Why Have Buy Now Pay Later Options Become So Popular?

Buy Now Pay Later lines of credit have become popular for quite a few different reasons. People are largely attracted to BNPLs because they allow consumers to payoff their purchases in installments and they usually do that without charging customers any interest. What's more? This new trendy form of credit (in so many ways at least) is also conveniently placed at checkout on most online stores. It's an enticing offer and one that many people are in fact taking as the industry and BNPL niche has grown tremendously in recent years. Well, if it seems too good to be true, there's always a chance it might be. Let's discuss a few reasons why we need to be conservative in our use of these options.

Outside Of Your Budget

A secondary reason BNPLs have become so popular is that the accounts live outside of traditional credit (for now at least). As of right, Buy Now Pay Later accounts are not currently reported to the three major credit bureaus. However, that process is underway and the accounts will soon begin to be reported with all three major bureaus starting very soon.

Buy Now Pay Laters serve the purpose of providing Americans with another outlet for borrowing that is outside the norm - for something like your typical store credit card. Although many Americans still opt for the store credit card, BNPL accounts are becoming a sort of installment alternative. Although they don’t grant the same points based rewards, they do offer consumers a line of credit to buy their goods at checkout. Offering this extra line of credit at the point of purchase can be very enticing for many consumers and allows them to purchase more goods than they may have otherwise purchased. For many consumers a 0% interest option at checkout is reason enough to justify a purchase. This increases spending and makes consumers buy more while also decreasing shopping cart abandonment rates for sellers and retailers. Seems like a Win-Win right? Well not necessarily for everyone.

Reminiscent of Lay-a-way

I try to think of BNPLs as a better version of Layaway from the 1990s, except you aren’t required to pay off the item in full in order to receive it or finish paying to wait for a shipment. Many consumers want things very fast nowadays and they don’t want to have to wait for it and looking back this we do sy how layaway really wasn't a good service for impatient and how spoiled we are nowadays.

Fintech Innovation

BNPL is another form of innovative credit that looks to put consumers more in debt and get them to spend more. Both brick and mortar and e-commerce stores want to get rid of inventory as quickly as possible and BNPLs help do exactly that. They help increase sales volume and companies that have partnerships in place can see a tremendous boost in sales. That is the ultimate goal of most forms of credit, to get money flowing through the economy and to get consumers to spend more. This is what eventually happens with newer and innovative forms of credit. Most of the time these forms of credit work out and become a part of the broader economic landscape but sometimes they don't. Think convertible notes, bonds with an option to buy, stock market options, etc. Ones that didn't work out (mortgage backed securities, credit default swaps, etc.) ending up causing the Great Recession.

The way BNPLs work, they allow for payment installments on any eligible purchase within that particular network. So, Affirm and Klarna and various other BNPL companies have different partners that accept their service at checkout. These options are usually integrated right onto website and are becoming so popular that they are now already have prepackaged integrations for sellers with Point of Sale companies and juggernaut drop-shipping companies like Shopify.

Eventually when these trends catch on, the pools of users becomes so large and sticky (if the product/service is good) that the financial instrument becomes a staple within the financial services industry. This appears to have already happened with BNPLs. This is why they will soon be added onto credit reports with other traditional types of credit. However these services are not yet battled tested and although they appear great now, that could change in the near future.

Burrito Bubble

New levels of extremes for borrowing occurred in 2025 when BNPLs were used to pay for burritos in installments. After recently going viral on the internet, Buy Now Pay Laters were used for burrito transactions and even other fast food orders to be paid off using their installment option on delivery services likes Grubhub. A social media craze stirred as this was allowed and internet goers shared a screenshot of a burrito purchase being broken up into installment payments. This "Burrito Bubble" quickly starting trending all over social media. Although the jokes and craziness were all fun and good, it is a bit of an extreme to borrow for a $6 purchase. It’s kind of an outrageous thing to do, to say the least. Yes we use our credit cards for small transactions like a cup of coffee, etc., but internet goers agreed this seemed to be a new level of insanity.

Otherwise, these types of services can be both good and bad. It’s often not the tool that is the issue, but how it's used. The problem usually stems from overuse and misuse of the service or product and loopholes. As of right now, these options have become favored by consumers and they are entering into their own niche within traditional finance like credit cards. However, things could easily change.

Regardless of how you feel about BNPLs, they appear to be sticking around for a little while longer as consumers have gotten accustomed to their convenience and the option of paying in smaller installments.

Buy Now Pay Later accounts all have their separate accounts for setup and they all require different payments with each installment/purchase. So you do need to be a little more mindful of your purchases as they wont appear on a consolidate credit card statement (if that’s what you’re more used to seeing).

All joking aside, the last thing the world needs is a great burrito default, so hopefully consumers don’t get in over their heads and are able to maintain their debt levels. Otherwise, they debt crisis in this country will continue to get worse and worse. And if it's burrito purchases that break the camel's back we're in trouble.