Buy now, pay later financing has experienced significant growth as consumers increasingly turn to these short-term installment services to manage rising costs of everyday necessities. Federal Reserve data indicates BNPL providers originated nearly $157 billion in consumer credit products in 2025, representing a substantial increase from nearly $116 billion in 2024. A survey conducted by LendingTree in early July found that 44% of Americans expect to apply for a BNPL loan within the next six months, with 13% anticipating three or more applications during that period.
The expansion of BNPL usage extends beyond discretionary purchases to cover essential expenses. According to a March LendingTree survey, 29% of BNPL users have applied these loans toward groceries, up from 14% the previous year. Additional data from Protect Borrowers indicates that 42% of BNPL users have utilized these services for medical or dental care, while 39% used them for utility bills and 13% for rent payments. This shift reflects broader economic pressures including inflation and rising costs across multiple sectors.
However, payment delinquencies present a growing concern. Nearly half of BNPL users, 47%, reported making late payments on such loans over the past year, an increase from 34% in 2024. Protect Borrowers research reveals that interest-bearing installment loans now account for over 37% of annual BNPL issuance in 2026, nearly double the share from 2021. Late fees can reach $7 to $8 per payment, while interest and financing fees may reach up to 36%, potentially creating an effective APR exceeding 100% when fees stack. Credit card debt in the United States reached $1.25 trillion in the first quarter, up 5.9% annually, underscoring broader household debt pressures.
Industry advocates contend that BNPL services provide consumers flexibility and transparent terms to address affordability challenges. The American Fintech Council and Financial Technology Association have emphasized the benefits of splitting purchases into installments with minimal or zero interest. Consumer advocates and credit counselors, however, warn that missed payments can create cycles of escalating debt, particularly for financially stressed households that have already exhausted traditional credit options.
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