BNPL Spending Tops $160 Billion as Late Payments Keep Climbing

A checkout button becomes a household budget tool

Buy now, pay later started as a convenience at online checkout. For many Americans it now helps cover basic monthly costs. Federal Reserve economists estimate that Americans spent more than $160 billion through BNPL plans last year, according to Associated Press reporting on their research.1 About half of that came through pay-in-four products, which split a purchase into four installments over roughly six weeks. Use of those plans has grown almost 80% since 2023.1 The rest went to loans with longer or shorter terms.1

The AP's central finding is not the total. It is what the money is buying. Experts told the AP they increasingly see people use these plans for groceries, utility bills, transportation and sometimes rent.1 NerdWallet's Sara Rathner pointed to a tough job market and everyday prices that in some cases are rising faster than incomes.1 Mark Elliott of Happen Bank, the company formerly called LendingClub, put it more bluntly: for many users, BNPL has turned from a convenience into a way to manage cash flow.1

In short, the product is the same one shoppers have seen at checkout for years, but more people now depend on it. That change affects consumers, lenders and the merchants who put the button on their payment pages.

The survey data agrees on direction, not size

Every major data source shows BNPL use and payment stress rising. They disagree, sometimes widely, on how much.

LendingTree's 2026 report is the most alarming. It found that 47% of BNPL users say they paid late at least once in the past year, up from 41% in 2025 and 34% in 2024.6 Among users, 54% agreed they need these loans to make ends meet, and the share rose to 62% for parents of children under 18.6 Grocery use has more than doubled in two years: 29% of users have bought groceries with BNPL, up from 14%.6 One in four users has carried three or more BNPL loans at once.6

Federal Reserve figures are lower. The Fed's household survey found that 24% of BNPL users paid late in 2024, up from 18% the year before.22 For 2025 it reported 26% with at least one late payment and 17% charged a late fee.25 The Fed data also shows how financing food ties into that stress. Among people who used BNPL for groceries or food delivery, 43% either paid late or were hit with an overdraft or insufficient-funds fee, compared with 21% of all BNPL users.25 Separate Urban Institute research found that nearly one in ten working-age adults used BNPL for groceries in 2025.25

Estimates of how many people use BNPL also vary. LendingTree says 47% of Americans have used a BNPL service.6 Bankrate's survey puts the share of U.S. adults at 30%.29 The Fed found that 16% of adults used BNPL in the previous 12 months.25 Most of this gap comes from different questions: ever used versus used recently, and different time windows and samples.23 All three still point the same way.

The more useful reading is that LendingTree's numbers are an upper bound and the Fed's are a conservative floor. Either way, the trend has risen for at least two straight years, and grocery spending is driving the stress.

Late payments are rising faster than losses

Company filings show a different picture. That doesn't contradict the surveys, but it matters.

Affirm reported that loans 30 or more days past due were 2.8% of its book in the quarter ended March 31, 2026.22 One analysis calls that flat compared with a year earlier.22 Another, which excludes legacy portfolios, puts it up 29 basis points.23 Affirm also set aside $512 million for expected credit losses, equal to 6.0% of loans held for investment.22 Klarna's credit-loss provisions were 0.55% of gross merchandise volume, nearly the same as 0.54% a year earlier.23

The explanation is that most late payments are only slightly late. LendingTree found that 72% of late payers said their most recent missed payment was no more than about a week overdue.6 A payment generally has to be about 30 days late before it hurts a credit score.6 In other words, more borrowers are slipping, but few are walking away.22 Forbes reported that investors have started grading BNPL lenders on credit discipline instead of user growth. Affirm's heavy loss reserves reassured the market, while Klarna's steady credit costs did not stop its stock from falling.28

The two lenders' numbers also can't be compared directly. Klarna measures provisions against total volume, which includes very short pay-in-four loans. Affirm's delinquency rate covers a book weighted toward longer monthly loans, which stay on the books longer and capture more risk.23

Our reading is that the gap between survey stress and lender losses describes the current moment, not a permanent state. If the economy weakens, borrowers who pay a week late today are the ones who could become losses later.

Both leaders are profitable and still growing at checkout

The rising stress comes as the industry's two leaders have reached profitability. Affirm reported fiscal third-quarter revenue of $1.04 billion, up 33%, on $11.6 billion in transaction volume, up 35%, with a GAAP operating profit.22 Klarna processed $33.7 billion across 119 million consumers in the first quarter of 2026 and posted an adjusted operating profit of $68 million.23

Both companies keep expanding their reach at checkout. Affirm counted 515,000 active merchants and 6.7 transactions per active consumer in the March quarter, up 20% year over year.23 Its Affirm Card handled $2.1 billion, up 146%.23 Klarna reported 1.075 million merchants, up 49%.23 Retailers have an obvious reason to sign up: Affirm says 29% of its users would not have completed a purchase without BNPL.27

For shoppers, the brand they use depends on how the question is asked. LendingTree found PayPal is the most-used service among BNPL users at 56%, followed by Affirm at 45%, Klarna at 41% and Cash App Afterpay at 33%.6 Bankrate's ranking of all adults puts them in the same order at lower levels.29 Industry market-share estimates differ again, with one putting Afterpay first.27

The rise in usage per customer matters here. When people make more purchases on the same app, that frequency is what lets BNPL use stretch from a new pair of shoes to the weekly grocery bill.

Credit reporting is changing, and inconsistently

The biggest structural change is that BNPL debt is starting to show up in the credit system, unevenly. In June 2025 FICO announced FICO Score 10 BNPL and FICO Score 10 T BNPL, models designed to read short, frequent installment loans.11 In FICO's validation study of more than 500,000 Affirm borrowers, 85% saw their score move by fewer than 10 points once BNPL data was added. Borrowers who paid on time generally held steady or improved.12 Lenders adopt new scoring models slowly, though, so the full effect could take years to arrive.16

Accounts differ on which providers report. Affirm reports its loans, including pay-in-four, to Experian and TransUnion.11 Coverage of Klarna conflicts. The AP says Klarna also reports to those two bureaus.1 Other reports say it shares data only on its longer 24-month loans23, or not at all for U.S. pay-in-four.11 Afterpay does not report to any bureau.1 Because the rules are scattered this way, two borrowers with identical payment habits can end up with different credit files. That fairness concern led Senator Elizabeth Warren and other Senate Banking Committee members to send letters to the three bureaus in May 2026.11

Federal oversight has moved in the other direction. The CFPB treated BNPL lenders like credit card issuers in 2024, then withdrew that interpretation in May 2025. States including New York and California have tightened their own rules since then.13

The bottom line

The coverage points to one conclusion. BNPL has become a mainstream line of credit used to cover gaps in household budgets, while the systems built to track it are only now catching up. Lender books look sound for now, and FICO's early data suggests responsible users will not be penalized. But a product whose biggest growth is in groceries, and where around half of users in one major survey admit paying late, is closer to everyday credit than a shopping perk. Experts recommend reading the terms closely, avoiding multiple loans across different apps, and only borrowing what you can realistically repay.12 For consumers, that advice matters more now than when BNPL was mostly used for clothing.