More Americans Are Falling Behind on Buy Now, Pay Later Loans

Buy Now, Pay Later was supposed to make checkout easier. For many Americans, it’s now becoming another bill they’re struggling to keep up with.

A new survey from LendingTree finds that 41% of users say they’ve made a late payment on one of these installment loans — up from 34% a year ago.

The increase comes as credit card balances remain near historic highs and everyday costs continue to squeeze household budgets. While Buy Now, Pay Later services are often marketed as flexible and interest-free, the data suggest they may be quietly adding to financial pressure.

And it’s not just lower-income borrowers who are falling behind.

“Surprisingly, high-income borrowers are among the most likely to pay late, along with men, young people and parents of young kids,” LendingTree reports.

The survey also shows these loans are increasingly being used for necessities — including groceries and food delivery — not just discretionary purchases.

When groceries go on installment

Twenty-five percent now use BNPL to finance their groceries — up from 14% last year. Meanwhile 16% have paid their restaurant delivery or takeout with one of these loans.

Last year, Debt.com reported As Grocery Prices Increase, So Does Debt — and Stress. A joint survey by Associated Press and the University of Chicago’s NORC Center for Public Affairs Research found 55% of Americans call food costs a “major” source of stress, while 33% report “minor” stress.

Among those under 45, four in ten were using Buy Now, Pay Later (BNPL) to cover grocery bills, part of a growing trend in short-term food financing.

For some households, Buy Now, Pay Later isn’t about convenience anymore. It’s about cash flow. One in three say it serves as a “bridge” from one paycheck to the next — up from 30% last year and 27% the year before.

Nearly half told LendingTree they’ve regretted their BNPL purchases. That includes 16% who say the regretful charges have happened more than once.

Youthful thinking, and spending

Last year, the largest and longest-running credit scoring model announced it would soon add BNPL charges to its algorithm. It’s yet to happen — but still 62% of LendingTree’s survey respondents believed on-time payments would help their credit.

Interestingly, younger borrowers are the most likely to believe that.

Gen Z is also the most likely to regret using BNPL — perhaps unsurprising, given they’re the generation most likely to use it.

Last year, Debt.com reported Gen Z is Ditching Credit Cards for BNPL.

CashApp AfterPay, one of the leading providers of these loans, published survey findings showing the youngest working generation associates credit cards with “hidden fees, high interest rates and financial stress.”

“BNPL reflects a broader shift in how Gen Z thinks about financial wellness,” Lindsay Bryan-Podvin, Cash App Afterpay’s Financial Therapist, told Debt.com at the time. “This generation prioritizes autonomy, transparency, and simplicity in every aspect of their lives, including how they spend. BNPL aligns with that mindset by offering structure and flexibility without the emotional baggage many associate with credit cards.”

Howard Dvorkin, CPA and chairman of Debt.com, argued the concept of BNPL financing wasn’t much different than credit card spending — something he’s never suggested going into debt with.

“Every new idea that makes it easier to borrow money drives millions of Americans deeper into debt,” Dvorkin says. “I’ve spent three decades helping people get out of it. This is just a newer form of the same trap.”

Could Gen Z be learning some of the financial lessons of older generations? LendingTree’s latest findings at least hint in that direction.

Regardless, Dvorkin’s advice is always straight to the point.

“I’m pretty old school,” he says. “If you can’t afford it, don’t buy it.”

For consumers feeling stretched, experts say awareness is the first step.

Debt.com offers a free debt analysis when you call (855) 240-7491. One of our certified debt relief specialists will walk you through available options and help you find the best solution for your situation.

Talk to a debt relief specialist to find the best way to pay off credit card debt.