Companies offering “Buy Now, Pay Later” (BNPL) loans are increasingly expanding their products to cover basic necessities like utility bills, rent, and groceries as costs rise across the U.S. economy.
The shift into financing everyday expenses comes as energy costs escalate and wage growth slows. While President Donald Trump pledged to lower consumer prices and cut household electricity bills in half, federal data indicates electricity prices have risen 18% during his second term, with average U.S. gas prices reaching $4.06 per gallon.
Lending apps such as Flex and Zip now allow borrowers to finance payments for electricity, water, broadband, mobile phone service, health insurance, and mortgages.
READ: Klarna IPO raises $1.37 billion as Buy Now, Pay Later demand grows (September 10, 2025)
Additionally, the platform Affirm has begun offering short-term loans to tenants extending monthly rent payments, alongside promotional instalment offers for routine back-to-school items.
Polling from Data for Progress highlights how widely instalment credit is being used for daily necessities.
According to the survey, 46% of buy now, pay later customers have used the financing for groceries, 42% for medical or dental expenses, 39% for utility bills, 38% for gasoline, and 22% for childcare.
Federal Reserve research cited by The New York Times shows Americans spent $160 billion through instalment loan programs last year, nearly double the amount spent in 2023.
Though this represents a fraction of the $3 trillion spent annually on consumer credit cards, instalment financing continues to expand at double-digit rates every year.
Major providers operating in the market include Affirm, Klarna, Afterpay, PayPal, Synchrony, Splitit, Sezzle, and Zip, supported by private equity and venture capital backing.
Advocacy groups warn that these instalment loans carry financial risks for vulnerable families.
READ: Klarna plans for $1 billion IPO as soon as next week (March 7, 2025)
A recent report from Protect Borrowers noted that while loans are frequently marketed as fee-free, instalment products often include late fees ranging from $7 to $8 per missed payment, capped at up to 25% of the purchase price, alongside additional charges for financing adjustments or insufficient bank funds.
In response, policy analysts from Protect Borrowers are calling on Congress to enact federal regulations to ban deceptive pricing and restrict predatory lending practices in the instalment debt market.