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As Congress works to avoid a government shutdown, the Senate may soon consider a bill that would increase Social Security benefits for certain pensioners.
The bill could be altered if amendments are successful or it could head to a final vote unchanged.
Here’s what experts say they expect to happen next.

Richard Stephen | Istock | Getty Images

As Congress scrambles to avoid a government shutdown, the Senate is also poised to consider another bill that would increase Social Security benefits for some public workers.
But the bill, the Social Security Fairness Act, may undergo changes if some Senators’ efforts to add amendments are successful.

Per the original proposal, the Social Security Fairness Act calls for eliminating Social Security provisions known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO, that have been in place for decades.
The WEP reduces Social Security benefits for individuals who receive pension or disability benefits from employment where they did not pay Social Security payroll taxes. The GPO reduces Social Security for spouses, widows and widowers who also receive their own government pension income. Together, the provisions affect an estimated 3 million individuals.
The bill has enthusiastic support from organizations representing teachers, firefighters, police and other government workers who are affected by the benefit reductions.

“You shouldn’t penalize people for income outside of a system when you’ve paid into it and earn that benefit,” said John Hatton, vice president of policy and programs at the National Active and Retired Federal Employees Association. “It’s been 40 years trying to get this repealed.”
The bill has received overwhelming bipartisan support. The Social Security Fairness Act was passed by the House with a 327 majority in November.

Preliminary Senate votes this week have also shown a strong bipartisan support for moving the proposal forward. On Wednesday, the chamber voted with a 73 majority on a cloture for the motion to proceed. That was followed by a Thursday vote on a motion to proceed that also drew a 73-vote majority.
Experts say the Senate may soon hold a final vote. It could proceed in one of two ways — with amendments that alter the terms of the original bill or with a final vote without any changes.

Amendments may include raising the retirement age

The Social Security Fairness Act would cost an estimated $196 billion over 10 years, according to the Congressional Budget Office.
Those additional costs come as the trust funds Social Security relies on to help pay benefits already face looming depletion dates. Social Security’s trustees have projected the program’s trust fund used to pay retirement benefits may be depleted in nine years, when just 79% of benefits may be payable.
Some senators who oppose the Social Security Fairness Act have expressed concerns about the pressures the additional costs would put on the program.
Sen. Rand Paul, R-Kentucky, who this week voted against moving the current version of the bill forward in the Senate, said this week he plans to propose an amendment to offset those costs by gradually raising the retirement age to 70 while also adjusting for life expectancy. Social Security’s full retirement age — when beneficiaries receive 100% of the benefits they’ve earned — is currently age 67 for individuals born in 1960 or later.
“It is absurd to entertain a proposal that would make Social Security both less fair and financially weaker,” Paul said in a statement. “To undo the damage made by this legislation, my amendment to gradually raise the retirement age to reflect current life expectancies will strengthen Social Security by providing almost $400 billion in savings.”
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As of Friday morning, a total of six amendments to the bill had been introduced, according to Emerson Sprick, associate director of economic policy at the Bipartisan Policy Center.
Some amendments call for replacing the full repeal of the WEP and GPO provisions with other changes.
One amendment from Sens. Ted Cruz, R-Texas, and Joe Manchin, I-West Virginia, would instead put in place a more proportional formula to calculate benefits for affected individuals. That change, inspired by Texas Republican Rep. Jodey Arrington’s Equal Treatment of Public Servants Act, has a lot of support from policy experts and the Bipartisan Policy Center, Sprick said.
Social Security advocacy groups have pushed for larger comprehensive Social Security reform that would use tax increases to pay for making benefits more generous.
“We want to help in making this happen, but our preference was for it to be part of a much larger Social Security reform,” said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.
To be sure, if amendments are successfully added to the bill, it would have to go back to the House.
“We’re hoping that that doesn’t come to that, because that could complicate matters, depending on the timing of what’s going on with the [continuing resolution]” to avoid a government shutdown, Adcock said.

