BNPL use spreads to groceries and bills as payment risks rise

Buy now, pay later loans are moving beyond checkout splurges and into groceries, rent, medical care and utility bills. For everyday investors, that makes BNPL worth watching as both a fast-growing corner of consumer credit and a signal that some household budgets are under strain.

BNPL providers originated nearly $157 billion in consumer credit products in 2025, up from nearly $116 billion in 2024, according to Federal Reserve estimates. The product lets shoppers split a purchase into installments, often with a down payment at checkout and several payments over the following weeks.

A new LendingTree survey of 2,000 consumers conducted earlier in July found that 44% of Americans expect to apply for a BNPL loan in the next six months. That includes 13% who expect to take out three or more such loans during that period.

Essentials are becoming part of the BNPL story

BNPL first became familiar to many shoppers as a way to spread out payments for discretionary purchases. Recent surveys suggest more consumers are using it for basic costs.

In a March LendingTree poll of more than 2,000 adults, 29% of BNPL users said they had used the loans for groceries, compared with 14% in 2024. The same survey found 18% used BNPL for car repairs or maintenance, while 13% used it to pay rent.

Protect Borrowers, a consumer advocacy group, reported that 42% of respondents who had used BNPL loans used them for medical or dental care, and 39% used them for utility bills. Data for Progress surveyed 1,164 U.S. voters online for Protect Borrowers in early July, with those figures based on 438 respondents who had used BNPL.

Ashley Reed, a 40-year-old paraeducator who also works part time as a radiology assistant, told CNBC she began using BNPL frequently after maxing out credit cards while covering caregiving costs after her mother suffered a ruptured brain aneurysm during a vacation. Reed said an ambulance ride cost about $2,500 and that she later used BNPL services, including for groceries, after hitting her card limits.

Jim Triggs, CEO of nonprofit credit counseling firm Money Management International, told CNBC that consumers often turn to BNPL after exhausting credit cards. U.S. credit card debt reached $1.25 trillion in the first quarter, up 5.9% from a year earlier, according to the Federal Reserve Bank of New York.

Late payments can change the math

Many BNPL loans use a “pay in 4” structure, meaning the borrower pays 25% at purchase and three equal installments over about six weeks, often with no interest. Other plans can run longer, include five installments and charge interest.

LendingTree’s March survey found 47% of BNPL users said they had paid late on a BNPL loan in the past year, up from 34% in 2024. Triggs told CNBC that missed payments have become a serious issue.

Protect Borrowers reported that interest-bearing installment loans made up more than 37% of annual BNPL loan issuance in 2026, nearly twice the share in 2021. The group said late fees on some services can run $7 to $8 per payment, and interest plus financing fees can reach as high as 36%.

Mike Pierce, executive director of Protect Borrowers, told CNBC that fees can make a small loan resemble a payday loan, with an annual percentage rate equivalent of 100% or more when late charges pile up. Annual percentage rate, or APR, measures the yearly cost of borrowing including interest and some fees.

Industry groups argue BNPL gives consumers useful flexibility. American Fintech Council CEO Phil Goldfeder said in a statement that consumers are choosing pay-over-time products with clear terms. Financial Technology Association spokesperson Miranda Margowsky wrote in an email that splitting purchases into four payments with zero to low interest can be smart money management rather than financial risk.

Reed told CNBC she has not missed a BNPL payment because she understands the risks, but said she still feels trapped by recurring expenses. Her experience shows the tension at the center of BNPL’s growth: the loans can smooth out a bill, but they can also add another due date to a budget that is already tight.

This story draws on original reporting from CNBC.