United States buy now, pay later services are gaining popularity among young consumers, yet financial experts warn of growing risks. The payment model allows buyers to split purchases into smaller installments rather than paying in full immediately. While marketed as a convenient alternative to credit cards, experts say the long-term consequences can outweigh the benefits.
Personal finance educator Haley Sacks strongly advises against using these services. She argues that credit cards offer better protections, including fraud prevention and the opportunity to build credit history. In her view, using buy now pay later plans may lead to overspending because consumers often underestimate the total cost of their purchases. Sacks encourages borrowers to instead explore credit card options with 0% interest payment plans.
The buy now pay later industry is on track to reach record transaction volumes this year. Rising adoption comes as many Americans face higher prices, elevated interest rates, and the return of student loan payments. These economic pressures have led more shoppers to turn to deferred payment methods for essentials, including groceries. However, this trend raises concerns about long-term debt accumulation among younger generations.
A recent LendingTree survey highlights these risks. Nearly half of American adults have used buy now pay later services such as Klarna or Affirm. Millennials make up the largest group of users, followed closely by Gen Z and Gen X. Alarmingly, 40% of surveyed users admitted to missing at least one payment in the past year. Missed payments often result in late fees, making purchases more expensive over time.
Sacks warns that the convenience of buy now, pay later services can mask the reality of financial strain. She notes that Gen Z in particular faces stagnant wages alongside persistent inflation. This combination makes it harder for young adults to afford everyday items without relying on financing. However, she cautions that deferred payments only delay the financial impact, often compounding the problem when multiple loans overlap.
The rise in buy now, pay later usage also coincides with major retailers expanding these options. For example, large chains have introduced partnerships with installment service providers to attract more customers. While this may boost sales in the short term, experts believe it could encourage unsustainable spending habits.
Financial advisors recommend that consumers use traditional credit products when financing is necessary. They stress the importance of budgeting and tracking all repayment obligations. Without careful planning, buy now, pay later services can quickly shift from helpful tools to sources of serious financial stress.
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