Senate may proceed to final vote on original bill

Much of what happens next rests on Senate Majority Leader Chuck Schumer, D-New York, who could decide unilaterally not to allow amendments to be considered, according to Sprick.
Alternatively, Schumer could decide to allow for amendments in exchange for limiting the length of time spent on consideration of the bill, he said.

However, Sprick said he doubts Schumer will allow amendments at this point.
“The most likely scenario at this point is that Senator Schumer just runs out the clock, doesn’t allow consideration of any amendments, and they take a final vote either very late tonight or early tomorrow,” Sprick said.
While opponents of the bill may delay a vote, they won’t be able to stop a vote, Hatton said. Moreover, there’s reason to believe the leaders who have voted to advance the bill this week will also vote for it if and when it is put up for a final vote, he said.
“I’m still optimistic that this passes, and it’s more just a matter of when, not if,” Hatton said. More

Saving $1 million for retirement is often considered the gold standard and, for the first time, a larger share of younger retirement savers are reaching that key savings threshold.
The number of millennials with more than $1 million in their 401(k)s has jumped 400% from one year ago, according to Fidelity.
Positive market conditions helped boost account balances to new highs in 2024.

A few years ago, Wes Bellamy, 38, took stock of his investment accounts in preparation to buy a home in Charlottesville, Virginia. It was then that he noticed significant gains in his 401(k).
Although Bellamy, who is the chair of the political science department at Virginia State University, had been saving diligently for nearly a decade and making the most of his employer’s matching program, he said seeing his retirement account balance was “a pleasant surprise and a nice nest egg.”

Since then, his 401(k) balance has continued to grow. “I’m at $980,000 — I’m not at a million yet but I’m close.”

More millennials are 401(k) millionaires

Saving $1 million for retirement used to be considered the gold standard, although these days financial advisors may recommend putting away even more.
Millennial workers are still the most common generation to say they’ll need at least $1 million to retire comfortably, according to a recent report by Bankrate, and, for the first time, a larger share of younger retirement savers are reaching that key savings threshold.
The number of millennials with seven-figure balances has jumped 400% from one year ago, according to the data from Fidelity Investments prepared for CNBC.
Among this group, the number of 401(k) accounts with a balance of $1 million or more rose to about 10,000 as of Sept. 30, up from around 2,000 in the third quarter of 2023, according to Fidelity, the nation’s largest provider of 401(k) plans. The financial services firm handles more than 49 million retirement accounts altogether.

Generally, reaching 401(k) millionaire status only comes after decades of consistent contributions, making it a harder milestone for younger workers to achieve.
This year, positive market conditions helped boost those account balances to new highs. The Nasdaq is up 29% year to date, as of Dec. 19, while the S&P 500 notched a 23% gain and the Dow Jones Industrial Average rose more than 12%.
“Even shorter-term savers have done well because of significant market gains,” said Mike Shamrell, Fidelity’s vice president of thought leadership.  
“If we continue to see positive market conditions, we could see not only the overall number of millionaires overall bump up over that threshold but also more millennials,” Shamrell said.
Whether savers benefit more from long-term savings efforts or a favorable investment environment, “the reality is, it’s a blend of both,” financial advisor Jordan Awoye, managing partner of Awoye Capital in New York, said.
Further, millennials — the oldest of whom will be 44 in 2025 — are nearing their peak earning years, he said, “which is making it more enticing to save for retirement.”
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Still, reaching the million-dollar mark “is not everything,” Awoye said.
Heading into a year of potential volatility, those balances will fluctuate, perhaps even dramatically. However, there is still plenty of time before millennial savers will need to access those funds in retirement. “You are likely not touching that money for 20 years. Even if [the market] goes up and down, stick to the script,” Awoye said.
“When you are retirement planning, you have to remember to tie it back to your North Star, which is your goal.”

