Understanding "Buy Now, Pay Later" in Today’s Economy: Key Insights for Smart Use
NEW YORK, USA (2025) — With inflation on the rise and job growth stalling, many consumers are gravitating toward "buy now, pay later" (BNPL) services for everything from concert tickets to fast food deliveries. However, increased adoption of these services may lead to financial challenges, as a growing number of people struggle to repay their loans.
The BNPL trend saw a significant spike during the pandemic, particularly among younger demographics. While these services provide a way to make larger purchases without upfront costs or hard credit checks, they also pose risks of overspending.
According to a recent survey by The Associated Press-NORC Center for Public Affairs Research, nearly 40% of Americans under 45 have opted for BNPL services when shopping for entertainment, dining, and essential items like groceries and healthcare.
While BNPL arrangements were not reported to major credit bureaus in the past, consumers can soon expect to see their impacts reflected in their FICO scores.
Whether you’re a new user or a seasoned BNPL participant, here are essential tips from financial experts to utilize these services wisely:
Prioritize Needs Over Wants
BNPL plans typically break down purchases into four manageable payments, often with little to no interest. Leading providers include Klarna, Afterpay, PayPal, and Affirm. Experts like Lauren Bringle, an Accredited Financial Counselor, recommend that these loans should only be used for significant purchases or necessities. Before proceeding, consider:
- Can I manage without this right now?
- Is this item essential for work or school?
Using BNPL responsibly means planning ahead rather than succumbing to impulse buys, with examples including purchasing a laptop for education or a refrigerator for your home.
Take a Moment to Reflect
Before committing to a BNPL plan, take the time to assess its necessity. Erika Rasure, Chief Financial Wellness Advisor at Beyond Finance, advises that while BNPL can be a useful budgeting tool, you should be fully aware of your spending patterns. If you tend to make emotional purchases, it may heighten financial stress rather than alleviate it.
“BNPL can sometimes serve as a coping strategy rather than a practical tool for managing your finances,” Rasure notes. It’s critical to evaluate existing obligations, such as credit card and student loan repayments, and how additional BNPL loans might affect your overall budget.
Read the Terms Thoroughly
Like credit cards, each BNPL loan comes with unique terms and conditions. Michael Savino, Chief Lending Officer at Municipal Credit Union, emphasizes the importance of understanding what you’re committing to before you proceed. Always check for fees, repayment schedules, and the consequences of missing payments—defaults can lead to fees, increased interest rates, or being barred from future use.
Avoid Multiple Simultaneous Loans
Managing multiple BNPL loans can complicate repayment and budgeting. Savino warns that juggling various plans may create confusion and increase your overall debt load, making it more challenging to stick to your budget.
The optimal strategy is to stay aware of your total spending and limit the number of BNPL loans you take on at any one time.
Track Your Loans Diligently
It’s crucial to monitor your BNPL purchases and payment schedules. Courtney Alev, Consumer Advocate at Credit Karma, suggests maintaining visibility on where your money is allocated. Automatic payments are common with BNPL loans, so ensure your account has sufficient funds to cover them.
Whether you choose reminders, spreadsheets, or budgeting apps, finding an effective tracking method will aid in avoiding late fees.
Utilize BNPL to Your Advantage
For individuals with limited credit history, BNPL offers a gateway to funding that might otherwise be unavailable. When used thoughtfully, these short-term loans can be beneficial, helping you establish a credit baseline and access more affordable credit options in the long run.
NerdWallet’s Sarah Rathner adds a key reminder: BNPL is still borrowing. “It may feel like you’re just getting a grace period for payment, but falling behind can harm your credit profile, akin to traditional loan defaults.”
In conclusion, while BNPL can be a viable financial tool in the current economic landscape, it’s essential to approach it with caution, ensuring that you maintain control over your spending and repayment strategies.