Holiday Shopping Spree Drives Surge in Installment Payments

A record number of consumers, 202.9 million, shopped during the five-day period from Thanksgiving through Cyber Monday this week, according to a survey from the National Retail Federation and Prosper Insights & Analytics.

The number of Thanksgiving shoppers is up from 197 million in 2024 and 200.4 million in 2023.

“This year’s record turnout reflects a highly engaged consumer who is focused on value, responds to compelling promotions, and seizes upon the opportunity to make the winter holidays special and meaningful,” said Matthew Shay, President and Chief Executive Officer at the National Retail Federation.

Consumers shopped in person at stores and others hopped online during the long holiday weekend. A total of 129.5 million Americans shopped in stores up 3% from last year, and 134.9 million Americans shopped online, an increase of 9% from 2024. 

Installment shopping proved to be popular on Black Friday.  According to a Black Friday survey, 58% of stressed customers, those living paycheck to paycheck, used credit card installments for their Black Friday shopping. 

Overall 31% of all Black Friday shoppers paid with credit card installments. Consumers like the structure and convenience of paying by installments on their credit cards.

“Mechanically, card-based installment plans convert eligible credit card purchases into fixed monthly payments, typically at a set rate for a specific term,” according to the PYMNTS survey. “That structure reduces uncertainty and creates a buffer against shocks to monthly cash flow.” 

With so much consumer interest in installment plans, banks would be wise to make credit card installment plans as appealing as possible to credit card shoppers.

Credit card installments are growing increasingly popular with 31% of Black Friday shoppers using them.

“For banks, this shift presents a clear opportunity to redesign installment products around flexibility and budgeting features. Because installment plans are already embedded into credit card rails, issuers can enhance them with clearer terms, easier activation, real-time budgeting insights and integration with rewards strategies,” the PYMNTS survey advises. 

Both banks and consumers would benefit from more credit card installment options going forward.

“Consumer benefits would include predictable payments, improved ability to manage monthly outflows and better tools to handle liquidity shocks without resorting to revolving balances,” according to the survey.

The survey continued, “for banks, the advantages include deeper engagement, higher on-card spending and stronger loyalty at a time when consumers are actively evaluating value across payment tools.”

According to data from Adobe Analytics, consumers spent $44.2 billion in online shopping from Thanksgiving through Cyber Monday spending $14.25 billion on Cyber Monday alone.  

Buy now, pay later was a popular payment method for Americans on Cyber Monday, resulting in $1.03 billion in online sales, an increase of 4.2% year over year, according to the Adobe survey. American consumers are increasingly shopping with their phones and tablets with most BNPL purchases, 79.4%, taking place on mobile devices.

Those shopping with BNPL said they are likely to buy electronics, apparel, toys, and furniture, according to Adobe.

BNPL is a form of credit that consumers without credit cards can easily access, and about 21% of consumers are using BNPL when shopping, according to an NPR interview.

Attorneys general in seven states are investigating the lending practices of BNPL companies such as Klarna and Affirm, The Wall Street Journal reports.  Other BNPL companies also under investigation include PayPal, Zip, Sezzle, and Afterpay.

The attorneys general are looking to determine whether the BNPL companies are complying with consumer protection laws. They will do this by examining pricing and repayment structures of BNPL companies as well as agreements, consumer contracts, and disclosures, according to The Wall Street Journal.

The number of Americans shopping from Thanksgiving through Cyber Monday hit a new high. Installment shopping on Black Friday was popular with shoppers living paycheck to paycheck.

Online spending on Cyber Monday was significant totaling $14.25 billion, and BNPL sales on Cyber Monday reached $1.03 billion even as seven state attorneys general announced they were investigating the lending practices of BNPL companies.