Cash-strapped millennials are turning to installment plans to pay for T-shirts and jeans

Installment plans have helped shoppers afford large purchases since the late 19th century and are still available for pricey items such as cars and smartphones.

But to delay payment for a T-shirt and a couple pairs of jeans, you needed a credit card. Now several fintech start-ups are putting smaller purchases on installment, too.

Earlier this year, Australia's Afterpay began offering installment plans in the United States, joining Affirm, a San Francisco start-up launched by PayPal co-founder Max Levchin.

Square announced its own installments plan in October, as did Swedish payments company Klarna, which has teamed up with H&M to offer services in 14 markets it didn't name.

Affirm and Afterpay say they're targeting millennial shoppers by filling a gap between credit cards and store credit, which require lots of paperwork and a strong credit rating.

Perhaps mindful of the new competition, established players such as Discover warn that these upstarts could run into trouble should the economy sour and defaults spike.

Consumers apply online or via app and learn whether they've been approved in seconds. They click a button at checkout on the websites of participating retailers if they want to pay by installment.

Cotton On, which sells inexpensive apparel, began offering U.S. installments through Afterpay in August. E-commerce chief Brendan Sweeney says 20 percent of buyers already are using the feature, which breaks up bills into four equal parts spread over six weeks and charges no interest.

'I was kind of skeptical that there would be a market for people interested in installments, but there clearly is,” he says.

'We've seen a remarkable uptake from millennial customers.”

Sweeney says shoppers spend $50 on average per order.