Perception, as they say, is everything.

This is especially true with regard to consumer spending, where individuals can switch between payment choices based on how they perceive a number of external factors. These factors could include inflation, for example, or job prospects.

Recent earnings results for businesses – banks and payment networks – have highlighted a resurgence in credit card spending, particularly for travel and entertainment-related goods and services.

Read more: Visa, Mastercard, Synchrony Results Spotlight Credit rebound — but for how long?

And yet, headwinds could be building against this rebound in credit, perhaps in favor of buy now, pay later (BNPL) and debit spending.

As the most recent note University of Michigan Consumer SurveysConsumers’ perception of current and future economic conditions in December was at a multi-year low.

At a high level, the consumer confidence index fell to 67.2 in the January survey, from 70.6 in December and well below last January’s 79. 74.

As for what lingers on the mind, the survey estimated that 75% said inflation remains a top concern and ranks higher than unemployment. Half of households surveyed believe the economy has deteriorated as 2022 approaches; a third of respondents (representing a minority) think the economy will improve.

Interestingly, and as it relates to the payments themselves, 41% of consumers surveyed said high prices remained a reason not to buy in December.

The less than optimistic outlook – indeed, the sentiment index is at its lowest level in a decade – could prompt consumers to re-examine not just what they are buying, but how they buy.

Higher rates loom

Inflation translates into higher interest rates, which in turn translates into more expensive credit card debt.

One option is for consumers to consolidate their debt. In an interview with Karen Webster, loan club CEO Scott Sanborn said that about 40% of people who earn at least $100,000 a year live paycheck to paycheck and could take a closer look at consolidating their debts (with the help of the platform company) as rates rise.

See more : Imminent rate hikes pose new challenges – and new opportunities – for lenders

Additionally, debit offers a way to spend cash in cash, essentially providing a budgeting tool, which prevents consumers from becoming over-indebted.

As part of debit, BNPL options are becoming a preferred method of payment, as installment loans offer consumers a way to more accurately account for and anticipate cash outflows. Considering that more than half of us live paycheck to paycheck, stretching to meet monthly expenses, this kind of visibility can be critical.

PYMNTS data shows that 40% of relatively financially stable and “worry-free” consumers – those with good credit or access to credit – want to use alternatives to traditional credit. Digging deeper into that count, 40% want to avoid overspending and 35% are focused on high interest rates.

Read more: User personas proving payouts have value beyond instant gratification

These priority concerns, amid declining consumer sentiment, seem tailor-made for continued use of debit in general, and BNPL options, in particular.