![\"Buy](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/07\/108333911-17839395491783939547-47133803553-1080pnbcnews.jpg\")
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Buy now, pay later services have been on the rise as more consumers look to short-term installment financing options<\/a> to help them manage the rising costs<\/a> of daily necessities, not just pay for discretionary purchases.\u00a0<\/p>\n BNPL providers originated nearly $157 billion in consumer credit products in 2025, up from nearly $116 billion in 2024, according to Federal Reserve estimates<\/a>. <\/p>\n Meanwhile, a new LendingTree survey<\/a> shows that 44% of Americans expect to apply for a BNPL loan in the next six months, including 13% who expect to take out three or more in that timeframe. The site polled 2,000 consumers earlier in July.<\/p>\n Yet falling behind on payments could result in a vicious cycle of debt, experts say.<\/p>\n “Often they just, they’ve exhausted their credit cards, and buy now, pay later is their only option,” said Jim Triggs, CEO of Money Management International, a non-profit credit counseling firm.\u00a0<\/p>\n Credit card debt<\/a> in the U.S. hit $1.25 trillion in the first quarter, up 5.9% from a year earlier, according to the Federal Reserve Bank of New York. <\/p>\n Consumers using buy now, pay later for necessities<\/p>\n Ashley Reed and her mom Regina Perez.<\/p>\n Courtesy: Ashley Reed<\/p>\n Ashley Reed tells CNBC she became a frequent BNPL user two years ago, after tapping out her credit cards to help pay caregiving expenses after her mother suffered a ruptured brain aneurysm<\/a> while they were vacationing together.<\/p>\n “I wound up maxing out my credit cards to get hotel rooms and things like that to stay with her and to get her transferred back to Baltimore. It was about $2,500 for an ambulance ride, and so, completely maxed out my cards,” said Reed, now 40, who has a full-time job as a paraeducator and also works part-time as a radiology assistant.<\/p>\n Having reached her credit limit on her cards, Reed said, she turned to BNPL services to help make ends meet, including for groceries.\u00a0<\/p>\n More from Your Money:<\/p>\n Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.<\/p>\n She’s one of a growing number of consumers doing so amid inflation and other price pressures, such as higher gas prices<\/a> stemming from the U.S. war with Iran.<\/p>\n Nearly a third, 29%, of buy now, pay later users said they’ve used these short-term loans to buy groceries \u2014 up from 14% in 2024, according to a separate March survey from LendingTree of more than 2,000 adults. About 18% said they used a BNPL loan for car repairs or maintenance, and 13% used it to pay their rent.<\/p>\n More recently, a survey<\/a> by the\u00a0consumer advocacy group Protect Borrowers\u00a0found\u00a0that\u00a042%\u00a0of respondents\u00a0who have used\u00a0BNPL loans\u00a0did so to pay for medical or dental care, and 39% to pay utility bills. Data for Progress, a progressive think tank, polled 1,164 U.S. voters online on behalf of Protect Borrowers in early July. The survey draws on a subset of 438 individuals who have used BNPL loans.<\/p>\n Missing BNPL payments can be costly<\/p>\n Keeping up with BNPL payments can be challenging: Almost half of users, 47%, said they’ve paid late on a BNPL loan in the past year, up from 34% in 2024, according to Lending Tree’s March poll.\u00a0<\/p>\n “We’ve also seen that a lot of consumers are missing payments,” Triggs said. “It’s definitely a big issue, a big problem.”<\/p>\n The majority of BNPL loans have a so-called “pay in 4” plan with no interest. Payments are often made in four installments \u2014 a 25% down payment at the time of purchase, followed by three more equal payments over the next six weeks.\u00a0<\/p>\n However, some BNPL services, like the ones Reed uses, offer a biweekly payment plan in which you pay in five installments over six to eight weeks, often with interest.\u00a0<\/p>\n In 2026, interest-bearing installment loans accounted for over 37% of annual BNPL loan issuance, which is nearly double the share in 2021, according to a new report from Protect Borrowers.\u00a0Late payment fees on some BNPL services can run $7 to $8 per payment, and interest plus financing fees can reach up to 36%, the report found.\u00a0<\/p>\n “That can make a small loan turn into something that looks more like a payday loan,” said Protect Borrowers executive director Mike Pierce. “It’s the equivalent of an interest rate of 100% APR or more because you have these late fees that stack on top of each other.”\u00a0 <\/p>\n Industry groups say BNPL is helping consumers confront an affordability crisis and rising inflation. <\/p>\n “Consumers are increasingly choosing the flexibility that pay-over-time options with clear, transparent terms provide,” American Fintech Council CEO Phil Goldfeder wrote in a statement.<\/p>\n Miranda Margowsky, a spokesperson for the Financial Technology Association, wrote in an email that “splitting the cost of a purchase into four installments with zero to low interest is smart money management, not financial risk.”\u00a0<\/p>\n Reed said she has not missed a BNPL payment because she knows the risks. But she still feels stuck.<\/p>\n “It’s almost like I’m in a never-ending cycle of doom,” she said. “I can’t get caught up, and then when I do pay it, something else comes up.”<\/p>\n SIGN UP:\u00a0Money 101\u00a0<\/a>is an 8-week learning course on financial freedom, delivered weekly to your inbox. Sign up\u00a0here.\u00a0<\/a>It is also available in\u00a0Spanish.<\/a><\/p>\n![\"Strategies](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/07\/108201274-6ED4-REQ-091925-EppersonLoans.jpg\")
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