More buy now, pay later, but not an alarming amount

Summary

• Lower-income households have shown larger adoption of buy now, pay later (BNPL) services.
• BNPL usage typically increases during the holiday season, but the increase this year is smaller than last year's.
• There is a gradual increase in households with BNPL repayments exceeding $500, particularly among higher-income cohorts.
• Heavy BNPL users tend to have higher credit card utilization rates.
• Bank of America Institute data indicates that BNPL usage is not currently at an alarming level.
• The report uses aggregated and anonymized transaction data from US Retail, Preferred, Small Business, and Wealth Management clients.
• Household income terciles are determined by quantitative estimates, with each tercile representing one-third of households.
• Data excludes corporate cards and includes only consumer cardholders making a minimum of five transactions per month.
• Store categories are classified as more discretionary, partly discretionary, or mostly necessity based on specific merchant types.
• Holiday spending is defined as items where November-December spending usually accounts for at least 20% of total annual spending.