More people rely on Buy Now, Pay Later option for necessities, behind on payments

CHARLOTTE — A new study shows more consumers are relying on Buy Now Pay Later for everyday needs and more are falling behind on payments than before.

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BNPL divides your purchase into multiple payments. If you pay on time, there would be no fees or interest. But if you miss a payment, they can add up.

A recent Lending Tree survey found more consumers are having trouble managing it.

They say 41% of BNPL users made at least one late payment in the past year -- 7% more than the year before -- and that many borrowers are using BNPL for necessary expenses rather than the occasional splurge.

“Maybe a birthday was coming up or Christmas was coming and there were these big-ticket items that I would want to get,” former BNPL user, Kat Makinde, told Action 9 attorney Jason Stoogenke. “And seeing it cut down into smaller pieces, I was like, ‘Oh yeah, I can absolutely do that.’”

“I think the gotcha with the ‘Buy Now Pay Laters’ is, would you have bought this if, if you had to pay in full? So, it’s really those superfluous things you don’t really need,” she said. “If you had to save up your money for months and months and months to buy it, I don’t think I would have made that same decision.”

“It’s not that it’s bad. I think it can be bad if you don’t know how to manage it,” she added.

“Initially, when it started, it was for major purchases, ” Naomi Peden, with Money Management International (MMI), a nonprofit that does credit counseling, said. “But now, what we are seeing is it moving more into a trend of regular expenses, groceries, just regular things that you need.”

You may remember, in 2024, the Consumer Financial Protection Bureau issued a rule classifying BNPL companies, including those from credit cards, so they must offer the same consumer protections.

In December 205, Attorney General Jeff Jackson and six other AGs sent six of the largest BNPL lenders letters, asking them to explain how they bill, handle late fees, handle disputes, and figure out whether customers can repay the loans.

Makinde turned to MMI for help. They helped her craft a plan. She’s on target to pay off her debt -- about $15,000 -- by 2029.

Speaking of MMI, Channel 9’s special “Ask a Debt Expert” event is on Wednesday from 5 p.m. to 7 p.m.

You’ll find a link on the home screen of our WSOC-TV website and news app. It will connect you with an expert from MMI. You can chat confidentially and for free about your debt situation and ways to get it under control.

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