Buy Now, Pay Later Tops $160 Billion as Late Payments Climb

A payment tool turned household budget support

Buy now, pay later started as a checkout option for sneakers and concert tickets. It now looks more like a way for many households to bridge the gap between paychecks. Research by Federal Reserve economists puts Americans' spending through buy now, pay later (BNPL) plans at more than $160 billion last year.1 Pay-in-four loans, which split a purchase into four installments over about six weeks, made up roughly half of that total. Use of those plans has grown close to 80% since 2023.1 The remaining volume came from loans with longer or shorter terms.1

The dollar figure is not the main story. The bigger shift is what the money is buying. Experts quoted in Associated Press reporting, which ran widely in regional papers this month, say they see more people using these plans for groceries, utility bills, transportation and sometimes rent.13 NerdWallet's Sara Rathner blamed a weak job market and everyday prices that have risen faster than many people's pay.3 Mark Elliott, chief customer officer at Happen Bank (formerly Lending Club), said BNPL has stopped being mainly about convenience and is becoming a cash-flow problem.1

The people in the AP coverage show what that looks like. A 26-year-old in South Carolina said BNPL is the reason she has furniture and food in her fridge. She has used it this way for six years and sees it as useful, not something to be ashamed of.1 A 28-year-old lecturer in North Carolina first used it for Hozier concert tickets. After her daughter was born she turned to it for groceries, and she said that leaves her angry and embarrassed.1 Both views are honest, and both point to the same thing: for a growing share of users, BNPL fills a gap in the household budget.

Federal Reserve data points the same way

The grocery trend shows up in survey data as well as in personal stories. The Fed's 2025 Survey of Household Economics and Decisionmaking found that 16% of U.S. adults used BNPL in the prior year. Among those users, 20% used it for groceries or food delivery.13 That group was also under more strain. Some 43% of grocery users paid late or were hit with an overdraft or insufficient-funds fee, about double the 21% rate for BNPL users overall.13

Earlier reporting found the same pattern. Last holiday season, a LendingTree survey found that about a quarter of BNPL users had used a loan for groceries. More than 20% had three or more loans open at the same time, a practice known as "stacking."16 The pieces fit together: more everyday purchases on BNPL, more loans per person, and more trouble keeping up.

How many people pay late depends on who's asking

The biggest disagreement in the coverage is over how common late payments are. The answer changes a lot depending on the survey. The Fed found that 24% of BNPL users made a late payment in 2024, up from 18% in 2023.12 LendingTree's March 2026 survey gave a much higher number: 47% of users said they paid late at least once in the past year, up from 41% in 2025 and 34% in 2024.1214

The gap probably comes from differences in survey methods and in how each one defines "late." A self-selected online sample can also skew toward heavier users. In practice, it means readers can't treat any one figure as definitive. Still, the two surveys agree on direction. Both show late payments rising year after year, and that trend is the more reliable signal.

Klarna and Affirm: late payments, but no surge in losses yet

Lender data looks calmer than the consumer surveys, and investors are paying close attention to that gap. Affirm's 30-plus-day delinquency rate was 2.8% for the quarter ending March 31, 2026, roughly the same as a year earlier.1214 One industry analysis, using a measure that excludes some legacy portfolios, found the rate was up 29 basis points year over year. Small as that rise is, it means "flat" depends on which number you use.15 Affirm has also set aside more for future losses. Its loss allowance reached $512 million, or 6% of loans held for investment.1214 Klarna's credit-loss provisions held at about 0.55% of gross merchandise volume, nearly unchanged from the 0.54% it reported a year earlier.15

The two companies run different businesses, which helps explain the different numbers. Klarna relies mostly on short pay-in-four loans and earns most of its revenue from merchant fees. Affirm makes more long-term, interest-bearing loans and keeps a larger share of each transaction as a result.17 Investors have responded differently too. Coverage in June said both lenders are profitable, but Klarna shares traded below their IPO price while Affirm's heavier loss reserves reassured the market.1214 Forbes described the trend as investors valuing BNPL lenders more on credit discipline than on user growth.14

The key point, as financial coverage repeatedly noted, is that more late payments have not yet led to more defaults.1214 My read is that this gap holds only as long as the labor market does. People who pay a week late on groceries are different from people who stop paying. The first group can turn into the second if job losses rise. Watch for loss provisions starting to climb at the big lenders. That would be the first sign the survey numbers are turning into actual losses.

Credit reporting is changing, and the details are confusing

For years, a missed BNPL payment stayed inside the lender's own records. That is changing. Late installments can now reach credit files, which matters most for people with thin credit histories.12 Coverage of exactly how it works conflicts, though. That is a problem in itself, because consumers can't manage a risk they don't understand.

The AP's guidance says that taking out a plan doesn't affect credit, but a missed payment can. It says Affirm and Klarna both report to Experian and TransUnion, while Afterpay reports to no bureau.1 Other accounts are more specific. One industry analysis says Affirm reports all new loans, including pay-in-four, to Experian and TransUnion but not Equifax. The same analysis says Klarna shares data only on its longer-term financing.15 A consumer comparison site, by contrast, says Affirm reports to all three bureaus and that Klarna's standard pay-in-four usually stays off credit reports.18 On missed payments, one difference is consistent: Affirm charges no late fees, while Klarna charges up to $7 per missed installment, capped at 25% of the order.18

Reporting can cut both ways. A study cited in one analysis found that most consumers with five or more Affirm loans saw their scores rise or stay the same after reporting began.15 The same analysis warns that wider reporting will also put the strain seen in the surveys onto credit files, which could limit the easy access that drove BNPL's growth.15 As more lenders report, the industry's blind spot around stacked loans shrinks. Before that, no single lender could see how many loans a borrower had with other providers.1720

What borrowers should take from this

The experts in the AP coverage give fairly practical advice. Stanford's Ed deHaan warns that some products sold as BNPL come with steep upfront and late fees, so contracts are worth reading closely.1 He also points out that people tend to overestimate what they'll be able to repay later.1 Carla Sanchez-Adams of the National Consumer Law Center advises against stacking plans with different providers, because the due dates become hard to track.1 Missing a payment can bring fees, interest, or a ban from the service.3 For people already in too deep, nonprofit credit counseling and help like food banks and SNAP are better choices than taking out another loan.1

The bottom line

Growth isn't the most important thing in these reports. What matters more is that BNPL, once a fintech experiment, is now part of how many Americans cover basic needs, while consumer data shows late payments rising and credit-reporting rules remain inconsistent. Klarna and Affirm have shown they can run profitable businesses.1417 What hasn't been tested is whether their borrowers can keep paying if the economy weakens. So far lender losses are holding, but the consumer data points to growing strain.