The Rise of “Buy Now, Pay Later”: Young Consumers Embrace Installment Loans for Everyday Essentials

More young adults are turning to “buy now, pay later” services for everyday purchases, reflecting the growing ubiquity of installment loans in an economy with rising consumer prices.

The popularity of “buy now, pay later” (BNPL) services continues to soar as young consumers increasingly rely on installment loans for both luxury and essential purchases. While traditional credit card usage remains prevalent among older demographics, data from LexisNexis Risk Solutions reveals that consumers aged 35 and under make up 53% of BNPL users but only 35% of credit card holders. This shift in consumer behavior highlights the growing comfort and reliance on installment loans to manage the rising costs of everyday essentials. This article explores the reasons behind this trend and its implications for young borrowers.

A Shift Towards Essential Purchases

Previously, apparel and accessories dominated the purchases made by millennial and Gen Z users of BNPL provider Afterpay. However, data from the company shows that in 2022 and 2023, these categories fell to fourth place, with “arts, travel and entertainment,” “home and garden,” and “hardware” taking the lead. This shift indicates that young adults are increasingly using BNPL services for everyday essentials as they adapt to higher prices.

Growing Comfort with BNPL

The comfort level with BNPL services is evident in the spending habits of young borrowers. Afterpay’s youngest users have seen significant spending growth on staples such as contact lenses (up 465%), garbage bags (up 182%), and first-aid antiseptics (up 98%). Surprisingly, even items like lighter fluid, laptop parts, and snoring and sleep apnea aids have witnessed spending growth surpassing 300%. This trend is not limited to Afterpay, as users of rival services like Klarna also embrace BNPL for everyday purchases.

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The Appeal of BNPL for Young Borrowers

For many young borrowers, BNPL services offer an alternative to traditional credit cards with high-interest rates. Benjamin Espinoza, a 27-year-old video editor from San Antonio, Texas, acknowledges that BNPL services do not help build credit but appreciates their convenience in the moment. Similarly, Jasmine Parker, a 30-year-old customer service representative from North Carolina, uses Klarna for groceries, allowing her to buy everything she needs without worrying about paying the full balance immediately.

BNPL and the Economy

The shift towards using BNPL for essential purchases reflects the growing ubiquity of installment loans in an economy where consumer prices are on the rise. Adobe reports that grocery purchases using BNPL loans have increased by 40% over the past year, surpassing all other product categories. This shift has been further fueled by social media platforms like TikTok and X, where users share BNPL-based grocery hacks to cope with higher costs.

The Concerns and Risks

While BNPL services offer convenience and flexibility, some analysts worry that their growth and popularity could lead to risky spending habits. Researchers at the New York Federal Reserve found that BNPL customers with shakier finances tend to use the services frequently for medium-sized, out-of-budget purchases. On the other hand, financially stable users turn to BNPL less regularly but primarily for avoiding credit card interest on larger purchases. It is crucial for borrowers to exercise responsible borrowing practices and avoid accumulating too many open installment loans.


The rise of BNPL services has revolutionized the way young adults manage their finances. With the convenience and flexibility they offer, installment loans have become a routine tool in the wallets of young consumers, helping them navigate the challenges of rising prices for everyday essentials. While there are concerns about the potential risks associated with BNPL, responsible borrowing practices can help mitigate these risks. As the economy continues to evolve, it is essential for consumers to understand the implications of their financial choices and make informed decisions when using BNPL services.

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