More shoppers are choosing to buy now, pay later this holiday season.
On Cyber Monday alone, consumers financed more than $1 billion in online purchases using this payment option — a record, according to Adobe Analytics data.
By the end of the holiday season, that figure is projected to jump to $20.2 billion, up 11% from last year, according to Adobe.
Buy now, pay later (BNPL) works like it sounds. Shoppers buy goods instantly through lenders like Afterpay, Affirm and Klarna — and pay them back over time.
Because many loans are easy to access, interest-free for limited or set periods, and don't require any long-term commitment, it's an increasingly popular purchasing option. Especially for people with no or limited credit history, BNPL can make large or unexpected purchases more manageable.
But like any form of credit, BNPL comes with drawbacks. If you don't pay back a BNPL loan, it can get sent to a debt collector. From there, it can be reported to credit bureaus. Those missed payments could hurt your credit score.
And a lot of BNPL borrowers run into trouble. According to a 2025 survey by Lending Tree, 41% of respondents who used BNPL loans said they made a late payment last year.
Finance experts share tips on how to use BNPL responsibly — and protect yourself from risk.
DON'T use BNPL if you can't pay the full amount
Just because a BNPL lender lets you borrow money doesn't necessarily mean they think you'll be able to pay it back.
" It's not an indicator of your credit worthiness," says Lisa Gill, an investigative reporter at Consumer Reports. "It's just an indicator that they're willing to take you on your word."
So follow the cardinal rule of borrowing money: Make sure you can pay it back. Be especially wary of using BNPL if you're already in credit card debt, or don't have the money to cover the payments.
But if you have the money to make the payments, go for it, says Felix Aidala, a former senior research analyst who studied BNPL loans at the New York Federal Reserve. It's much riskier if you're using BNPL to buy something "because you can't afford it otherwise."
People who use BNPL are overall more likely to be "financially fragile," according to a 2023 report from the New York Federal Reserve, which Aidala worked on.
DO avoid taking out multiple BNPL loans at the same time
It's easy to borrow too much and lose track of how much you're paying and when you'll be paying it.
"All those debts add up in a way that's not easily visible," says Lauren Saunders at the National Consumer Law Center. "You don't get a simple, clear statement showing how much credit you've taken out when your payments are due."
Each loan can also have a different billing cycle with a different repayment period, even between loans from the same provider, says Ted Rossman with Bankrate, a consumer finance website. And keep in mind: "many of those plans longer than six weeks do charge interest."
With all those payments debiting your checking account at different times, it's easy to overdraw your account.
Many BNPL loans default to autopay. And if you lose track of how many loans you're repaying automatically, "there may not be enough in that account to actually cover all those loans," Gill says.
That can trigger overdraft fees at your bank or force you to slash other parts of your budget to make up the difference.
One way to guard against this is to take out BNPL loans from only one lender so all your payment plans are in one place, Aidala says.
DO be aware of impulse shopping
You just arrived at the checkout screen and you're not sure you want to click the "buy" button on that thing you probably don't need. Say the item is $200. But then you see the option to buy now, pay later.
At that moment, it can be easy to lose sight of the total cost, Rossman says. Fifty bucks sounds better than $200, right? So you take up the offer to pay in installments.
Don't just buy something because buy now, pay later is an option. Buying on impulse can lead to buyer's remorse, says Bob Sullivan, journalist and author of Gotcha Capitalism.
That's especially true among younger shoppers. Over one in four Gen Z BNPL users say they regretted spending as much as they did using BNPL, according to a Bankrate survey released earlier this year.
One way to head off regret, Sullivan says, is to imagine talking with your future self looking at all those bills. That could help you get a grip on what your purchase means over the long term.
DON'T use BNPL if you need more purchase protection
Say you buy a $400 purse using a BNPL loan, but it arrives damaged. Or you receive another purse entirely.
Unlike what would happen if you charged that purchase to a credit card, BNPL loans don't afford you the same rights that credit cards do.
The big one is chargeback rights: the power to dispute charges on your credit statement if the item never arrives or if it's damaged. Many BNPL lenders have return or dispute policies, but some consumers say they've found themselves paying nonetheless.
BNPL lenders aren't regulated as strictly as credit cards. That means if something goes wrong with an order made using BNPL, you could end up "on the hook for making those payments," Gill says.
The digital story was edited by Malaka Gharib, with art direction by Beck Harlan. We'd love to hear from you. Leave us a voicemail at 202-216-9823, or email us at LifeKit@npr.org.
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