How to become a 401(k) millionaire

Certified financial planner Chelsea Ransom-Cooper, chief financial planning officer of Zenith Wealth Partners in New Jersey, works with mostly millennial clients. She says she often encourages them to contribute more than what’s necessary to get the full employer match — even up to the maximum annual contribution limits for a 401(k) or IRA.
In 2023, only 14% of employees deferred the maximum annual amount into 401(k) plans, according to Vanguard’s 2024 How America Saves report. But that’s a missed opportunity, Ransom-Cooper said.
In 2025, employees can defer $23,500 into workplace plans, up from $23,000 in 2024. (The IRA contribution limit is $7,000 for 2025, unchanged from 2024.)
At the same time, employer contributions are climbing. Together, the average 401(k) savings rate, including employee deferrals and company contributions, rose to 12.7% in 2023, up from 12.1% the year before, according to the Plan Sponsor Council of America’s annual survey of 401(k) plans.
That’s made a big difference, Ransom-Cooper said. “There’s more money that can go into these accounts outside of the employee contribution, that can be really helpful to push these accounts higher and help people reach their retirement goals.”

While there is always the chance that a market downturn will take a toll on these balances in the year to come, the markets are up more than they are down, Ransom-Cooper said. “They can weather those tougher days in the shorter term.”
“Staying the course and keeping that longer term vision is really helpful,” she said.
Bellamy says his goal is to retire in another 20 years, before reaching 60. “Then, I’ll have another 15, 20 years to live my life freely as I want to.”
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In 2023, the average 401(k) savings rate, including employee deferrals and company contributions, was 12.7%, up from 12.1% in 2022, according to the Plan Sponsor Council of America.
While Vanguard recommends a combined savings rate of 12% to 15%, Fidelity Investments says investors should aim for 15%.
If you can’t reach those percentages, you should defer at least enough to get your employer’s full matching contribution, experts say.

Drs Producoes | E+ | Getty Images

The average 401(k) savings rate, including employee deferrals and company contributions, continued to climb in 2023, a new industry survey reported.
In 2023, the average combined savings rate was 12.7%, up from 12.1% in 2022, with employees deferring 7.8% of pay and companies adding 4.9%, according to the Plan Sponsor Council of America’s yearly survey of more than 700 company 401(k) and profit-sharing plans.  

“The deferral rate has been trending up over time,” with dips during economic downturns, said Hattie Greenan, director of research and communications for the Plan Sponsor Council of America.  
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Meanwhile, Vanguard reported the average combined savings rate was an estimated 11.7% in 2023, which matched the figures from 2022, according to the company’s yearly analysis of more than 1,500 qualified plans and nearly 5 million participants.
Fidelity Investments, which reports retirement savings rates quarterly, estimated the combined savings rate was 14.1%, as of Sept. 30, 2024, based on an analysis of 26,000 corporate retirement plans.

How much to save in your 401(k)

Vanguard recommends saving 12% to 15% of your earnings every year, including employer contributions, to meet your retirement needs. The combined savings benchmark for Fidelity is 15%.  

Typically, companies match employee deferrals up to a specified limit — and you should aim to contribute at least enough to get the full match, said Greenan from the Plan Sponsor Council of America.
“That’s really going to add up over time,” she said. 
More than 80% of plans included a matching contribution in 2023, according to the Plan Sponsor Council of America report.
After hitting the match, some experts suggest boosting your deferrals every year, but “you’re going to see growth from whatever you can afford to contribute,” Greenan said.

Starting in 2025, the 401(k) maximum employee deferral will jump to $23,500, up from $23,000 in 2024. The 401(k) catch-up contribution will remain $7,500 for workers 50 and older, but increases to $11,250 for investors aged 60 to 63. 
If you’re planning to save more in 2025, right now is “an important time of the year” to boost deferrals, said certified financial planner and enrolled agent Catherine Valega, founder of Boston-area Green Bee Advisory. 
Typically, it takes a few paychecks until your 401(k) deferral updates go into effect, so it’s better to make changes in December to be ready for January, she said. 
Only 14% of employees maxed out 401(k) plans in 2023, according to Vanguard’s annual report. On top of maxed-out contributions, an estimated 15% of workers made catch-up contributions in plans with the feature, the same report found.

