Buy now, pay later services increasingly used for groceries and essentials

PHOENIX (AZFamily) — As budgets tighten, more people are turning to buy now, pay later options to cover basic expenses, including groceries.

According to a recent LendingTree survey, 25% of buy now, pay later users have used the microloans to buy groceries. The services, which include platforms like Klarna and Affirm, are often used to split up larger purchases like flights or appliances.

Cody Bortle, a teacher who started in 2023, said covering bills has become more difficult.

“Everything has just gotten way too expensive,” Bortle said.

Rising costs strain budgets

Bortle said car payments, groceries and rent have all increased. His rent recently jumped $150 per month.

“I never imagined I’d be in my professional career as a teacher, just paycheck to paycheck,” he said.

He maxed out $15,000 worth of credit cards and now covers some expenses with buy now, pay later microloans, including a trip home to visit his grandparents.

“I can afford $70 a month, but I can’t afford a $400 plane ticket right now, so let me pay $100 right now, and I’ll pay 70 for the next few months,” Bortle said.

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Late payments increasing

More people are making late payments on buy now, pay later services. According to LendingTree, 41% of people who use BNPL options have made at least one late payment in the past year, up from 34% the previous year.

“The fact that they’re so attractive and so easy to get is what also makes them so dangerous,” said Miguel Velasco, the senior director of counseling at Money Management International (MMI), a nonprofit that helps people get out of debt.

The buy now, pay later industry touts its products as more consumer-friendly and more available than other lending options, like credit cards and payday loans.

“When [consumers] start buying essentials with buy now pay later, that’s the moment to stop,” Velasco said. “We really need to stop and understand what the financial situation is.”

Creating a budget

Velasco said it starts with a budget. He recommends writing down all money coming in and all money going out, then making changes.

“Those are hard conversations to have because you’re telling people they need to stop their spending habits. You’re telling people they need to go get a second job. You’re telling people they need to maybe incorporate some roommates or find a way of making money work,” Velasco said.

Bortle connected with MMI for help to get out of debt. He’s on track to pay off his credit cards by 2030. Along the way, he’s sharing lessons about money with his students.

“I’m very transparent with my kids,” Bortle said. “You have to be really smart with your money now, especially if you have jobs in your high school years. Start saving that because you will need it.”