Record Number Of Americans Embrace 'Buy Now, Pay Later' Loans For Daily Essentials As Rising Costs Squeeze Households
News Summary
A LendingTree survey indicates that 41% of Americans considered using Buy Now, Pay Later (BNPL) loans in August 2025, marking a 5% increase from July and the highest level since data tracking began in December 2021. Among current BNPL users, 41% reported making a late payment in the past year, up from 34% the previous year. BNPL loans are increasingly being used for daily necessities such as groceries and fuel, highlighting the growing financial pressures on U.S. consumers. Half of respondents (50%) plan to use a BNPL loan within the next six months, and 60% of existing users hold multiple loans simultaneously. Gen Z's borrowing habits are particularly notable, with 64% having used BNPL and 71% of those carrying multiple loans. The widening gap between wages and inflation (partially fueled by tariffs) is a key driver behind the surge in BNPL usage. Companies like DoorDash have partnered with Klarna, and Walmart is increasing discounts to adapt to shifting consumer spending. BNPL spending in the U.S. is projected to reach $116.7 billion in 2025, according to eMarketer. However, critics like conservative activist Charlie Kirk label these services, including Affirm and Klarna, as promoting "predatory" debt among young Americans through largely unregulated lending practices.
Background
Buy Now, Pay Later (BNPL) services allow consumers to make purchases and pay in installments, often interest-free over a short period. Initially popular for non-essential spending, BNPL usage has expanded to daily necessities like groceries and fuel as U.S. consumers face increasing economic pressure from stagnant wages and surging inflation. This trend reflects the struggles of American households in managing everyday expenses and has prompted retailers and payment platforms like DoorDash and Walmart to adapt by offering BNPL options or increasing discounts.
In-Depth AI Insights
What are the deeper economic implications of increased BNPL usage for essentials, particularly under President Trump's 'America First' trade policies? - The shift to BNPL for necessities suggests consumers are facing structural increases in basic living costs, not just reduced discretionary income, potentially signaling broader spending weakness across the economy. - Tariff-driven inflation, a legacy of the Trump administration's trade policies, is directly eroding household purchasing power. The BNPL surge is a direct response by consumers trying to offset these policy side effects, not a sign of economic strength. - This trend could lead to long-term debt accumulation and rising default risks, straining consumer credit profiles and potentially stifling future big-ticket purchases, posing a sustained challenge to economic growth. How might BNPL providers like Affirm and Klarna, and traditional financial institutions, be reshaped by this shift in consumer behavior, and what regulatory responses could emerge? - BNPL providers' business models are shifting from higher-margin discretionary loans to lower-margin, higher-risk essential loans, which could lead to increased non-performing loans and necessitate more stringent risk management. - Traditional financial institutions may face increased competition from BNPL, particularly in micro-lending and installment payments. They might be compelled to launch their own BNPL products or partner with existing platforms to retain customers and adapt to market shifts. - Given the rapid growth of BNPL and criticisms of "predatory" lending, increased regulatory scrutiny is highly probable. The Trump administration might move on consumer protection, such as demanding greater transparency in fee structures, stricter credit assessment standards, and potentially even caps on interest or fees, addressing public concerns over consumer debt risks. What are the long-term strategic implications of this cultural shift towards BNPL reliance for the U.S. retail sector and broader consumer spending landscape? - Retailers will increasingly rely on offering flexible payment solutions to attract and retain consumers, especially within middle and lower-income demographics. Those not offering BNPL options may lose market share. - As consumers increasingly pay in installments, retailers' cash flow patterns may change, requiring adjustments to their inventory management and vendor payment strategies. - In the long run, if consumers become over-leveraged with BNPL debt, it could lead to reduced spending on non-essentials, putting pressure on discretionary retailers. Concurrently, essential retailers like Walmart, by combining discounts with BNPL, may gain an advantage in capturing limited consumer budgets, intensifying competition and consolidation within the sector.