With the holiday shopping season officially beginning this month, consumers will have a variety of financing options to choose from. According to NerdWallet’s 2026 Holiday Spending Report, nearly three-quarters of holiday shoppers said they plan to use a credit card for holiday-related expenses this year, while 38% plan to use Buy Now, Pay Later (BNPL) services.
With third-party BNPL services growing in popularity and traditional credit card usage hitting record highs nationwide, Arvest Bank is highlighting important financing factors shoppers should consider when choosing how to finance their holiday purchases.
Whether you're using a Buy Now, Pay Later service or a traditional credit card, it's important to treat every transaction like a loan. Both options carry unique risks that could quickly overwhelm a holiday budget if not managed carefully. Whatever option you choose, it's always good to have a repayment plan and use them responsibly.
Arvest offers these tips to help shoppers better manage their financing options this holiday season.
Watch Out for Balance Build-Up
With BNPL, payments are split into small chunks, and opening multiple plans at once can suddenly turn monthly installment plans of $100 into $400 a month for three months. A recent Motley Fool study showed that more than 25% of Americans regret using BNPL after discovering the full extent of their debt. Similarly, constantly tapping a credit card without tracking the cumulative total can lead to a surprising high balance and minimum payment shock when the January statement arrives.
Understand BNPL Late Fees vs. Credit Card Interest Rates
While BNPL services often advertise 0% interest, that promotion usually hinges on perfection. Missing a single payment, even by one day, can trigger high-cost penalties. For credit cards, the average interest rate is over 21%. If you rely on a credit card and don't pay the balance in full each month, compounding interest can quickly make your holiday gifts significantly more expensive than their original price tags. The Federal Reserve Bank of New York reported credit card balances hit an all-time high of $1.28 trillion in the fourth quarter of last year.
Factor in Purchase Protections
Traditional credit cards generally offer protections on purchases and fraud liability that third-party BNPL services often lack. If a BNPL-financed item arrives damaged or needs to be returned, shoppers may still be on the hook to keep making payments while they work with the merchant for a refund.
Consider All Your Borrowing Options
While credit cards allow consumers to earn rewards on spending they are already doing, they require strict balance management to avoid interest. For larger holiday purchases that need to be paid off over time, a personal loan may be a safer alternative to both revolving credit card debt and stacked BNPL plans. Personal loans offer a fixed rate, a clear payoff date, and every on-time payment helps build credit history.