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The Biden administration announced on Friday that it would forgive another $4.28 billion in student loan debt for 54,900 borrowers who work in public service.
The relief is a result of fixes the U.S. Department of Education made to the once-troubled Public Service Loan Forgiveness Program.

U.S. President Joe Biden delivers remarks on the economy at the Brookings Institution in Washington, DC, U.S. December 10, 2024. 
Kevin Lamarque | Reuters

The Biden administration announced on Friday that it would forgive another $4.28 billion in student loan debt for 54,900 borrowers who work in public service.
The relief is a result of fixes the U.S. Department of Education made to the once-troubled Public Service Loan Forgiveness Program.

The debt relief comes in President Joe Biden’s final weeks in office.
Biden has forgiven more student debt than any other president. He has cleared nearly $180 billion for 4.9 million people with student debt.
Still, Republican-led legal challenges have stymied all of Biden’s attempts at delivering wide-scale relief.
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A “faulty” transfer of student loan accounts from Nelnet to Mohela in 2023 led to “millions of consumer credit reporting errors,” lawmakers say in a new letter to government agencies reviewed by CNBC.
The change in loan servicers caused nearly 2 million duplicate student loan records to appear on borrowers’ credit reports, and hundreds of thousands of borrowers’ credit scores being reported incorrectly for up to a year and a half, according to the letter, which Sen. Elizabeth Warren, D-Mass., Ron Wyden, D-Oregon, and other lawmakers sent on Wednesday evening.

Chair Elizabeth Warren, D-Mass., conducts the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth hearing titled Promoting Competition, Growth, and Privacy Protection in the Technology Sector, in Dirksen Building on Tuesday, December 7, 2021.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

A “faulty” transfer of student loan accounts from Nelnet to Mohela in 2023 led to “millions of consumer credit reporting errors,” lawmakers say in a new letter to government agencies reviewed by CNBC.
The change in loan servicers caused nearly 2 million duplicate student loan records to appear on borrowers’ credit reports, while hundreds of thousands of borrowers’ credit scores were reported incorrectly for up to a year and a half, according to the letter. Sen. Elizabeth Warren, D-Mass., Ron Wyden, D-Oregon, and other lawmakers sent the letter on Wednesday evening to Consumer Financial Protection Bureau Director Rohit Chopra and U.S. Department of Education Secretary Miguel Cardona.

As part of their investigation, the lawmakers sent inquiries to Nelnet, Mohela and three credit reporting companies: Equifax, Experian and Transunion. They asked the companies about what had gone wrong and how many borrowers were impacted.
In their letter, the lawmakers urged the government agencies to investigate the problems.
“We respectfully request that the CFPB and ED use their supervisory and enforcement authority to ensure that the appropriate parties are held accountable for these errors,” the lawmakers wrote.
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Mohela appears to have failed to inform the credit reporting companies of each loan transfer from Nelnet, the lawmakers said they found in their investigation. As a result, many borrowers had their single loan balance reported twice, once by each servicer.

Duplicate student loan balances on a borrowers’ credit report can reduce their credit scores and make it more difficult for them to obtain mortgages, car loans and other credit, the lawmakers note in the letter.
Nelnet spokesperson Ben Kiser said the issues “arose out of an ED-directed change in servicing requirements,” which “are entirely outside servicers’ control.”
Mohela did not immediately respond to a request for comment.

The credit reporting companies identified “over 100,000 cases” in which the reporting errors led borrowers to have an incorrect credit score, according to the lawmakers’ investigation. Thousands of borrowers had their credit scores drop by more than 20 points, they said.
They added that borrowers submitted around 7,500 complaints and disputes to Mohela and the credit reporting companies in attempts to fix the errors.
The credit reporting companies told the lawmakers the duplicate balances “have been resolved now,” the letter said.
An Equifax spokesperson said they were aware that some student loan servicers “did not report loans in adherence to the consumer reporting guidelines.”
“We are working with the Department of Education and the servicers to correct misreported accounts and ensure that student loans are being appropriately reflected on consumer credit reports,” the spokesperson said. 
A spokesperson for the Consumer Data Industry Association responded on TransUnion’s behalf to CNBC’s request for comment.
“Our CDIA members were aware some consumers faced issues and actively worked with the student loan servicers to address the matter,” the spokesperson said. “The bureaus continue to work with servicers to ensure that student loan and other accommodations are being appropriately reflected on consumer credit reports.”
Experian did not immediately respond to a request for comment. More

