NEW YORK — With credit unions increasingly offering the option, buy now, pay later (BNPL) financing, once associated largely with online shopping and discretionary purchases, is increasingly being used by Americans to cover rent, utilities, medical care and other household necessities as consumers struggle with rising living costs, according to a new report.
Americans spent about $160 billion through BNPL loans last year, nearly double the amount in 2023, according to Federal Reserve research cited by the New York Times. While that remains small compared with more than $3 trillion in annual credit card spending, the BNPL market continues to grow at double-digit rates.
The shift is also changing what consumers finance.
Apps including Flex and Zip allow borrowers to finance expenses such as electricity, broadband, health insurance, mobile phone service, mortgages and water bills. Affirm has begun a pilot program allowing some renters to extend their monthly rent payments by several weeks.
Additional Avenues
BNPL financing is also increasingly available through dentists, veterinarians and medical providers. Intuit this year began promoting “File Now, Pay Later” financing to TurboTax customers who owe taxes, the Times reported.
Pay-later loans are becoming the “working capital for the modern middle class,” Karen Webster, CEO of payments news and research company PYMNTS, told the Times. “Consumers are using it more for essential, everyday things.”
The expansion comes as households increasingly rely on debt to meet routine expenses, the Times noted. Half of BNPL borrowers surveyed by LendingTree said they could not make ends meet without the loans.
‘Not the Answer’
Lauren Saunders, senior attorney at the National Consumer Law Center, said BNPL financing can address an immediate shortage of money without solving the underlying problem.
The loans “address the real need that people are short of funds, but just adding fees to their monthly budget and leaving them short next week is not the answer,” Saunders told the Times.
With Convenience Comes With Risks
BNPL loans generally allow consumers to borrow immediately through an app, with repayment spread over several weeks or months. Many have fixed fees, do not charge late fees and stop borrowers from taking out additional loans when payments are delinquent.
Supporters say those features can make BNPL financing more predictable than revolving credit card debt, particularly for consumers who want short repayment periods, the Times reported.
But consumer advocates warn that borrowers can accumulate multiple loans simultaneously. About 25% of BNPL users surveyed by LendingTree said they had at times carried three or more loans at once, the report added.
‘Additional Problems’
Automatic withdrawals from bank accounts and debit cards can create additional problems if consumers do not have enough money available when payments are collected, potentially triggering overdraft charges or causing other payments to be missed.
BNPL companies say their products can provide consumers with flexibility without exposing them to compounding credit card interest or potentially more serious consequences from missing payments on rent or other bills.
Affirm described its move into rent financing as a pilot program, the Times said. Borrowers may have only one rent loan outstanding and cannot borrow again until the previous month’s loan has been repaid.
‘Greater Certainty’
John Pitts, Affirm’s vice president of public policy, said the product can provide greater certainty for consumers whose income may fluctuate, including gig workers.
Flex, founded in 2019 and based in New York, has financed nearly $40 billion in rent payments for about 3 million tenants, according to the Times. Its customers have a median credit score below 600, generally considered subprime. About one-third use the service every month.
Flex charges a $6 monthly fee, a fee equal to 3% of the amount borrowed and a processing fee. It does not charge late fees or compounding interest and prevents customers from borrowing again until existing rent debt is repaid.
The company this year expanded into financing other recurring expenses, including utilities and auto loans.
“We can’t solve income, or the price of rent and affordability,” Ryan Metcalf, Flex’s vice president of public affairs, told the Times. “What we can help people solve is a timing issue. It’s harm reduction.”
BNPL Creates ‘Phantom Debt’ Concerns
The rapid growth of BNPL has also raised concerns because much of the debt remains outside traditional credit reporting systems.
Most BNPL lenders do not report their loans to credit bureaus, making it difficult for other lenders, regulators and economists to determine how much debt individual consumers are carrying.
That has contributed to what is sometimes called “phantom debt” — borrowing that does not appear in conventional credit reports and may therefore be missing from assessments of household financial health.
FICO announced in 2025 that it planned to introduce credit scores incorporating BNPL data. But the new scores still do not have a release date because FICO has said it is waiting for lenders to report sufficient BNPL information to credit bureaus so the models can be tested and adopted.
The Federal Reserve Bank of Richmond concluded in a 2025 analysis that BNPL lending posed a “limited” systemic risk but warned the risks could increase if the industry’s growth went unchecked.
