Americans spent more than $160 billion through buy now, pay later plans last year, according to research published by Federal Reserve economists, as consumers increasingly used installment payments for necessities as well as discretionary purchases.
Pay-in-four plans, which divide a purchase into four payments over roughly six weeks, represented about half of that total. Use of those plans has risen by nearly 80% since 2023, the research found. The remaining spending came through BNPL products structured as either shorter- or longer-term loans.
BNPL use is moving beyond online shopping
Buy now, pay later products let consumers spread the cost of a purchase across scheduled payments. The plans were once closely associated with online retail checkouts, but consumers are now using them for everyday expenses, including groceries, bills and transportation. Some services also allow people to divide rent into multiple payments.
That shift has changed the role of BNPL for some households. Mark Elliott, chief customer officer at Happen Bank, a financial services company formerly known as Lending Club, said the products are increasingly tied to managing cash flow rather than simply making checkout more convenient.
“It isn’t really just a convenience element anymore; it really is becoming a cash flow challenge,” said Mark Elliott, chief customer officer at Happen Bank.
Using BNPL for necessities can move a payment from the present to future paychecks. Sara Rathner, NerdWallet’s credit card expert, said consumers are facing pressure from higher everyday costs and a difficult job market.
“It has been very hard out there for a lot of people,” said Sara Rathner, NerdWallet’s credit card expert. “It’s a tough job market, and it’s a rough economy, and the cost of the things that we buy every day has been going up, in some cases more than people’s incomes.”
What the Federal Reserve research shows
| Measure | Finding |
|---|---|
| Total BNPL spending last year | More than $160 billion |
| Share from pay-in-four plans | About half |
| Increase in pay-in-four use since 2023 | Nearly 80% |
The figures include more than one type of BNPL arrangement. Pay-in-four products generally finish within six weeks, while other plans use different repayment periods. That distinction matters because consumers may face different payment schedules depending on the product they select.
Elizabeth Brown, 26, of Columbia, South Carolina, said she began using BNPL after moving out on her own and finding that her salary did not cover basic expenses comfortably. She said she used the products for groceries and furniture. Jordan Williams, 28, said she first used BNPL for concert tickets before turning to it for groceries after experiencing financial hardship following the birth of her daughter.
The experiences illustrate how BNPL has expanded from a way to divide the cost of a retail purchase into a payment tool used for household needs. The Federal Reserve economists’ findings show the scale of that change, while the growing use of the products for essentials underscores how payments scheduled for later can become part of a household’s regular financial obligations.
- Americans spent more than $160 billion using BNPL plans last year.
- Pay-in-four plans made up about half of that spending and have grown nearly 80% since 2023.
- Consumers are increasingly using BNPL for groceries, bills, transportation and rent, not only retail purchases.
