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Buy now, pay later: when it helps and when it hurts

Pay-in-four plans charge no interest if you pay on time, but missed payments and bank fees add up. New CFPB and Federal Reserve data on who uses BNPL and how to use it safely.

Bison Cash USA editorial teamUpdated October 17, 2026Fact-checked against 3 primary sources

The short version

At a glance

Key takeaways

  • 16% of U.S. adults used buy now, pay later in 2025.2
  • 11% of BNPL users had a payment trigger an overdraft or insufficient-funds fee from their bank.2
  • Among six large BNPL lenders, borrowers took an average of 6.3 loans per lender in 2023.1
  • 4.1% of loans were charged a late fee, averaging about $10.1

The basics

How pay-in-four works

The CFPB defines BNPL as a four-installment, no-interest loan with a 25% down payment and the rest due in two-week intervals.1

A typical pay-in-four plan for a $200 purchase

Four equal payments, no interest

At checkout (25% down)$50
Two weeks later$100
Four weeks later$150
Six weeks later$200
Bars show the running total paid. Structure based on the CFPB’s definition of BNPL: four installments with a 25% down payment, then payments every two weeks.1

The market

BNPL by the numbers

53.6Mconsumers took at least one BNPL loan from six large lenders in 20231
335.8Mloans made in 2023, up from 273.8M1
$135average loan size1
$848spent per user per lender in 20231

The CFPB notes that 53.6 million likely overstates the number of individual users, because one person can borrow from several lenders.1

Pros and cons

When BNPL helps and when it hurts

When it can help

  • You can afford the purchase now and simply want to spread out the cost
  • You pay all four installments on time, so there is no interest or fee
  • It replaces a credit card balance you would otherwise carry at a high APR
  • You track every plan and its due dates in one place

When it can hurt

  • Payments are pulled from a checking account that is short, which can trigger bank fees2
  • You miss a payment and pay a late fee1
  • You stack several plans from different apps and lose track
  • You use it for everyday needs like groceries because cash is already short

Use it wisely

Five rules for using BNPL safely

  1. 1

    Only finance what you could pay today

    If you could not pay the full price now, four payments will not change that. They only delay it.

  2. 2

    Limit yourself to one plan at a time

    The average borrower took 6.3 loans per lender in a year.1 Several overlapping plans are hard to track.

  3. 3

    Pay with a card, not a thin checking account

    If your checking account could dip below zero on a payment date, a bank fee can cost more than the late fee.

  4. 4

    Turn on reminders

    Most apps can send payment reminders. Put each due date in your calendar too.

  5. 5

    Compare with other options by APR

    Some longer BNPL plans charge interest. Compare the APR, which includes most fees, before you agree.3

FAQ

Common questions

Does buy now, pay later charge interest?

Standard pay-in-four plans usually charge no interest if you pay on time. Some longer BNPL plans do charge interest, so check the APR before you agree.

What happens if I miss a BNPL payment?

You may be charged a late fee. In the CFPB’s 2023 data, 4.1% of loans had a late fee, averaging about $10. A failed payment can also trigger an overdraft or insufficient-funds fee from your bank.

How many people use buy now, pay later?

The Federal Reserve found that 16% of U.S. adults used BNPL in 2025.

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Sources

Sources for this page

Official and primary sources only. Last reviewed October 17, 2026.

  1. 1
    Consumer Financial Protection BureauMarket report
    The Buy Now, Pay Later Market (report)
    consumerfinance.govDecember 2025 · 2019–2023 data
  2. 2
    Federal Reserve BoardSurvey data
    Economic Well-Being of U.S. Households in 2025: Fact Sheet
    federalreserve.govMay 13, 2026
  3. 3
    Consumer Financial Protection BureauRegulator guidance
    What is the difference between a loan's interest rate and its APR?
    consumerfinance.govInterest rate vs. APR