Yahoo Finance

Buy now, pay later services are becoming a go-to option for everyday purchases — including groceries. But with more Americans turning to these short-term loans to cover basic needs, concerns about missed payments and financial strain are also rising.

Groceries Now a Common BNPL Purchase

A growing share of Americans are using BNPL loans not just for electronics or clothing, but for food. According to a recent LendingTree survey, 25% of BNPL users reported using the loans to pay for groceries — a sharp jump from just 14% in 2024 and 21% in 2023.

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This shift reflects ongoing financial pressure. Despite recent periods of strong employment and wage growth, many consumers are still grappling with high interest rates, inflation, and rising costs at the checkout lane.

Matt Schulz, LendingTree's chief consumer finance analyst, told CNBC, "A lot of people are struggling and looking for ways to extend their budget." For many, BNPL has become a tool to bridge the gap between paychecks.

Late Payments on the Rise

While BNPL loans often don't charge interest, missing a payment can come with high fees — and many borrowers are falling behind. LendingTree found that 41% of BNPL users made a late payment in the past year, up from 34% the year before.

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Most late payments — about 76% — were only a week or so overdue, but the trend points to a larger issue. Schulz said the rise in late payments could be a sign of broader economic stress. "I do think it's going to get worse, at least in the short term," he said.

The survey also found that 23% of BNPL users had three or more active loans at once, a situation that can easily become difficult to manage, especially for those already under financial strain.

Misunderstandings About Credit Impact

Another problem: Many consumers don't fully understand how BNPL loans affect their credit. More than 60% of users incorrectly believe that making on-time payments helps improve their credit score. In reality, most BNPL providers don't report on-time payments to credit bureaus — though missed payments may still show up.