To begin with, who uses BNPL?
In the United States, BNPL services are steadily gaining popularity. Between 2019 and 2021, the number of BNPL loans issued by five providers grew from 16.8 million to 180 million, with an average loan amount of $135, typically repaid over a six-week period.
Most BNPL users (53%) in the U.S. are under 35, while this age group represents only 35% of credit card holders. This suggests that BNPL has become an essential financial tool for younger consumers. Initially, Millennials (ages 30–44) and Gen Z (ages 18–29) primarily used BNPL for clothing and accessories. However, categories such as “arts, travel, and entertainment,” “home and garden,” and “equipment” have now surpassed clothing in popularity.
From luxury items to everyday essentials
While BNPL users, regardless of age, initially used the service for luxury items and services, its usage has gradually expanded to more essential goods. In the U.S., spending on basics such as contact lenses (+465%), trash bags (+182%), and hand sanitizers (+98%) increased from 2022 to 2023.
At the same time, younger consumers are turning increasingly to BNPL for grocery shopping to manage the rising cost of living. Grocery purchases via BNPL have grown by 40% annually, making them the fastest-growing category. In contrast, once a popular BNPL choice, electronics purchases decreased by 14% in 2023.
Non-essential purchases still account for a significant portion of BNPL use, with travel expenses seeing the largest increase. Travel ticket purchases rose by 1,430% on the BNPL service Afterpay in 2023, while Affirm reported that travel and tickets were the fastest-growing categories for Gen Z that year.
Understanding usage to avoid over-indebtedness
The rapid growth of BNPL usage has raised concerns about overuse and over-indebtedness. The Federal Reserve Bank of New York found that consumers with greater financial means tend to use BNPL for larger, occasional purchases to avoid credit card interest on installments.
In contrast, consumers with lower financial means use it for out-of-budget purchases, increasing the risk of debt accumulation. Even small loans under $250 can add up to a significant amount, especially when multiple installments are due simultaneously.
While BNPL can be helpful and allow you to make purchases you couldn't afford at the moment, if you're not careful, you may end up with more debt than you can handle. The more organized and informed you are, the more likely you are to benefit from Buy Now, Pay Later services without facing unwelcome surprises on your bill.
Sources: NBC, Lexis Nexis