The Hidden Dangers Of Buy Now, Pay Later Loans
Jun 11 | 2025
Image by Raul Gonzalez Escobar for Unsplash
In recent years, the Buy Now, Pay Later (BNPL) service has become an increasingly popular way for consumers to make purchases and spread the cost over time. This payment option is widely available, allowing consumers to buy everything from clothes to electronics, and even groceries, and pay later in installments, often without interest. While BNPL offers convenience, a growing number of consumers are finding themselves in a financial bind, unable to meet their payment obligations.
How Buy Now, Pay Later Works
BNPL services allow consumers to make purchases upfront and pay over time — typically in installments spread over weeks or months. These services, such as Afterpay, Klarna, and Affirm, partner with retailers to offer financing options at the point of purchase. The idea is simple: shop now, pay later.
For the consumer, it feels like a risk-free way to buy what they need or want without having to pay the full amount immediately. Often, these loans are interest-free if paid back within the agreed period, but if the balance isn’t cleared on time, interest rates can skyrocket.
While this may sound like a terrific way to manage your budget, the growing number of BNPL users is creating a brewing financial crisis for many. Recent reports show 25% of consumers who use BNPL services are relying on them for everyday expenses like groceries. — quite a worrying trend.
The Trouble with BNPL
The promise of deferred payments can create an illusion of financial freedom, but for many consumers, it can lead to trouble. Because BNPL allows people to make multiple purchases across different platforms and retailers, it’s easy to lose track of how much is owed. Without the urgency of traditional credit cards or loans, some people forget about the payments, accumulating debt across various services and platforms.
Personal finance experts are concerned that consumers are becoming overwhelmed by these growing obligations. According to data from the Consumer Financial Protection Bureau (CFPB), more than 70% of BNPL users have missed at least one payment, which can result in steep late fees or interest charges. The financial strain is especially felt in households struggling with the rising costs of living — whether from inflation, increased grocery prices, or energy bills. As a result, many consumers find themselves in a cycle of debt they can’t escape.
What’s Happening to Consumers?
The consequences of falling behind on BNPL payments can be severe. Missed payments often lead to late fees, which can compound the original debt. For instance, missed payments might trigger a fee as high as $10 per installment, and those fees continue to increase the longer the debt remains unpaid. Consumers may also face increased interest rates, sometimes upwards of 30%, depending on the terms of the loan.
Even more concerning, some BNPL providers report delinquencies, where consumers fail to meet payment deadlines altogether. This can damage credit scores, making it harder to secure future loans or credit. In the worst-case scenario, this debt can spiral out of control, leading to collections, legal action, even bankruptcy.
How to Combat the Growing Problem
If you’re one of the many consumers using BNPL services, stay on top of your payments. Here are a few tips to help you manage your BNPL loans:
- Track Your Payments: Keep a close eye on your due dates and payment amounts. Many BNPL platforms offer apps that send reminders about upcoming payments, so take advantage of these notifications.
- Only Use BNPL for Purchases You Can Afford: Avoid using BNPL services for purchases you can’t afford to pay off quickly. Be sure you have the funds available before committing to a loan.
- Avoid Multiple BNPL Loans: Try not to use multiple BNPL services at once. Juggling several installment plans can quickly become unmanageable.
- Set a Budget: Take a hard look at your overall spending. If you find yourself relying on BNPL for essentials like groceries, reconsider your spending habits.
- Reach Out for Help: If you’re struggling to make your BNPL payments, contact the service provider. Many offer hardship programs or can help you set up a payment plan that works for you.
Final Thoughts
Although Buy Now, Pay Later services offer consumers a convenient way to manage their expenses, if not carefully managed, they can lead to financial strain. As more consumers fall behind on their payments, it’s crucial to stay aware of the risks and take steps to avoid accumulating debt. Set a budget, stay organized, and only use BNPL for purchases you can manage — all key to maintaining financial health.
By using these services responsibly, you can avoid the pitfalls and make BNPL work for you, not against you.
