Buy now, pay later consumers tap installment plans for groceries, rent and utilities as late payments rise
More consumers are using buy now, pay later to cover essential household expenses, including groceries, rent and utility bills, and late payments among BNPL users have increased, according to recent reporting. The combination points to a change in how the product is being used and the risks that follow.
Key takeaways
- More consumers are using buy now, pay later (BNPL) to cover essential household expenses such as groceries, rent and utility bills, according to recent reporting.
- Late payments among BNPL users have increased, with users missing payments at a higher rate than before.
- BNPL was originally built for discretionary purchases split across four payments, not recurring non-negotiable costs like rent and groceries.
- Financing essentials through BNPL signals that a borrower's cash is not covering basics rather than a desire for payment flexibility.
- Late payments on essential spending pose a harder problem for BNPL providers than late payments on discretionary goods because the underlying expenses cannot be returned or deferred.
More consumers are using buy now, pay later to cover essential household expenses, including groceries, rent and utility bills, and late payments among BNPL users have increased, according to recent reporting. The combination points to a change in how the product is being used and the risks that follow.
Essential spending changes the credit picture
Buy now, pay later was built for discretionary purchases. Split the cost of a laptop or a jacket across four payments and the downside is manageable. Groceries and rent do not work the same way. These are recurring, non-negotiable costs. When a consumer finances them through an installment plan, it signals that cash is not covering basics, not that a buyer wants payment flexibility on a considered purchase.
That distinction matters for lenders. The risk profile on a BNPL loan for rent differs from one for electronics, even if the transaction mechanics are identical. The product was priced and structured around one type of borrower. The borrower base is shifting.
Late payments are rising
The more immediate signal is that BNPL users are missing payments at a higher rate than before. Late fees or deferred interest, standard features in many BNPL products, activate exactly when a borrower is already short. A financing tool intended to spread cost becomes more expensive at the moment it is most needed.
The late-payment trend and the shift toward essential spending are connected. A consumer financing groceries on an installment plan and then missing a payment is in a more exposed position than one who bought furniture and paid late. The stakes are higher when the underlying expense cannot be returned or deferred.
The risk the data describes
The pattern is a borrower base under financial pressure, turning to a short-term credit product for basic needs and then struggling to repay. For BNPL providers, late payments on essential spending are a harder problem than late payments on discretionary goods. The most recent data shows that more BNPL users have missed payments even as the product's use expands into expenses that households cannot skip.