Afterpay Touts Holiday Success Amid Soaring Credit Card Debt

SAN FRANCISCO, CA – January 15, 2026 – As Americans grapple with record-breaking credit card debt, fintech company Afterpay has released data suggesting its users practiced notable financial discipline during the recent holiday shopping season. The Buy Now, Pay Later (BNPL) provider announced that 96% of its U.S. customers who used its Pay-in-4 service for Black Friday and Cyber Monday 2025 purchases have paid off their balances either early or on time.

This high repayment rate stands in stark contrast to the broader national landscape of consumer credit. According to the Consumer Financial Protection Bureau (CFPB), total credit card balances in the U.S. soared past $1.2 trillion in 2024. The same period saw average credit card APRs climb to a historic high of 25.2%, leading to an estimated $160 billion in interest charges assessed to consumers. Afterpay's announcement positions its interest-free installment model as a timely alternative for shoppers seeking to avoid the pitfalls of revolving debt, particularly during peak spending periods.

A Counter-Narrative to Mounting Debt

Afterpay argues that its platform is engineered to foster responsible spending habits, a direct challenge to the traditional credit card model that profits from carried balances and high interest. The company's core product, a 'Pay-in-4' plan, splits a purchase into four equal, interest-free payments due every two weeks.

"This data is a testament to the discipline and financial responsibility of our customers," said Marni Schapiro, Global Head of Commerce Sales at Block, Afterpay's parent company. "During the holidays—a time when spending pressures are at their highest—our customers demonstrated that they can shop confidently and pay responsibly."

Built-in safeguards are central to this model. New users are typically granted modest spending limits that only increase after a proven history of on-time payments. Crucially, if a customer misses a payment, their account is automatically paused, preventing them from making new purchases and accumulating further debt. This mechanism is a fundamental departure from credit cards, which often allow continued spending even as balances and interest charges grow. The company also employs soft credit checks that do not impact a user's credit score and offers a financial hardship policy for those facing unexpected difficulties.

The result, according to the firm, is that 98% of its Pay-in-4 purchases globally incurred no late fees as of the third quarter of 2025. This figure is particularly noteworthy when compared to broader industry data. Some 2025 studies indicate that between 24% and 41% of general BNPL users have reported making at least one late payment in the past year, suggesting Afterpay's performance may be significantly stronger than the industry average.

The Shifting Sands of Consumer Preference

The data also reinforces a well-documented trend: younger consumers are increasingly turning away from traditional credit. Driven by a desire for financial control and a wariness of high-interest debt, Gen Z and Millennials are embracing BNPL services at a rapid pace. A 2025 J.D. Power survey found that 54% of Gen Z consumers used BNPL during the 2024 holiday season, outpacing their use of credit cards (50%).

The primary drivers behind this shift are transparency and budgeting. The fixed, predictable payment schedule of BNPL loans appeals to consumers who want to avoid the complex fee structures and compounding interest of credit cards. Afterpay's press release noted that 63% of Gen Z have moved away from credit cards, seeking alternatives that offer greater control. This growing user base is also showing deeper engagement, with the average BNPL basket size growing by 10% during the recent holiday shopping period, indicating users are making larger or more frequent purchases through the service.

A Favorable Model in a Shifting Regulatory Climate

The growth of the BNPL industry has not gone unnoticed by regulators. In May 2024, the CFPB issued an interpretive rule classifying BNPL providers as "card issuers" under Regulation Z, which would have subjected them to credit card-like requirements for dispute resolution and fee disclosures. The move signaled a significant step toward stricter oversight, reflecting concerns about potential debt accumulation and a lack of consistent consumer protections.

However, in a surprising reversal throughout 2025, the CFPB announced its intention to revoke that very rule. Citing a strategic shift in enforcement priorities, the agency has signaled a regulatory rollback for the BNPL sector, at least for now. This change provides significant breathing room for companies like Afterpay, whose business models benefit from a regulatory framework distinct from that of traditional credit card issuers. While the long-term regulatory landscape remains fluid, the immediate-term outlook appears favorable for the industry's continued expansion.

The Economics of "Interest-Free"

While consumers enjoy an interest-free experience, Afterpay's revenue is primarily generated from merchants. Retailers pay a transaction fee, typically a fixed amount plus a commission of 4% to 6% on each sale. This rate is higher than standard credit card processing fees, but merchants are willing to pay it in exchange for higher conversion rates, increased average order values, and access to a younger, engaged customer base. Afterpay assumes the risk of consumer default, a proposition that is also attractive to retailers.

This model, which relies on merchant fees and, to a lesser extent, capped late fees, has faced questions about its long-term profitability. Afterpay, acquired by Block, Inc. in 2021, has contributed significantly to its parent company's revenue but has also posted substantial net losses in the past, partly due to bad debts. However, recent analyses suggest the company is moving closer to profitability.

As the financial landscape continues to evolve, the success of Afterpay's holiday season highlights a growing divergence in consumer behavior. With millions of Americans trapped in high-interest credit card cycles, the appeal of a structured, transparent, and interest-free alternative is proving to be a powerful force, reshaping how a new generation thinks about and uses credit.