Buy Now, Pay Later Spending Topped $160 Billion in 2025

American consumers increasingly used installment plans to cover rising everyday expenses last year.

Updated on Oct. 9, 2026 in Spending

Bold vector editorial illustration showing a stack of segmented blocks, with the top layer offset, representing divided financial installments. — American consumers utilized buy now, pay later installment plans for over $160 billion in 2025, signaling increased reliance on short-term credit to cover daily living expenses. AI Illustration. Upload story photo >

Live Poll

Do you believe buy now, pay later services are a helpful financial tool for your budget?

In 2025, consumers in the United States spent more than $160 billion using buy now, pay later plans. This figure highlights a significant rise in the popularity of short-term lending services for managing daily financial obligations.

Why it matters

Many Americans are turning to these installment plans to manage everyday expenses such as groceries, bills, and rent amid ongoing cash flow challenges. The shift reflects a growing reliance on credit to bridge gaps in monthly household budgets.

Pay-in-four plans accounted for approximately half of the $160 billion total spent in 2025. These plans allow users to split costs into four installments over a six-week period.

The players

Affirm

This is a publicly traded financial technology company that provides point-of-sale installment loans to consumers.

Klarna

This is a global retail bank and payments provider known for its popular pay-in-four shopping services.

Afterpay

This is a financial services company that operates a buy now, pay later platform without reporting activity to credit bureaus.

The details

Consumers use these services to navigate budget constraints, often tracking multiple concurrent loans to avoid additional late fees. While major agencies report lending activity to Equifax, Experian, and TransUnion, reporting practices vary; Affirm and Klarna share data with Experian and TransUnion, whereas Afterpay does not report to any bureau.

2023 served as the baseline for the observed 80 percent increase in plan usage.
Consumers spent over $160 billion on these payment plans during 2025.

Market Landscape

The widespread adoption of installment plans follows the historical trajectory of revolving credit established by the Federal Reserve's G.19 Consumer Credit report. This shift marks a notable departure from traditional credit card dominance, signaling a change in how consumers manage short-term liquidity.

Consumers relying on these plans must carefully track payment dates and amounts to avoid accumulating late fees that can quickly increase the cost of a purchase. Because different providers have varying policies on reporting to credit bureaus, users should be aware that their usage may not consistently impact their formal credit scores.

The takeaway

Using installment plans can help manage temporary cash flow gaps, but it requires diligent tracking to prevent long-term debt accumulation. Users should prioritize paying off these loans on schedule to maintain financial stability and avoid the compounding costs of late fees.