According to recently released data from Lending Tree, an increasing number of Americans are turning to buy now, pay later (BNPL) loans to purchase groceries, with a notable rise in late payments for these services.
The findings reflect a worrying trend among consumers grappling with the pressures of an unstable economy, which includes ongoing inflation, elevated interest rates, and concerns surrounding tariffs. These factors are making it increasingly challenging for individuals to afford basic necessities like food.
A survey conducted April 2-3 involving 2,000 U.S. consumers aged 18 to 79 revealed that approximately half of the respondents have utilized BNPL services. Among those users, 25% indicated they are using these loans for grocery purchases, a significant increase from 14% in 2024 and 21% in 2023.
The survey further revealed that 41% of participants admitted to making late payments on BNPL loans in the past year, up from 34% the previous year.
Matt Schulz, chief consumer finance analyst at Lending Tree, noted that most respondents who reported late payments were only behind by a week or less.
“Many individuals are struggling financially and seeking ways to stretch their budgets,” Schulz explained. “With inflation remaining a significant issue and interest rates still high, the ongoing uncertainty surrounding tariffs and economic stability is leading people to explore all available options to manage their expenditures.”
“For many, this translates into an increased reliance on buy now, pay later loans, for better or worse,” he added.
While Schulz refrained from labeling these trends as indicators of an impending recession, he did emphasize that conditions are likely to deteriorate before they improve.
“I anticipate things may worsen, at least in the near future,” Schulz remarked. “I don’t see many reasons to expect an improvement in these numbers in the immediate term.”
Buy now, pay later loans allow consumers to break down purchases into smaller payments, making them a popular alternative to credit cards that typically charge interest. However, consumers may incur substantial fees if payments are late, and problems can arise if they take on multiple loans simultaneously. The survey indicated that 60% of BNPL users have multiple loans outstanding, with nearly a quarter holding three or more at the same time.
“It’s crucial for users to exercise caution with these services, as they can be valuable interest-free options for managing finances, but mismanagement carries significant risks,” Schulz cautioned. “People should approach these loans with caution.”
Lending Tree’s findings align with recent revelations from Billboard, which noted that approximately 60% of general admission attendees at Coachella financed their tickets through buy now, pay later loans. This has sparked discussions regarding the current state of the economy and consumer reliance on debt to maintain lifestyles. Additionally, DoorDash’s recent announcement about accepting BNPL financing from Klarna for food deliveries has prompted jokes about consumers financing everyday meals like burgers and burritos.
Despite facing persistent inflation and high-interest rates, consumers have managed relatively well in recent years, buoyed by a strong job market and wage growth that has kept pace with inflation for some. However, major companies like Walmart and Delta Airlines have recently indicated a shift in this dynamic, reporting a decline in consumer demand and adjusting their sales forecasts downward.
