Americans Are Buying Now And Paying Later More Often. Many Households Now Have Bills Topping $500 a Month.

Nearly one in five households using buy now, pay later methods made a repayment exceeding $500 in September as installment financing becomes an increasingly common part of Americans' monthly spending.

The Bank of America Institute's October Consumer Checkpoint found that 8.3% of households in its banking dataset made at least one Buy Now, Pay Later (BNPL) payment during September, compared with roughly 5% four years earlier. The $500 figure measures repayments made during that month, rather than a fixed monthly obligation or the total amount a household owes.

BNPL services allow consumers to divide purchases into smaller installments instead of paying the full amount upfront. Providers such as Affirm, Klarna, Afterpay and PayPal offer different financing arrangements, including plans that split payments into four installments over six weeks, often without interest if payments are made on time.

Although clothing, electronics and furniture remain popular purchases, installment financing has increasingly extended into everyday expenses. Research published in August by the Federal Reserve found that 16% of U.S. adults had used BNPL during the previous year, based on responses to its 2025 Survey of Household Economics and Decisionmaking.

Clothing and accessories were the most common purchases, reported by 49% of BNPL users, followed by electronics at 32% and furniture or appliances at 26%. However, one in five users also reported financing groceries or food delivery, showing how the payment option is being used beyond discretionary shopping.

The types of purchases varied considerably by household income. Among BNPL users earning less than $50,000 annually, 29% had used the service for groceries or food delivery, compared with just 9% of those earning $100,000 or more. Higher-income consumers were more likely to use installment financing for travel, while lower-income households used it more frequently for everyday purchases.

Bank of America's transaction data also found that BNPL adoption was increasing across all income groups, with the strongest growth among lower-income customers. However, the largest repayments were more common among wealthier households, with more than 21% of BNPL-using households in the bank's highest income group making payments exceeding $500, compared with approximately 18% in its lowest income group.

A large repayment does not necessarily indicate financial difficulty, since some consumers use installment plans to manage cash flow or spread out expensive purchases. The Federal Reserve's household survey found that 87% of BNPL users cited the ability to spread payments as a reason for choosing the service, while 82% mentioned convenience.

The industry has expanded considerably as installment financing becomes available through more retailers and payment platforms. A separate Federal Reserve research note published in June estimated that six major BNPL providers originated $156.7 billion in U.S. consumer credit during 2025.

Traditional pay-in-four plans accounted for $78.3 billion, while other short-term and longer-term installment products made up the remainder. Approximately 63% of the credit originated carried no annual percentage rate, while 37% involved interest-bearing arrangements, meaning BNPL purchases do not always come without borrowing costs.

The growing use of installment financing has also raised questions about how consumers manage multiple payment schedules. Unlike traditional credit cards, many short-term BNPL loans are not routinely reported to the major credit bureaus, making it harder for lenders to determine how much debt a borrower has accumulated across different services.

For consumers, juggling several repayment plans can create problems when payments fall due around the same time. The Federal Reserve's household survey found that 26% of BNPL users had made at least one late payment during the previous year, while 17% reported being charged extra for paying late. Another 11% said a BNPL payment had triggered an overdraft or insufficient-funds fee.

These difficulties were more common among consumers with limited savings and those using installment plans for essential expenses. However, Bank of America's latest research did not identify a sudden surge in adoption or widespread deterioration in repayment behavior, despite the steady increase in usage.

The bank also found that BNPL payments tend to rise during the holiday shopping season before declining in subsequent months. With installment financing now used for a wider range of purchases, the September figures show how payment plans have become a recurring feature of household spending rather than something reserved for occasional big-ticket purchases.