Holiday Shopping: Record Highs with Buy Now, Pay Later Services

U.S. shoppers are projected to spend a record $18.5 billion using buy now, pay later services for holiday purchases, marking an 11.4% increase from last year. This rise surpasses the overall expected holiday spending increase of 8.4%. The trend may lead to higher debt, warns Consumer Reports.

U.S. shoppers are on track to spend a record $18.5 billion on holiday purchases using third-party buy now, pay later services in the year's final quarter, data firm Adobe Analytics revealed on Wednesday.

With many Americans currently facing increased debt, spending on buy now, pay later services is projected to jump by 11.4% over last year's holiday season, according to Adobe. These services, which allow consumers to pay for items in installments over several months, offer expanded purchasing power.

The surge in buy now, pay later spending outpaces the 8.4% rise in overall holiday spending, which Adobe predicts could reach $240.8 billion. Companies like Klarna, Afterpay, and Affirm are expected to gain market share over traditional debit cards and other payment methods, particularly for electronics and beauty products. However, using credit cards to cover buy now, pay later payments could increase consumer debt, warns Delicia Hand of Consumer Reports.

(With inputs from agencies.)