A 'buy now, pay later' habit is becoming a budget breaker for 41% of users

A 'buy now, pay later' habit is becoming a budget breaker for 41% of users.

A LendingTree survey found that 41% of 'buy now, pay later' (BNPL) users made at least one late payment in the past year, up from 34% previously. Many of these users are relying on the services for everyday expenses rather than occasional purchases, turning a tool meant for convenience into a recurring financial obligation.

BNPL loans typically do not charge interest but impose late fees, which can vary by lender and often reach $10 per missed installment. For users juggling multiple such loans, even small fees accumulate quickly. Missed payments can also lead to penalties and, in cases of default, damage to credit reports.

Thomas Nitzsche, vice president of public relations at Money Management International, said the real danger lies in the stacking of BNPL payments with other financial commitments—credit cards, student loans, auto loans, housing, and utilities. When a tight budget is the primary reason payments are missed, late fees only deepen the hole.

Michelle Cloutier, a shopper from Indianapolis, used BNPL services through Amazon and Affirm but now attends credit counseling at Money Management International. She once carried $20,000 in credit card debt and sees BNPL as a repeat risk. “If you’re using these services as a patchwork for a broken budget, it’s going to fail,” she said. “It’s putting a Band-Aid on the Hoover dam.”