As the Senate wraps up its final legislative days for the year, it is expected to vote on a bill that would increase Social Security benefits for about 3 million people.
The Social Security Fairness Act calls for eliminating certain rules that have been in place for decades that reduce Social Security benefits for some people with public sector pensions.

The US Capitol building in Washington, DC, on November 24, 2024. 
Daniel Slim | Afp | Getty Images

The Senate is getting closer to a final vote on a bill that would increase Social Security benefits for an estimated 3 million people.
The chamber voted Wednesday to let consideration of the bill — the Social Security Fairness Act — proceed. The bipartisan proposal calls for repealing certain rules that reduce Social Security benefits for individuals who receive pension income from work in the public sector.

Despite a bipartisan 73 majority vote to proceed, the effort to advance the bill was met with some dissent, with Sen. Thom Tillis, R-N.C., citing the costs associated with the change. The Congressional Budget Office has estimated repealing the rules — known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO — would cost $196 billion over 10 years.
The WEP reduces Social Security benefits for individuals who receive pension or disability benefits from jobs where they did not pay Social Security payroll taxes. The GPO reduces Social Security benefits for spouses, widows and widowers who also receive their own government pension income.

Passing the bill would speed up Social Security’s trust fund insolvency dates by six months, according to the Committee for a Responsible Federal Budget. Without the change, Social Security’s trustees have projected the trust fund the program relies on to pay retirement benefits will run out in 2033, when 79% of those benefits will be payable.
“We are about to pass an unfunded $200 billion spending package for a trust fund that is likely to go insolvent over the next nine to 10 years, and we’re going to pretend like somebody else has to fix it,” Tillis said during a Senate speech ahead of the vote to advance the bill.
Tillis said lawmakers are not considering the 97% of beneficiaries who would not benefit from the bill, but who would be hurt by future consequences that passing it would have on the program.

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“Ladies and gentlemen, this bill has not even had a hearing in any committee in the House or the Senate,” Tillis said.
The Social Security Fairness Act was approved by the House in November after two lawmakers – Reps. Abigail Spanberger, D-Va., and Garret Graves, R-La. – filed a discharge petition to force a vote on the bill. The Senate cloture vote to proceed to a final vote also limited the ability for that chamber to debate the proposal.
The 27 Senate leaders who voted “no” on moving the Social Security Fairness Act to a final vote are all Republicans, with the exception of Sen. Joe Manchin, an independent representing West Virginia.
The Senators who voted to move the bill forward included a mix of Democrats and Republicans, including Senate Majority Leader Chuck Schumer, D-N.Y., and Vice President-elect and Sen. JD Vance, R-Ohio.

‘No excuse for treating our public servants this way’

Leaders who spoke on the Senate floor in support of the bill ahead of Wednesday’s vote to proceed cited the financial suffering of their constituents.
As of November, more than 2 million people’s Social Security benefits were affected by the WEP, while more than 650,000 people were impacted by the GPO, said Sen. Susan Collins, R-Maine, who co-led the Senate version of the bill.
One 72-year-old constituent had to return to work after her husband died, since the GPO reduced her Social Security widow benefits by two-thirds, Collins said.
“She did not have the financial security any longer to remain retired, and the GPO penalty left her with few choices but to return to work,” Collins said.

