Buy now, pay later services offer short-term convenience, but they could end up costing you. Here's how.
As costs continue to rise, more families are stretching their budgets by using "buy now, pay later" (BNPL) services that let shoppers split payments into smaller installments.
But missing payments could lead to fees and, in some cases, hurt your credit.
BNPL use on the rise
Financial analyst Michael Gunther tracks spending using data from 40 million credit and debit cards. His research shows BNPL use more than doubled in the last five years.
"People are obviously under economic stress," Gunther said. "These are becoming so much more widespread."
He says the most frequent users are renters and families with children.
"It's simple, easy to access," said Lorelei Salas, former supervision director with the Consumer Financial Protection Bureau.
Salas said while BNPL can be a useful budgeting tool, treating it like free money can quickly become an expensive mistake.
"Buy one thing and then don't use [BNPL] again until you finish paying," she said. "Because the problem is that it's on you to keep track of all those payments and the due dates."
BNPL late fees
The most common version BNPL plan is "pay in four." The shopper pays the first 25% at checkout, then makes the remaining three payments over the following weeks.
Salas said where consumers can run into trouble is when they start doing what's called "stacking." That's when a consumer is making payments on multiple BNPL plans at the same time.
"The instance of people using more than one, and in some cases two or three or more, has risen substantially," Gunther said.
Salas said many "pay in four" plans are interest-free, but if you miss a payment, you could face late fees.
Klarna's late fee is up to $7. For Afterpay, it's up to $8. Both cap fees at 25% of the purchase amount, or less. The companies send reminders and provide a 10-day grace period before the fee is charged.
Affirm does not charge late fees, but the company said a missed or late payment may result in a consumer being unable to use the service again for a future purchase.
Klarna and Afterpay also said if a consumer is behind on a payment, they will not allow them to take out new loans.
Afterpay said as of May 2026, 98% of all purchases made through their service incurred no late fee.
BNPL credit impact
Experts said more and more BNPLs are now reporting to the credit bureaus, meaning your payment history could follow you.
Make your payments on time, and your credit score could improve. Miss payments, and it could damage your score.
In a statement, a Klarna spokesman said, "Klarna does not report interest-free BNPL transactions in the U.S., but they do report their interest-bearing, longer-term transactions to both TransUnion and Experian. For all its products, Klarna performs a soft credit inquiry to assess creditworthiness without impacting credit scores."
Affirm said it reports all loan activity to TransUnion and Experian on a monthly basis, but that activity is not currently factored into credit scores or visible to other lenders.
Afterpay, meanwhile, said they do not report BNPL activity or account information to credit bureaus and only conduct soft credit checks that do not impact credit reports.
Each company offers different features and benefits. Consumers should read the fine print before signing up.
