedication to delivering accessibility and convenience to shoppers while emphasizing budget-friendly spending and a responsible way to pay.”
