The Real Cost of Buy Now, Pay Later Deals

We live in a culture that rewards constant buying, where social media feeds and peer pressure make it easy to feel like everyone else has more. You’re checking out online, and the option pops up: Pay $50 now instead of $200 all at once. It feels like a no-brainer. Not only are you able to purchase that hot new item that you’ve had your eye on, but you can also buy a few other things while you’re at it since you can easily split the payments up.

That seamless experience is exactly what Buy Now, Pay Later (BNPL) providers like Affirm, Klarna, and Afterpay are designed to create. An estimated 96.3 million Americans are expected to use BNPL services in 2026, up from roughly 91.5 million in 2025. U.S. BNPL payment volumes are projected to surpass $111 billion this year. If you’ve used it, you’re far from alone. But the real cost of these deals often goes well beyond what you see at checkout.

You Probably Spend More Than You Think

BNPL companies make money mostly from fees charged to stores, but they also benefit when you spend more than you planned. Studies show that people using BNPL spend 85% more per order than people using other payment methods, and regular BNPL shoppers spend 72% more per purchase compared to other online shoppers. The reason is easy to understand once you notice it in your own habits: A $400 item looks a lot cheaper when it shows up as four payments of $100. Your brain focuses on the smaller number instead of the full price, and suddenly, an expensive purchase feels completely manageable.

This goes beyond the occasional splurge on a big ticket item or on an expensive Christmas gift. A Motley Fool survey found that more than half of BNPL users have bought things they knew they couldn’t afford. Among Gen Z shoppers, the number is even higher. If you’ve ever added something to your cart because the installment price seemed low enough to swing, you’ve felt this pull firsthand. Over time, splitting payments can reshape how you think about money, making it feel normal to stretch your budget in ways you might not have considered before.

Missed Payments Are Becoming More Common

BNPL is often sold as an interest-free alternative to credit cards, and it can be, as long as every payment lands on time. But more and more people are falling behind. Federal Reserve data shows that 24% of BNPL users missed a payment in 2024, up from 18% in 2023. If you’re between the ages of 18 and 29, the odds are even steeper: 32% of users in that age group have missed at least one payment. A LendingTree survey found that 41% of BNPL users made at least one late payment in the past year.

A single late fee might not seem like a big deal (the Consumer Financial Protection Bureau reported the average was $9.99 in 2023), but it adds up fast if you’re carrying more than one BNPL loan at a time. According to LendingTree, 60% of BNPL users have had multiple loans running at once, and 23% have juggled three or more. If you’ve ever lost track of a due date because you had too many installments going, you know how quickly those small fees can snowball.

Your BNPL Debt Might Impact Your Credit Score

Most BNPL loans haven’t been reported to credit bureaus. The Federal Reserve Bank of Richmond calls this “phantom debt” because it doesn’t show up when banks check your financial history. That means if you apply for a car loan or a mortgage, your lender might not see the full picture of what you owe.

This is starting to change. In June 2025, FICO announced it would start including BNPL data in some credit scores, and Affirm began sharing loan data with the credit bureau Experian in April 2025. Going forward, your BNPL payments will affect your credit score, for better or worse. The problem is that 62% of BNPL users already believe their on-time payments are helping their credit scores, which isn’t true for most loans yet. If you’re one of them, these rule changes could come as an unwelcome surprise.

A lower credit score doesn’t just make it harder to get approved for loans; it can also mean higher interest rates on mortgages, car payments, and credit cards, costing you thousands of dollars more over the life of those accounts.

The People Who Can Least Afford It Are Using It Most

BNPL tends to be used most by people who are already stretched thin. According to the Federal Reserve’s 2024 SHED report, 58% of BNPL users said the service was the only way they could afford their purchase. The Federal Reserve Bank of New York has pointed out that BNPL users are far more likely than average to struggle with coming up with $2,000 in an emergency. A Kansas City Fed study from 2025 found that the ease of BNPL can lead people with tight budgets into a cycle of taking on too much debt, especially when multiple loans overlap and automatic payments risk overdrawing a bank account.

That fragility becomes painfully clear when something goes wrong. An unexpected car repair, a trip to the emergency room, or even a few missed shifts at work can throw off an entire month’s budget. For someone already juggling two or three BNPL installments alongside rent and utilities, a single disruption can trigger a chain reaction of missed payments, late fees, and overdraft charges. The Federal Reserve found that 77.7% of BNPL users relied on at least one financial coping strategy in 2024, such as working extra hours, borrowing money, or dipping into savings, compared to 66.1% of non-users. When the margin for error is already razor-thin, BNPL doesn’t just add another bill. It removes the cushion that could have absorbed the blow.

How to Use BNPL Without Getting Burned

If you’re going to use BNPL, the safest approach is to treat it like a convenience tool for purchases you could already pay for outright. The trouble starts when installment plans become a way to buy things that don’t fit your budget. Before you click “Pay in 4,” take a moment to add up the full price, make sure each payment fits comfortably alongside your other bills, and check whether late fees apply if something slips. Try to avoid stacking multiple BNPL loans at the same time, because keeping track of overlapping due dates is harder than it sounds. As BNPL data starts showing up on credit reports, treating these loans with the same care you’d give a credit card balance will matter more than ever.

Writing Staff