50% of holiday shoppers plan to use buy now, pay later to cover their expenses, but it can encourage overspending. Here are some alternatives

Although BNPL is advertised as a budgeting tool, it can make overspending easy. PayPal found that 52% of respondents are “more likely” to hit the “buy” button if they can use BNPL.

There’s no denying that BNPL is a convenient way to pay, but misusing it could easily set a shopper’s holiday finances back.

BNPL gifting: Beneficial or destined to backfire?

BNPL is appealing because it’s so simple: just break your purchase down into smaller interest-free payments. There are no credit checks and no waiting to save up, which can make big-ticket gifts feel manageable.

Plus, there’s the instant gratification of getting what you want while still paying it off.

The numbers show more Americans are gravitating to BNPL as a budgeting tool. Capital One noted a rise from 86.5 million to 91.5 million Americans who used BNPL between 2024 and 2025. (2)

Due to this surge in popularity, BNPL has become a business driver in recent years. PayPal notes that enterprises that use BNPL see a 91% bump in their average order value.

But BNPL’s simplicity has a sinister side.

Surveys reveal that a significant number of people who use the BNPL model are struggling to keep track of their payments. For instance, LendingTree data shows 41% of people were late on their payments within the past year. (3) Morgan Stanley also estimated that the average loan for a BNPL user is now $760. (4)

All of these statistics align with what economists now call the “K-shaped economy,” where the bottom 80% of Americans face increasing pressure from rising prices.

To further illustrate this point, LendingTree found that 25% of consumers now use BNPL for groceries. (3) That’s up 14% from 2024.

So, even though spending may seem resilient, it’s increasingly dependent on short-term financing tools to keep it going.

And even with BNPL, many people are struggling to keep up with their payments.

Are there better budgeting strategies than BNPL?

Although BNPL is tempting and increasingly unavoidable, that doesn’t mean it’s the only way to finance holiday purchases. Regardless of the method someone uses, smart spending begins with creating a realistic budget.

Before you browse online or step into a store, decide how much you can comfortably spend on gifts, travel, food and other holiday expenses.

Consider downloading a money management app to track your expenses and stay on track with your goals and limits. Seeing the numbers in black and white can help prevent impulse purchases and provide a clear guide for what’s reasonable.

If you’re looking for a BNPL-like experience, credit cards remain the classic alternative, and they let you earn rewards for your purchases.

Pro tip: Search for the latest holiday promotions for cards to take advantage of deferred interest or higher rewards. You could also use a dedicated credit card for holiday spending to make tracking expenses easier.

Another traditional alternative is a layaway program on sites like Amazon, which lets you secure an item with a small down payment and installments over time.

A big difference between BNPL and layaway is that you don’t receive the item until it is fully paid off (so don’t worry about impulse use while indebted!).

For anyone concerned about safety, using a debit card forces you to only spend what’s available in your bank account. For even greater discipline, you could load a prepaid debit card with your allotted shopping money so once the card is empty, your spending is done.

But don’t feel bad if you still want to use BNPL. Although BNPL is easy to misuse, it’s not inherently bad, and there are strategies that everyone can use to keep payments in check.

For instance, avoid juggling more than one or two BNPL purchases at a time. Overlapping due dates can easily increase confusion and lead to missed payments and fees.