At stores and online checkouts worldwide, a quiet revolution is underway. Consumers are increasingly favouring fixed-payment instalment plans — often tied to store-branded credit programmes — for larger purchases. This trend bucks decades-long dominance of general-purpose credit cards, especially among younger shoppers. Recent data show private-label store card instalments have been expanding at about 4.8% per year, compared with just 0.8% annual growth in instalments on conventional credit cards. In short, even though store cards still make up a smaller slice of the credit market, their faster growth signals a significant shift in spending habits.

Store-brand instalments outpace credit cards

In the US, PYMNTS Intelligence finds that only 47.8 million consumers used traditional credit cards to finance purchases on instalment plans through mid-2025 — growth of just 0.8% year on year — whereas 30.3 million used store-branded cards for instalments, up 4.8% annually. Middle-income households and Gen Z shoppers are driving this gap. Younger consumers boosted their use of private-label instalments by nearly 20% over the past two years (versus only about 0.8% growth among millennials and a slight decline among Gen X). Store-brand cards often come with easy approvals, loyalty rewards and 0% introductory financing on big-ticket items, making them more attractive to cost-conscious buyers than high-rate revolving credit. In essence, more shoppers now treat store instalments as a mainstream way to spread payments – a preference long catered to by “store cards” but now embraced by even middle-income and young demographics.

Younger consumers lead the shift

The generational divide is evident around the world. Globally, Gen Z and younger millennials are up to three times as likely as older cohorts to use alternative payments (contactless, apps, Buy Now Pay Later, etc.). In practice, EY finds 69% of Gen Z report using debit cards regularly, but only 39% use credit cards frequently (versus 51% of older consumers). Many young adults have lived through financial crises and are pragmatic about debt: they prefer the predictability of equal instalments and avoid the uncertainty of compounding interest. Survey data bear this out: for example, around 39% of Australian Gen Zers use BNPL plans, far above the 18% of US Gen Zers or 16% in the UK. In short, younger consumers value simplicity and control – they see instalment plans and BNPL as lower-risk, budget-friendly alternatives to traditional cards.

Global payment preferences vary

Payment habits differ sharply by region. In Asia and other mobile-first markets, digital wallets dominate: over 90% of people in Malaysia, Singapore and Hong Kong routinely use mobile wallets. whereas the US remains more credit-card-driven (roughly 90% of US households use debit and 79% use credit cards). Buy-Now-Pay-Later schemes have made notable inroads: about 27% of US households now use a BNPL service (roughly double the share two years ago), and some 28% of Australians do likewise. However, BNPL remains niche in other places (single digits in Hong Kong/Singapore). Overall, the charts above illustrate that while payment landscapes are diverse, one consistent theme is that younger, digitally savvy shoppers are quickly adopting instalment and BNPL options across all markets. In almost every country, these modern credit forms are eating into the share of traditional cards – for example, among US households using both BNPL and cards, the share of spending on credit cards fell from about 70% to 58% in just two years.

Risks and regulatory concerns

Financial regulators are taking note of the instalment craze and its risks. Store instalment plans often come bundled with deferred-interest or promotional terms that can backfire if a consumer misses payments. In fact, US regulators report that retail store cards typically carry much higher costs: around 90% of store cards have APRs above 30% (versus only 38% of general-purpose cards). Store-card holders are also more likely to carry balances and make only minimum payments, and the industry charge-off rate on private-label cards is roughly double that of ordinary cards. In practice, shoppers who take a “0% instalment” offer but then default can incur massive retroactive interest.

BNPL isn’t risk-free either. A recent CFPB study found many BNPL users already carry heavy credit card debt: average card utilisation rates among BNPL borrowers are a striking 60–66% (median 70%), compared to only ~34% for non-BNPL users. In other words, a large fraction of BNPL customers are maxing out their existing cards even as they take on new loans. Policymakers have begun tightening oversight: for instance, the UK introduced stricter BNPL disclosure rules, and in the US a proposed bill would cap all credit card APRs at 10%, which could dramatically affect store financing. The bottom line is that the shift toward instalments, while consumer-friendly in design, may amplify household debt and require more diligent underwriting and education.

Retailers, banks and the way ahead

Merchants and financial firms are scrambling to adapt. Retailers are doubling down on instalment offers — many have beefed up in‑house credit programmes or partnered with fintechs to offer branded “buy now pay later” checkouts. Card issuers, in turn, are borrowing BNPL’s playbook: most major banks now offer their own 3- or 4‑month installment options on credit cards, often at 0% interest, to stem customer migration. Even tech platforms see opportunity: Apple, PayPal and Amazon have launched credit/financing plans to capture share from pure-card networks.

Co-branded retail credit programmes are being refreshed too. Traditionally, a win-win for retailers and banks, these card partnerships now account for only about 10% of total credit card spending. With that growth stalling (private-label card spending rose just ~3.4% a year from 2000 to 2016), issuers are rethinking the model. Many now emphasise omnichannel loyalty perks and seamless digital experiences around instalments, aiming to keep cardholders engaged.

Looking ahead, incumbents face a steep challenge: they must marry the ease and rewards of modern pay-by-instalment schemes with sustainable risk management. As one industry observer notes, private-label instalments may start from a smaller base, but they are “capturing the loyalty — and the spending share — of the very consumers who will define the next generation of credit”. The clear takeaway is that the credit landscape is evolving: players who adapt to demand for flexibility, transparency and control will be best placed when the next wave of spending arrives.