Sen. Bill Cassidy, R-La., recalled meeting with a retired Louisiana schoolteacher impacted by the GPO, who cried in his office because she didn’t understand why her Social Security spousal benefits were reduced.
“She felt like she was being punished for educating generations of Louisiana children,” Cassidy said. “There’s no excuse for treating our public servants this way.”
If the Senate passes the bill, it will be a win for Collins and Sen. Sherrod Brown, D-Ohio, who co-led the bill. Collins has pushed for the change for more than two decades, Brown noted in a Wednesday Senate speech. Brown is leaving the Senate after losing a reelection campaign.
Reps. Spanberger and Graves, who introduced the House bill, are also leaving Congress.
“If you love this country and fight for the people who make it work, I urge all my colleagues on both sides to join us — restore the Social Security that people who protect us in service have earned over a lifetime of work,” Brown said during a Wednesday Senate speech.

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Nearly 1 in 4 cardholders — 23% — did not redeem any rewards at all in 2024, according to a new survey by Bankrate.
More consumers say rewards can be difficult to redeem or are worth less than they thought, according to the Consumer Financial Protection Bureau.
Now the CFPB is cracking down on what it calls “bait-and-switch” rewards programs.

CFPB cracks down on rewards tactics

About 90% of all credit card spending is on rewards cards. But according to the CFPB, an increasing number of consumers have reported that some rewards are hard to redeem or are not worth as much as they thought. In 2023 alone, complaints involving credit card rewards jumped 70% over pre-pandemic levels. 

“Large credit card issuers too often play a shell game to lure people into high-cost cards, boosting their own profits while denying consumers the rewards they’ve earned,” CFPB Director Rohit Chopra said in a statement. “When credit card issuers promise cashback bonuses or free round-trip airfares, they should actually deliver them.”

According to the Consumer Bankers Association, only a small share of credit card users report problems with rewards: Complaints regarding rewards made up just 2% of all credit card complaints reported to the CFPB since January 2020. 
“The only bait-and-switch that’s happening here is from the CFPB once again misrepresenting its own data,” CBA President and CEO Lindsey Johnson said in a statement.
“As the CFPB’s own research shows, credit cards are — by far — the best tool for the one-fifth of Americans that lack access to credit to begin building their financial lives,” Johnson said.
Consumer complaints about credit card rewards are exceedingly rare, the American Bankers Association also noted.
“Despite widespread evidence that credit card rewards programs are highly popular and deliver tremendous value to tens of millions of U.S. cardholders from all walks of life, Director Chopra has once again chosen not to let facts get in the way of his decision to tarnish a hugely popular consumer product,” Rob Nichols, the ABA’s president and CEO, said in a statement.

Consumers like reward cards

Even with credit card interest rates near an all-time high, when deciding on a new credit card, 83% of cardholders said their final decision comes down to perks, according to a separate report by CardRates.com.
The majority, or 58%, of credit card users polled by CardRates said they preferred cash back over miles or points. But still, not all cardholders used the credit card rewards available to them.
Travel rewards can be more lucrative but are notoriously harder to redeem, Bankrate also found. Only 11% of rewards cardholders redeemed for a free hotel stay, while just 10% redeemed for a free flight, according to Bankrate.
“Failing to redeem your rewards is a major missed opportunity,” said Bankrate’s senior industry analyst Ted Rossman. “While the best rewards can be subjective, the worst reward is getting nothing at all.”

How to make the most of rewards

In the best-case scenario, credit card rewards are “almost like free money,” said Bill Hardekopf, a credit card expert and CEO of BillSaver.com.
But that’s only if you pay your credit card off on time and in full every month. With credit card rates over 20%, on average, the benefits of cash back or other perks are quickly eroded if you carry a balance.
“If you miss a payment or are late on a payment, you get socked with a huge penalty — that interest rate will far outweigh the rewards you are going to get,” Hardekopf said.
When it comes to which reward card to choose, Hardekopf recommends a cash-back card with a low, or no, annual fee. “The best reward you can get is cash back because cash talks — it’s easy to understand and there’s no problem redeeming.”
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When asked to choose between a store card or a buy now, pay later plan, 58% of surveyed shoppers prefer store cards, according to a new report by LendingTree.
Interest rates for retail store credit cards are averaging a bit more than 30%.
If you plan to finance your holiday purchases, keep in mind “ownership costs,” experts say.

