Struggling Americans are increasingly relying on "buy now, pay later" (BNPL) services to cover everyday necessities as inflation continues to outpace wage growth. A report from LendingTree indicates that 29% of users of popular BNPL brands like Klarna and Affirm are using these services for groceries and other essentials. For 54% of these users, BNPL loans are critical for making ends meet, a significant increase from previous years.
Additional research from the Federal Reserve shows that one in five Americans used BNPL to pay for food from major retailers or through delivery apps in the past year. Groceries have become the third most common BNPL purchase, following clothing and electronics.
While often presented as a "pay in four" interest-free structure, experts warn that heavy reliance on BNPL can lead to overwhelming debt. "Buy Now, Pay Later has become so common that many consumers don’t really think of it as debt anymore," said Ashley Morgan, a debt and bankruptcy lawyer. "A $200 purchase may feel expensive, but four payments of $50 somehow feels affordable."
The practice of "loan stacking," where consumers juggle multiple BNPL loans simultaneously, is a growing concern. One in four BNPL users reported having three or more active loans at once, and 68% stated that these loans enable overspending. "Suddenly several hundred dollars from your next paycheck is already committed before you even get paid," Morgan explained. "If you need BNPL to regularly make ends meet, the problem … isn’t the payment plan; the underlying budget no longer works."
According to Matt Schultz, chief consumer finance analyst at LendingTree, the ease of access to BNPL services makes them attractive for everyday needs. "The problem is that because they tend to be easier to get than credit cards and other types of loans, it can be easy to overspend and get yourself in some trouble, especially if you’re relatively new to managing credit," Schultz said.
While some BNPL options, like PayPal's "pay in four" and Klarna's similar offering, are interest-free if paid on time, others come with significant costs. PayPal's "Pay Monthly plan" and Klarna's "pay over time" financing options can carry annual percentage rates (APRs) as high as 35.99%, depending on creditworthiness. These interest-bearing loans can lead to substantial debt if not managed carefully.
Cody Schuiteboer, president and CEO of Best Interest Financial, advised consumers to approach BNPL with caution. "The ‘no interest if paid on time’ pledge has been broken," he stated, noting that interest-bearing installment loans comprised over 37% of BNPL issuance in 2026. Consumers are reportedly paying an average of $7 to $8 in late fees per payment, with 47% of BNPL users experiencing difficulties in making payments on time.
The growing, multi-billion-dollar BNPL market operates with fewer consumer protections compared to traditional bank loans or credit card contracts, despite oversight from federal financial watchdogs.