Americans Turning to 'Buy Now, Pay Later' for Groceries Amid Rising Costs
As grocery prices continue to rise, a growing number of Americans are turning to "buy now, pay later" (BNPL) services to manage everyday expenses. A recent LendingTree survey found that 25 percent of BNPL users have used these loans to purchase groceries, up from 14 percent the previous year.
BNPL services, offered by companies like Affirm, Klarna, and PayPal allow consumers to split purchases into interest-free installments. The most common BNPL option is the "pay in four" plan, dividing the total cost into four equal payments over six weeks.
While initially popular for discretionary spending, BNPL is increasingly used for necessities. In the LendingTree survey, groceries ranked as the fourth most common BNPL purchase, following clothing, technology, and home décor.
Gen Z consumers are at the forefront of this shift. Approximately 33 percent of Gen Z BNPL users reported using the service for grocery purchases, reflecting broader financial pressures on younger demographics.
Despite the convenience, BNPL carries risks. The LendingTree survey revealed that 41 percent of BNPL users made at least one late payment in the past year, up from 34 percent the previous year. Late payments can incur fees and potentially impact credit scores.
Moreover, managing multiple BNPL loans can be challenging. About 23 percent of users reported having three or more active BNPL loans simultaneously, increasing the risk of missed payments and financial strain.
Recognizing the demand, BNPL providers are partnering with food delivery services. In March, Klarna announced a collaboration with DoorDash, allowing customers to use BNPL for meal and grocery deliveries. DoorDash stated the partnership aims to provide customers with more.
Financial experts advise consumers to use BNPL judiciously. While it can be a helpful tool for managing cash flow, relying on BNPL for essentials like groceries may indicate deeper financial issues. Matt Schulz, LendingTree's chief credit analyst, noted that using BNPL for food purchases highlights the financial challenges many Americans face.
