The news: Consumers overwhelmingly prefer credit card installments to buy now, pay later (BNPL) fintechs across all generations, financial situations, and income levels, per a PYMNTS Intelligence report.

• 42% of Gen Zers used at least one card-linked installment in January, compared with 15% who used BNPL plans in the same time period.
• 20% of Boomers used card-linked installments, versus 5% for BNPL plans.
• 37% of consumers who do not live paycheck-to-paycheck and have no issues paying bills selected credit card installments, versus 14% who chose BNPL.
• And 33% of those who do live paycheck-to-paycheck and struggle to pay bills picked card-linked installments, compared with 18% for BNPL.

Why this matters: The sweeping preference for card-linked installments demonstrates wide consumer appeal for flexible payments tied to traditional credit sources. 

More than one-third (34.2%) of shoppers who chose credit card installments through a general-purpose card cited managing their debts as a key factor that influenced their payment decision. While 25.2% of shoppers who chose BNPL also cited credit management, card-linked options may have an edge because consumers aren’t opening a new line of credit when they use it.

BNPL providers who have opted out of credit reporting may also be losing consumers who want their repayment history to improve their credit scores so they can qualify for other loans, especially young consumers: 

• Gen Zers place more value on their credit scores than their social media following, per a Credit Sesame survey conducted by OnePoll. 
• Among Gen Z consumers, 43.7% cited credit management (which includes managing credit scores) as a reason for using card-linked installments, per PYMNTs.

Where BNPL connects: While consumers overwhelmingly prefer card-linked installments, BNPL platforms are winning consumers who don’t currently have access to credit: 43.4% of BNPL users cited approval speed and ease as a driving factor using the payment method. 

This indicates that low payment friction is key for BNPL adoption, meaning merchant and POS tie-ups, digital wallet integrations, and BNPL-enabled cards are critical tools to stealing share away from credit cards.

Implications for installment providers: Issuers offering card-linked installment plans should highlight the credit-score-building opportunities for cardholders trying to build a strong credit history to achieve financial goals like mortgages and car loans. 

BNPL platforms, meanwhile, should make their products as easily accessible at checkout as possible to attract consumers who don’t have a credit card—and so that it’s easier to apply for a BNPL loan than to pull out a wallet to enter card information.