What We're Watching: Buy Now, Pay What?
When consumers need flexibility, having access to a range of responsible credit options matters. A strong financial system gives households and businesses different ways to borrow, pay, and manage expenses—from credit cards and bank loans to lines of credit and newer products like “buy now, pay later,” or BNPL.
In a recent email, we discussed the alternatives consumers may turn to when traditional credit is harder to access, including payday loans and BNPL. Unlike payday loans, many BNPL products allow consumers to divide a purchase into predictable installments, often without interest.
BNPL’s rapid growth reflects strong demand for fast, convenient financing. But as the product becomes a routine part of shopping, consumers should be able to understand what they owe, when payments are due, and how multiple loans fit into their broader budgets.
Suddenly, BNPL is everywhere
BNPL programs have grown by an average of 20% annually since 2021, as online shopping grew and more retailers began offering installment payments at checkout.
A Federal Reserve Bank of Richmond researcher estimated that annual BNPL spending has reached approximately $70 billion. The Consumer Financial Protection Bureau found that roughly one in five consumers with a credit record used BNPL in 2022, with more recent surveys suggesting adoption has continued to grow.
These figures point to strong demand for flexible credit products—and to the importance of ensuring that new options remain transparent and sustainable.
Flexibility should not become financial strain
Research suggests BNPL is especially common among consumers already managing financial pressures. Gallup found that lower-income consumers were more likely to report using BNPL regularly, with 37% of those with an annual household income under $48,000 using the program frequently or occasionally. The CFPB research similarly found that BNPL borrowers were more likely than nonusers to carry balances on other forms of credit and to show signs of financial distress.
That does not mean BNPL causes financial hardship. In many cases, consumers use it because it helps them manage a tight budget or spread out a necessary expense. But the overlap makes it especially important that borrowers can see their full obligations and avoid taking on more payments than they can comfortably manage.
A July LendingTree survey found that 47% of BNPL users reported making at least one late payment during the previous year, up from 41% in 2025 and 34% in 2024. Survey responses are not the same as lender repayment data, but the trend warrants attention: as BNPL becomes more widespread, more consumers may be struggling to track payments or fit them into already-stretched budgets.
Consumers need a complete picture of what they owe
BNPL has historically existed outside some of the reporting systems used for conventional loans. As a result, consumers who repay successfully may not receive the same credit-building benefit, while lenders may not see a borrower’s complete set of obligations when assessing affordability.
Expanding the range of responsible credit options can give consumers, households, and businesses more flexibility and choice. As those options evolve, the principles should remain consistent: clear terms, understandable costs, appropriate safeguards, and a realistic assessment of borrowers’ ability to repay.
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