For a growing segment of American shoppers, “buy now, pay later” (BNPL) loans are no longer limited to big-ticket purchases; thay’re becoming a common way to pay for groceries and other necessities.

Food prices have skyrocketed, said Tia Hodge, of Austell, Ga.,who uses Klarna,to manage her grocery expenses. She divides her payments into four interest-free installments, aligning with her budget and other financial obligations.

Hodge is part of a growing trend. A recent LendingTree survey revealed that nearly a quarter of BNPL users now finance groceries, a meaningful jump from 14% the previous year. This trend extends beyond groceries, with more Americans utilizing these loans for recurring monthly bills like utilities and streaming services.

Consumers are now splitting payments for everything from gasoline to fast-food orders, with some even sharing tips on social media for using BNPL to cover rent.

A Double-Edged Sword

While some borrowers find BNPL loans a helpful tool for managing cash flow, others view the increasing reliance on these plans for everyday essentials as a worrying indicator of financial stress.

I don’t think there’s any question that it is at least a sign of how much people are struggling, said Matt Schulz, chief consumer finance analyst at LendingTree. He cautioned that the ease of accumulating multiple BNPL loans can quickly lead to financial overextension, especially for those living paycheck to paycheck.

However, some experts argue that this trend is a natural evolution of the BNPL industry and a possibly better option to high-interest credit cards.

I don’t think it’s a sign of the financial apocalypse per se, said Christopher Uriarte, a payments expert at the consulting firm Glenbrook Partners. We’re seeing these companies getting into many different sectors that they have not traditionally been in.

The Rise of ‘Buy Now,Pay Later’

BNPL financing gained traction during the pandemic as online shopping surged. according to CapitalOne Shopping Research, BNPL purchases in the United States skyrocketed from $2 billion in 2019 to over $116.3 billion in 2023. However, this figure remains a fraction of the $1.18 trillion charged to credit cards in 2025, according to the Federal Reserve Bank of New York.

The rapid growth of companies like Klarna, Affirm, and Afterpay has raised concerns among consumer groups, who fear that the accessibility of these loans may encourage young and low-income Americans to take on excessive debt. Unlike traditional credit cards, BNPL firms typically do not conduct hard credit checks.

Instead, they approve short-term financing based on factors like stated income and payment history with the company. While interest is usually not charged if installments are paid on time, BNPL companies primarily generate revenue by charging fees to retailers.

The lack of routine reporting to credit bureaus creates a potential “phantom debt” risk to the financial system.

However, consumers and BNPL companies maintain that these loans offer a more affordable financing option compared to credit cards with high interest rates.

I’ve used the loans for groceries and even to pay my phone bill, said Randis Dennies, 42, of Memphis, Tenn. He values the ability to manage his cash flow and borrow without interest, especially with rising costs. When everything has gotten so expensive – groceries, gas – it makes my life easier to use these loans to buy my groceries or whatever else I need at that moment, he added.

Industry expansion and Potential Risks

BNPL companies are actively expanding their partnerships with a wide array of merchants.

Affirm, such as, is leveraging its experience in underwriting larger purchases to facilitate financing for everyday items, according to a company spokesperson.

The surge in BNPL usage coincides with rising food prices, which are 28% higher than in 2020, according to the U.S.Bureau of Labor Statistics. This disproportionately affects lower-income households, who allocate a larger percentage of their income to food expenses.

Data from the Federal Reserve indicates that lower-income households (earning less than $50,000 annually) are the primary users of BNPL programs.

Inflation in food prices and across all of our daily lives has led people to take on debt or dip into their savings, said Ted rossman, a senior industry analyst at bankrate.

There are indications that borrowers are feeling the strain, with nearly a quarter of BNPL users reporting late payments last year, a significant increase from 2023.

Regulatory Scrutiny and Consumer Experiences

Klarna reported a 17% year-over-year increase in credit losses in its latest quarter. While the company acknowledged a slight rise in its default rate, it emphasized that it represents a small fraction of its total loan portfolio.

The Consumer Financial Protection Bureau (CFPB) has expressed concerns about the potential vulnerability of BNPL customers in a weakening economy. While the agency initially indicated it would regulate BNPL companies similarly to the credit card industry, it has since stated that it will not prioritize enforcement actions on pay later loans.

Hodge began using BNPL loans a few years ago when she moved to the Atlanta area and faced financial constraints.

she emphasizes the importance of careful tracking and responsible spending to avoid late payments and maintain access to these loans. This is a resource that helps my family and I don’t wont to mess that up, she said.

The Merchant viewpoint

Despite the relatively high fees charged by BNPL companies, stores and service providers are increasingly offering this payment option. These fees frequently enough exceed the swipe fees associated with credit card transactions.

However, Uriarte suggests that the potential increase in sales and larger purchase volumes may justify the cost for merchants.

In the beginning when I started to use these plans,I was very irresponsible, said Victoria Blocker,who works for a Veterans Affairs hospital in Augusta,Ga. She realized she had to change her habits after noticing frequent withdrawals from various BNPL companies.

Since then, she has limited her use of BNPL to specific, larger purchases, such as her honeymoon trip to Hawaii.

I had to take a step back, Blocker said. It had become a trap for me.