BNPL Is Exploding in Popularity—But Here’s Why Experts Say It’s a Dangerous Trap

Buy now, pay later (BNPL) services such as Afterpay, Klarna, and Affirm have exploded in popularity in recent years, completely changing the way that people shop. For years, the concept of buying something now and paying for it later was saved for major purchases. However, due to ongoing economic issues that have impacted millions of people, BNPL is now available for seemingly routine purchases like groceries.

On the surface, these options seem like a great option for people who are living paycheck to paycheck. However, according to experts, many of the people who accumulate buy now, pay later debt are making those repayments much later, which is negatively impacting their credit scores.

If you don’t recognize the financial risks of BNPL, it’s easy to assume that it’s a fast, effective way to get the things you need when money is tight. However, there are plenty of reasons to steer clear of BNPL debt.

If you’re one of the millions of people who have been using a buy now, pay later approach to shopping, you need to understand the financial risks of BNPL and what experts are saying about the long-term ramifications of this type of spending.

The Rise of BNPL and the Rise of Missed Payments

The surge in popularity of BNPL is hard to ignore. Klarna, one of the leading names in the industry, reported a 17% rise in consumer credit losses in the first quarter of 2025. While some of that figure is related to the increase in the company’s popularity, at least some of it is related to a concerning trend: more people are falling behind on their payments.

According to a study published by LendingTree, 41% of BNPL users made at least one late payment last year. That’s a 7% increase from the year before. Bankrate conducted its own survey on buy now pay later debt that showed that 18% of users had missed at least one payment outright. These studies indicate that even though payments are small and spaced out, consumers are struggling to keep up.

As pandemic-era savings continue to dwindle while the cost of living continues to rise, more people are relying on BNPL debt to meet their daily necessities. While this type of debt was once used only for luxuries, it’s now reaching into everyday living, which could carry serious consequences.

Why People Turn to BNPL in the First Place

In order to better understand the financial risks of BNPL, we need to understand why people are turning to it. At its core, BNPL functions like a short-term loan. Consumers make a down payment, and then spread the rest of the payments over several installments. These loans are fast and easy to get, and typically don’t require any sort of credit history review.

According to the study from LendingTree, 25% of users have used BNPL to pay for groceries, which was a drastic increase from the 14% of users who did the same in 2024. This big shift is incredibly telling, and it’s far from healthy.

33% of user say that they view BNPL services as a “bridge” to their next paycheck, essentially turning it into a stopgap for cash-flow problems. This figure also represents a steady rise, as 30% of users viewed BNPL as a bridge in 2024, and 27% of users considered it as such in 2023. The most common uses of BNPL debt include clothing, electronics, and home décor, but the increasing reliance on it for necessities points to a deep-rooted budget problem.

Another study, this one conducted by the Consumer Financial Protection Bureau (CFPB), reported that 63% of BNPL users have multiple active loans at once. This is an incredibly easy way to lose track of payments and fall further into debt.

How BNPL Can Derail Your Financial Goals

On the surface, BNPL looks like a great way to get something you need while spreading the payments out. In a time when many consumers are struggling to get to enjoy any of their money, it seems like an effective way to let them enjoy some luxuries while still making sure that suppliers, manufacturers, and sellers are getting paid. However, they create a number of issues.

First of all, BNPL makes it easy to overspend without realizing it. Since purchases seem smaller and more affordable, it’s easy to fall into a dangerous, perpetual cycle of buying and overspending, especially since many of the payments are interest-free. “It gives a false sense of affordability,” said Haiyan Huang, chief credit officer at Prosper.

Additionally, the relationship between BNPL and credit scores is potentially dangerous. Most BNPL providers don’t report on-time payments to major credit bureaus. This means that using these services doesn’t help you build your credit the same way that using a credit card and immediately paying the balance would. However, if you miss a payment, many of these vendors are quick to send the debt to collections, which guarantees a ding on your credit report. It’s essentially a high-risk, no-reward proposition. Since a lower credit score makes it hard, or even impossible, to get approved for a mortgage, car loan, or even rental housing, there’s a potentially dangerous relationship between BNPL and credit scores. Making your Klarna payments on time won’t help your credit, but missed Klarna payments can derail your financial future.

Budgeting with BNPL is also tricky, even if you start the process with the best of intentions. Rick Miller, a financial planner, outlines the issue with a simple statement. According to Miller, when you shop with a BNPL approach, you’re “spending money you don’t really have.” This throws off your ability to plan for the future with your money, especially when it comes to big-picture goals like retirement. According to Miller, “Spending what you can’t afford now will only hurt your future self.”

What You Should Do Before Using BNPL

Whether it’s an online grocery order or some home décor on Amazon, you’ll probably see the “Pay Later” button at the end of your order. Before you click it, take a moment to ask yourself some questions.

First, ask yourself if the purchase is essential. While there’s nothing wrong with enjoying your money when you have some extra, the fact remains that spending money on things that you don’t need when you’re struggling financially puts you on the fast track to financial problems. You also need to ask yourself if you can pay the full amount without affecting your ability to pay bills in the future. If that new outfit is going to make it hard for you to keep your lights on, stick to wearing clothes that you already own.

Finally, ask yourself if you have access to more cost-effective options. Instead of buying that $200 piece of furniture, could you find something functional for half the price, even if it doesn’t have the pattern that you love? When you look for smarter ways to spend your money, you can avoid falling into a pattern of reckless financial behavior.

If you’re leaning on BNPL options because you’re short on cash, consider some of your other options. For instance, a fixed-rate personal loan may come with an interest rate, but it also offers a predictable repayment schedule. You can also reap the benefit of an improved credit score by making your payments on time.

If you’re a homeowner who needs to tap into some extra funds for a large, vital purchase, consider a home-equity loan. Finally, think about checking into community assistance programs. While it’s possible to use BNPL debt responsibly, the fact remains that most people don’t. Even those who go into the process under the assumption that it will be a one-time thing often fall into the trap of using it time after time. When combined with the fact that most BNPL transactions result in missed payments, the risk usually isn’t worth it.

Final Thoughts: Buy Now, Regret Later?

Buy now, pay later options like Klarna can be useful tools in a time when many people are stressed about their finances. However, they come with a great deal of risk that most retailers don’t tell you about. If you’re relying on BNPL as a budgeting tool or as a substitute for emergency funds, it’s time to rethink how you budget your money. Don’t let a few easy payments for something that you don’t really need derail your ability to thrive in the future.