Buy now, pay later services promised convenience and flexibility, but they're increasingly pushing consumers into a cycle of debt that's difficult to escape. What began as a simple alternative to credit cards has evolved into a $36.3 billion industry that preys on financially vulnerable shoppers who can least afford to fall behind.​

The Growing Crisis

According to LendingTree, 41% of BNPL users made at least one late payment in the past year—up from 34% just one year ago. Even more alarming, 22% of consumers are currently in debt to a BNPL provider, with 19% juggling multiple BNPL loans simultaneously. Monthly BNPL spending surged nearly 21%, from $201.60 in June 2024 to $243.90 in June 2025, suggesting consumers are becoming increasingly dependent on these services.​

The Federal Reserve reports that approximately 24% of BNPL users fell behind on at least one payment in 2024, with more than half facing additional fees. These penalties quickly transform what seemed like an interest-free convenience into an expensive debt obligation. Retail analyst Howard Shoulberg warns:

"It's a significant trap for consumers, many of whom may not fully comprehend the depth of their debt. Luring customers into financial peril is not a sustainable business approach—it's a ticking time bomb".​

Why It's So Easy to Overspend

BNPL services exploit behavioral psychology to encourage spending beyond consumers' means. Research from the Central Bank of Ireland found that participants spend 4.39% more when using BNPL than with debit cards, with mental accounting effects leading to an inflated perception of available funds. When payments are deferred, consumers are 22.2% more likely to spend on discretionary products because their account balance doesn't immediately reflect the purchase.​

A Credit Karma survey revealed that 34% of BNPL users spent more than they could afford. The installment structure makes spending feel less burdensome, especially when users borrow through multiple platforms. Financial expert Ted Rossman explains:

"You might end up with four or five simultaneous loans without even realizing it".

This creates a dangerous domino effect where consumers lose track of their total obligations.​

Who Gets Hurt Most

The Federal Reserve Board found that the most financially at-risk consumers are also the most likely to use BNPL. "Adults who report lower overall financial well-being, as well as those appearing liquidity or credit constrained, are among the most likely to use BNPL," researchers noted, adding that "most of these consumers indicated that they depended on BNPL as the only means to afford their purchases". These are purchases that financially strained consumers wouldn't qualify for under traditional credit evaluation processes.​

BNPL users typically have significantly lower savings and are more prone to accruing credit card debt. One study found that consumers who took a BNPL loan had on average $871 more in credit card debt in the month they originated the loan compared to similar individuals who didn't use BNPL. Young consumers face particular vulnerability—32% of Gen Z users have missed payments, compared to 24% overall.​

The Regulatory Gap

Until recently, BNPL operated in a regulatory gray area. In May 2024, the Consumer Financial Protection Bureau issued an interpretive rule treating BNPL lenders like credit card providers, requiring them to provide refund rights and dispute protections. However, under the current administration, the CFPB abandoned enforcement of this rule in May 2025, undermining consumer protections.​

CFPB Director Rohit Chopra previously stated:

"Regardless of whether a shopper swipes a credit card or uses Buy Now, Pay Later, they are entitled to important consumer protections under longstanding laws and regulations already on the books".

Without consistent enforcement, consumers remain exposed to predatory practices.​

The convenience of buy now, pay later comes with a hidden cost that too many shoppers discover only when the bills pile up. As defaults accelerate and regulatory protections remain uncertain, financially vulnerable consumers continue bearing the brunt of an industry built on deferred consequences. The question isn't whether this bubble will burst—it's how many people will be trapped in debt when it does.