Americans "pay in installments" for essentials: Is a crisis approaching?

From electronics to groceries, BNPL creeps into every essential expense

In the gray area of ​​the US economy in 2025, a strong and controversial consumer trend is emerging, the explosion of "buy now, pay later" (BNPL) services.

No longer just a way to split payments for big-screen TVs or new sofas, BNPL is now a temporary lifeline for many Americans facing food bills, groceries, and other basic living expenses.

A recent study from marketing firm PartnerCentric paints a remarkable picture, with more than half of the US population (52%) admitting to using BNPL services.

More alarmingly, this trend is particularly prevalent among young people – who are supposed to be the future pillars of the economy – with 59% of Gen Zers and 58% of millennials relying on this form of short-term installment payments.

That number shows no signs of slowing down. According to PartnerCentric, 35% of those surveyed plan to rely on BNPL more this year, and that number jumps to a staggering 65% for Gen Z.

BNPL was originally designed as a flexible financing solution for relatively large-ticket items, typically $250 or more, such as electronics, furniture, or appliances. However, the harsh reality of persistent inflation and high interest rates is putting consumers in a difficult position.

PartnerCentric's survey revealed a sobering number: 31% of users admitted to having to use BNPL to buy daily groceries - the most essential items for life.

Another survey from LendingTree further reinforces this gloomy picture, showing that the percentage of people using BNPL to buy food has skyrocketed to 25%, nearly double the 14% just a year earlier.

More and more Americans are using BNPL to buy everyday food - the most essential items for life (Photo: AP).

Matt Schulz, credit analyst at LendingTree, told Newsweek bluntly: "The growing use of BNPL for small things like groceries... is further evidence that inflation, high interest rates and economic uncertainty continue to erode the finances of American households."

The initial convenience of splitting payments seems to be morphing into a stopgap solution, masking deeper financial difficulties.

BNPL: Budgeting tool or sophisticated debt trap?

The rise of BNPL has sparked a fierce debate. Service providers like Klarna market BNPL as a smart, transparent budgeting tool that helps users control their spending without having to go through complicated credit checks or worry about exorbitant interest rates like traditional credit cards.

Stephanie Harris, CEO of PartnerCentric, agrees, saying that “the rise of BNPL is not just about convenience, it’s about control. Consumers are looking for financial tools that fit the pace and pressures of modern life.” She emphasizes that brands offering BNPL is a way to show understanding and empower customers.

But many financial and economic experts are not so rosy, warning that the popularity of BNPL, especially for small, frequent purchases, could be a sign of declining personal financial literacy and a clear symptom of the economic pressures that are eroding the wallets of middle-class Americans.

Personal finance expert George Kamel likens BNPL to "a new kind of credit card without the card," and warns that using it to order food means Americans are "eating in debt - in four installments."

A recent partnership between BNPL giant Klarna and food delivery app DoorDash has raised concerns, and many economists see it as a red flag for the health of the economy. Gary Hufbauer, a respected economist, even called the deal “a measure of true desperation,” suggesting that people are struggling enough to pay for their home-delivered meals in installments.

These concerns are not unfounded. American consumer confidence in the economy is in a steep decline. The latest survey from The Conference Board showed that confidence fell for the fifth consecutive month in April, with the index of expectations for the future falling to a 13-year low.

"The main reason is that consumer expectations have fallen. The outlook for future income has turned negative for the first time in five years, suggesting that economic anxiety is spilling over into personal finances," said Stephanie Guichard, chief economist at The Conference Board.

The "ghost" of recession and the uncertain future of the US economy

With consumer confidence plunging and people increasingly relying on short-term loans like BNPL to cover basic expenses, the specter of a recession is looming larger. While the Trump administration and some policymakers have tried to reassure the public, many independent economists are issuing ominous warnings.

David Rosenberg, founder of Rosenberg Research, said that uncertainty, especially unpredictable tariff policies, is making both consumers and businesses more cautious about spending.

He warned that tariffs would first reduce real incomes, leading to a decline in spending, which currently accounts for nearly 70% of US GDP. As incomes decline, the abuse of forms of credit such as BNPL, even though they are interest-free, is still risky if users do not control it well and fall into a spiral of debt.

The specter of a US recession is looming larger and larger as consumer confidence plummets and people increasingly rely on short-term loans like BNPL to cover basic expenses (Photo: Getty).

A recent Reuters poll found that about 60% of economists surveyed rate the risk of a US recession in 2025 as “high” to “very high.” The growing reliance on BNPL for everyday essentials could be seen as an early indicator that the economy is in serious trouble.

Klarna, in a statement, recommended that Americans prioritize using debit cards for everyday spending and reserve interest-free BNPL “for the few occasions when you really need it” as a way to build a healthier financial future. But the real-world data tells a different story, with more and more people being forced to use BNPL for even grocery shopping.

Will BNPL continue to be a useful financial tool that puts control in the hands of consumers, as its vendors claim? Or is it just a shiny facade to mask a simmering personal finance crisis, a sign that the No. 1 economy is edging ever closer to the brink of recession?

The answer remains to be seen, but one thing is certain: how Americans use BNPL in the coming months will be an important indicator of the true health of the economy and how resilient people are to headwinds.

Source: https://dantri.com.vn/kinh-doanh/nguoi-my-tra-gop-ca-nhu-yeu-pham-khung-hoang-dang-toi-gan-20250512175601911.htm