NEW YORK—Traditional credit cards are losing ground in the competition for consumer spending power, a new report indicates.
While general-purpose cards remain central to American credit use, their role in installment payments is expanding at a fraction of the pace seen in private-label store cards — a shift led by younger shoppers drawn to predictable, interest-free repayment options, PYMNTS said.
According to PYMNTS Intelligence, private-label installment plans offered by retailers for big-ticket items have grown at a 4.8% compound annual rate over the past two years, compared with just 0.8% growth for installment use on traditional credit cards.
Though private-label cards still occupy a smaller slice of the overall credit market, the acceleration is notable, PYMNTS emphasized. Store-branded installments are gaining traction not only with middle-income households but also with Gen Z, whose adoption surged nearly 20% between 2023 and 2025. Millennials showed only modest gains, while Gen X usage slipped slightly.
Why Store Installments Appeal
Retail-branded credit has a simple pitch: easier approval, loyalty perks, promotional financing, and the ability to spread payments on furniture, electronics, and other big purchases — all without the burden of compounding interest. That predictability resonates most with younger generations, but the appeal is spreading to families and even older consumers who are rediscovering the value of fixed-payment plans, PYMNTS said, sharing the following points:
- Stalled growth for general-purpose cards: 47.8 million Americans used them for installments as of May 2025, up just 0.8% from 47.2 million in 2023
- Momentum for store cards: 30.3 million consumers used private-label installments in May 2025, up from 27.9 million in 2023
- Gen Z leads the way: Their usage rose nearly 20% in two years, outpacing all other age groups
Younger consumers’ comfort with structured repayment is reshaping expectations, blurring the line between credit cards and buy now, pay later options. The slow adoption rate for installment use on general-purpose cards suggests that banks and networks will need more than cashback rewards to keep pace with retailers’ tailored offers, PYMNTS said.
“For banks and card issuers, the message is as straightforward as it is challenging: private label installments may be growing 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,” PYMNTS concluded.