Nearly a third of buy now, pay later users now rely on microloan apps to cover groceries and other essentials, a sharp rise that financial experts warn is masking a deeper household budget crisis across the country.
The numbers are hard to dismiss. Twenty-nine percent of consumers using Buy Now, Pay Later services, offered by companies like Klarna, Affirm, PayPal, and Afterpay, are putting everyday necessities on installment credit, the New York Post reported. That figure represents a 25 percent jump from just a year earlier and more than double the rate from two years ago, based on data compiled by LendingTree.
Groceries now rank third on LendingTree's list of items most commonly purchased through BNPL plans, trailing only clothing and electronics. Federal Reserve research published in June found that one in five Americans used BNPL to pay for food from major retailers like Walmart or through delivery apps like DoorDash over the past year.
More than half, 54 percent, of BNPL users told LendingTree they would not be able to make ends meet without the loans. That is not a sign of a trendy payment tool catching on. It is a sign that millions of household budgets have broken down.
The basic BNPL model splits a purchase into four interest-free installments. PayPal confirmed to the Post that its "pay in four" option charges no interest and no late fees. Klarna told the Post its short-term, interest-free products are "built with safeguards that credit cards don't have" and that the company will "cut off further use the moment a payment is missed."
But the industry has moved well beyond four-payment plans. PayPal's "Pay Monthly" option lets consumers finance purchases up to $10,000 over as long as 24 months, with annual percentage rates ranging from 9.99 to 35.99 percent depending on creditworthiness. Klarna's longer-term "pay over time" financing carries APRs as high as 35.99 percent, rates that rival the worst credit cards on the market.
Cody Schuiteboer, president and CEO of Best Interest Financial, put it bluntly:
"The 'no interest if paid on time' pledge has been broken. Interest-bearing installment loans comprised over 37% of BNPL issuance in 2026."
Schuiteboer also cited data showing consumers now pay an average of $7 to $8 in late fees per missed payment, and that 47 percent of BNPL users had trouble making payments on time this year. Those are not rounding errors. Nearly half the people using these products cannot keep up with them.
One in four BNPL users have carried three or more active BNPL loans at the same time, according to LendingTree. That practice, known as loan stacking, is the quiet engine behind the rising default rates. Ashley Morgan, a debt and bankruptcy lawyer in Northern Virginia, described how it works in practice:
"Suddenly several hundred dollars from your next paycheck is already committed before you even get paid. If you need BNPL to regularly make ends meet, the problem... isn't the payment plan; the underlying budget no longer works."
Morgan identified something the raw numbers alone do not capture: a psychological shift.
"Buy Now, Pay Later has become so common that many consumers don't really think of it as debt anymore. A $200 purchase may feel expensive, but four payments of $50 somehow feels affordable."
Matt Schultz, LendingTree's chief consumer finance analyst, made a related point. BNPL providers, he said, "have done an amazing job in making their loans available to be used for almost anything, almost anywhere at almost any time." The accessibility is the selling point, and the trap. Because BNPL loans are easier to get than credit cards, Schultz warned, "it can be easy to overspend and get yourself in some trouble, especially if you're relatively new to managing credit."
Sixty-eight percent of BNPL users themselves admitted the loans enable them to overspend. When two-thirds of a product's own customers say it leads them to spend more than they should, the product is working exactly as designed, for the lender.
Financial advisor Ted Jenkin, writing in Fox News, compared BNPL to payday lending with better branding. Roughly 40 percent of BNPL users have missed at least one payment, Jenkin noted, and the average user carries four to six active plans at once, yet most cannot state their total amount owed. "It's predatory because it masks the risk," Jenkin wrote. "It convinces people they can afford things they absolutely cannot."
Until now, BNPL loans have largely existed in a regulatory gray zone. The products sit under the umbrella of federal financial oversight, but the S1 source identifies no specific agency or enforcement action directed at the industry. That gap matters. Consumers have been able to stack BNPL obligations without those debts showing up on traditional credit reports, meaning lenders extending mortgages, car loans, or credit cards often had no idea how stretched a borrower already was.
That is about to change. AP News reported that BNPL loans will soon begin affecting consumers' FICO credit scores, a significant policy shift by major credit reporting bureaus. For borrowers already missing payments, 47 percent of them, by Schuiteboer's count, the consequences could ripple outward fast, raising interest rates on other debt and shrinking access to traditional credit.
About four in 10 Americans under 45 have used BNPL for purchases including entertainment, restaurant meals, groceries, or medical care, according to an AP-NORC poll cited by AP News. Erika Rasure, chief financial wellness advisor for Beyond Finance, warned that "buy now, pay later can become a coping mechanism rather than a financial tool."
Strip away the sleek app interfaces and the "four easy payments" marketing, and the picture is straightforward. Inflation and the cost of living have risen faster than salaries and bank balances. Consumers who once covered groceries and gas with cash or a debit card now need installment credit to get through the month. BNPL providers, backed by Wall Street private credit, have filled that gap with products that feel frictionless on the front end and punishing on the back end.
The BNPL market is now a multi-billion-dollar industry. Its growth is not a sign of financial innovation reaching more consumers. It is a sign of more consumers running out of options. When one in five Americans finances food through an installment loan, and more than half of BNPL users say they cannot make ends meet without the product, the trend is not convenience. It is distress.
The companies will point to their safeguards. Klarna says it cuts borrowers off after a missed payment. PayPal says its basic plan charges no interest. And those features may help some users. But 37 percent of BNPL loans issued this year carry interest, APRs run as high as 35.99 percent, and nearly half of all users are already falling behind.
When families need a loan to buy eggs and milk, the problem is not a lack of payment plans. The problem is an economy where paychecks no longer cover the basics, and a financial industry happy to profit from the gap.