Roughly 60% of Coachella general admission ticket buyers chose to finance their passes through a payment plan — up from just 18% in 2009. That’s a troubling statistic — and it’s not just music festivals.
DoorDash and Uber Eats recently made headlines offering new payment plans for takeout. Yes, people are financing fast food.
Buy Now, Pay Later (BNPL) has become a modern way to buy something you can’t currently afford. But the convenience it offers comes with long-term consequences for how we think about money, spending, and debt.
A Brief History of BNPL
BNPL isn’t new. It began as layaway and has its roots in the early 1900s. Shoppers would put a down payment on a large purchase and make smaller payments while the store held onto it. Once the balance was paid in full, they could take it home.
These programs grew in popularity during and after the Great Depression when people didn’t have disposable income for large purchases. They were more akin to “pay now, buy later.”
What You Can BNPL Today
Today, the opposite is happening. Consumers get the product now and worry about payments later — even for small transactions. These programs may offer flexibility, but they thrive on instant gratification.
BNPL has found its way into nearly every industry: flights and hotels, clothing, groceries, video games, electronics, gym equipment, and even fast food. It’s now common to split up the cost of a new TV for Christmas, finance a computer or weight machine for your home office, or break up the cost of a Chipotle burrito after class.
This shift especially appeals to younger generations and low-income buyers, many of whom are more likely to feel financial pressure.
What’s Fueling BNPL Growth?
BNPL’s explosive growth comes down to two major forces: rising consumer debt and strategic business incentives.
Consumer Debt
Revolving Consumer Credit Owned and Securitized – FRED
Revolving credit — primarily credit card balances — has seen a sharp uptick, especially post-Covid. Consumers are carrying more debt than ever, and BNPL debt isn’t even counted in this data. That means total debt levels may be much higher than they appear.
As consumers become more comfortable taking on debt, BNPL is there to capitalize.
Business Incentives
Firms like Klarna, Affirm, and Afterpay are not offering buy now, pay later out of kindness. They are leveraging buyer psychology to drive sales. According to Klarna, using its service leads to a 23% increase in average order value, a 20% boost in conversion rates, and a 46% increase in purchase frequency.
These services exist to help businesses sell more. And because BNPL helps generate more revenue, businesses are going to continue taking advantage.
Risks of BNPL
Before making a purchase with BNPL, it’s important to consider the risks — many of which are listed directly on provider websites.
First, BNPL encourages impulse spending. Many consumers make purchases they would not consider if full payment were required upfront. The ability to delay spending increases the likelihood of buying things that strain their budgets.
Second, some plans come with hidden fees or deferred interest clauses. Retailers often advertise no-interest financing, but missing a payment or misreading the fine print can result in retroactive charges.
Third, BNPL fosters a false sense of financial freedom. Small recurring payments make spending feel painless, but it’s an illusion that disappears when multiple purchases convolute your budget.
Benefits of BNPL
BNPL is often marketed with several practical advantages, particularly for purchasers with limited access to traditional credit. For individuals with lower credit scores, BNPL can make larger purchases more attainable. And because payments are spread over time, they appear more manageable.
In some cases, deferring payment allows purchasers to keep cash on hand. For the financially savvy, that cash could be placed in a high-yield savings account or invested elsewhere, generating returns in the meantime.
Still, these benefits are only meaningful when BNPL is used responsibly. It is not a replacement for budgeting or saving. The most optimistic use cases come from consumers who are already in strong financial health.
Financial Flexibility or Folly?
In a world where almost everything can be financed, it’s worth asking a simple but uncomfortable question: how much are you already paying off?
Consider your current obligations:
- Subscriptions
- Streaming services
- Credit cards
- Deferred purchases
BNPL may feel like a frictionless way to buy now and sort it out later, but that ease is what makes it dangerous. Friction gives us a moment to pause, to question, and to weigh whether the cost is truly worth it.
Our mission is to challenge conventional financial thinking and equip you with the tools to make wise, tested decisions. We’re not here to sell you shortcuts — we’re here to give you clarity, discipline, and conviction. For more resources on managing money in today’s economy, check out our podcast and other stories.