What’s Happening?
More Americans are using “Buy Now, Pay Later” (BNPL) services to pay for everyday essentials like groceries, according to a recent survey. However, many are struggling to pay on time, and experts warn this could signal financial stress in the economy.

Key Takeaways

  1. BNPL Basics:
    • BNPL lets you buy items immediately and split payments into installments (like a modern layaway, but you get the item upfront).
    • Often used for clothes or electronics, but groceries and food delivery are now a growing part of BNPL use.
  2. Why Are People Using BNPL More?
    • Rising costs: Inflation (prices going up) and high interest rates make it harder to afford basics.
    • Economic uncertainty: People worry about job security, taxes, and global trade issues.
    • Convenience: Apps like Klarna or Afterpay make it easy to split payments.
  3. The Problem: Late Payments Are Rising
    • 41% of BNPL users paid late in the past year (up from 34% last year).
    • Most delays are short (a week or less), but self-reported data may downplay the issue (people might not admit to missing payments).
  4. What Are People Buying?
    • Top categories: Clothes (41%) and tech gadgets (39%).
    • Big jumps in essentials:
      • Groceries: 25% of BNPL users (up from 14% last year).
      • Food delivery: 16% use BNPL for takeout.
    • Gen Z (ages 18–28): 1 in 3 use BNPL for groceries; 64% have used BNPL overall.
  5. Regret and Risks
    • 48% of users regret using BNPL for at least one purchase.
    • Gen Z: 64% feel regret; 24% regret multiple purchases.
    • Credit score myth: 62% think on-time BNPL payments boost credit scores, but they don’t (for now).
  6. Who’s Using BNPL?
    • Men: 53% have used BNPL vs. 46% of women.
    • Age gap: 64% of Gen Z vs. 29% of Baby Boomers (ages 61–79).

Why This Matters

  • Financial stress: Using BNPL for basics like food suggests many are stretched thin.
  • Debt cycle risk: Late fees and missed payments can lead to debt.
  • Future impact: Credit agencies may soon track BNPL behavior, affecting loans or mortgages.

Real-World Example

DoorDash now lets users split food delivery payments into 4 installments via Klarna. Critics compare this to risky loan practices seen before the 2008 financial crisis, where debt was repackaged and sold as investments.

Bottom Line
BNPL can help manage short-term costs, but rising reliance on it for essentials—and growing late payments—hint at deeper financial struggles. Always read the fine print, and consider budgeting tools to avoid debt traps.

Source: Lending Tree survey of 2,000 U.S. adults (April 2024).