Filadendron | E+ | Getty Images

High interest rates aren’t deterring many shoppers from store credit cards.
When asked to choose between a store card or a buy now, pay later plan, 58% of surveyed shoppers prefer store cards, according to a new report by LendingTree. The remaining 42% picked BNPL loans.

The site polled 2,040 U.S. adults in September.
That choice “speaks to the fact people may be looking for a little bit longer-term help with their financial situation,” said Matt Schulz, chief credit analyst at LendingTree.
In December, new cards offered by the top 100 retailers had an average annual percentage rate of 32.66%, up from 27.7% in 2022, according to the Consumer Financial Protection Bureau. Many short-term BNPLs do not charge interest, but longer-term loans do, and on the higher end, those rates can be comparable to a store card.
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Younger shoppers have been early adopters of BNPL, and that shows in their payment preferences. 

About 59% of Gen Zers and 51% of millennials prefer BNPL over retail store credit cards, Lending Tree found. To compare, 38% of Gen Xers and 22% of baby boomers prefer BNPL.
“Buy now, pay later really started off as a millennial, Gen Z phenomenon,” Schulz said. “Younger Americans really drove a lot of the growth.” 
Whichever payment option you plan to use to finance holiday purchases this year, keep in mind the cost of carrying the debt, experts say.

How store cards and BNPL work

Retail store credit cards and BNPL loans operate differently.
A retail store credit card is a long-term, revolving line of credit that a store offers in conjunction with a bank partner. To entice new users, stores generally offer applicants a discount on their first card purchase, or financing deals. The card may also be tied into the retailer’s loyalty program, sometimes with bonus rewards for cardholders.
A buy-now, pay later loan — issued through a provider the merchant works with — typically breaks up the total cost of a purchase into installment payments over a set period of time. Some providers offer longer repayment periods, too, and charge interest. Users can have multiple purchases with the same BNPL provider at once, but those may be treated as individual loans with their own repayment terms.
With either payment method, make sure to pay off the balance on time — you might face penalties like fees and interest if you don’t stay on track.

A retail credit card can affect your credit history, as the account is reported to the three major credit bureaus: Equifax, Experian and TransUnion.
BNPL has been somewhat “invisible” to credit bureaus in the past, meaning the loan did not show up on users’ credit reports. But AfterPay, Affirm and Klarna are among the providers reporting some BNPL loans to the credit bureaus.
Both payment forms can be attractive for shoppers. Retail store credit cards tend to be easier to qualify for compared to other credit cards, especially as banks have been tightening credit card approval requirements in recent months, Schulz said. 
Over the third quarter of 2024, some banks have tightened their lending standards for credit card loans, lowered their credit limits and increased minimum credit score requirements, according to the Federal Reserve.
“It’s a reaction from the banks to rising delinquencies, rising debt and overall economic uncertainty,” Schulz said.

BNPL can also be relatively easy to apply for and qualify.
“The rise of buy now, pay later is the biggest reason why Americans are opening fewer store cards,” according to Ted Rossman, an industry analyst at Bankrate.

‘Consider the total cost of ownership’

The holiday season is here, a busy time to buy gifts for family and friends. If you find yourself in a situation where a retail store credit card or a BNPL can help stretch your budget, consider the “total cost of ownership,” Rossman said.
“Both of these payment methods can be advantageous depending on how you use them, but could also be a pretty slippery slope into debt and overspending,” he said.
BNPL can be tricky because you can have multiple loans running at the same time, and the costs “can add up,” Rossman said. Make sure to keep track of the pay-later loans you have and are able to withstand the automatic deductions.
If you can’t pay a retail card purchase off at the end of the statement period, any discount, reward or perk that you may get is going to be washed over by the interest you’ll owe on top of the outstanding balance, Schulz said. 
“Paying 30% interest to save 15 or 20% doesn’t make a whole lot of sense financially,” Schulz said. More