Americans Are Turning to Klarna and PayPal to Pay for Groceries and Gas, and the Numbers Reveal a Worrying Shift in How They Make Ends Meet
A New York Post report published on August 21, 2026 examined how Americans are using buy-now, pay-later (BNPL) services, including Klarna and PayPal, to cover everyday expenses such as groceries and gasoline. These services were once associated primarily with online shopping and purchases that consumers wanted to spread across several payments. Their growing use for necessities raises a different question about what happens when people need financing for expenses they cannot easily postpone.
Unlike a discount, an installment plan does not make a shopping trip cheaper. It divides the cost into payments scheduled for later, leaving the consumer responsible for the outstanding balance. Because groceries and fuel are recurring expenses, those future payments can overlap with the costs of the next shopping trip or tank of gas.
Grocery spending has moved up the list
An updated October 14, 2026, version of LendingTree’s 2026 buy-now, pay-later report found that 29% of BNPL users had used the services to purchase groceries. That compares with 25% in 2025 and 14% in 2024, meaning the share has more than doubled in two years. These figures measure reported grocery purchases among BNPL users, rather than the percentage of all American shoppers financing their food.
Groceries ranked third among purchase categories in LendingTree’s survey. Clothing, shoes and accessories led at 39%, followed by technology devices at 34%. The ranking shows that BNPL remains common for discretionary purchases while becoming a more visible option for spending on everyday necessities.
Some users say they need the loans to make ends meet
The financial pressure behind these transactions becomes clearer when consumers explain why they use the services. LendingTree found that 54% of BNPL users agreed they would not be able to make ends meet without these loans, while 26% strongly agreed. The percentage rose to 62% among parents with children younger than 18 and 59% among millennials.
Only 25% of users disagreed that they needed BNPL to make ends meet. These responses suggest that installment financing has become an important part of some households’ financial arrangements, rather than simply a convenient way to purchase something immediately. However, the figures do not explain each respondent’s income, existing debts, savings or other available payment options.
Gas is part of a broader list of essentials
Groceries are not the only everyday expense being financed through installment payments. In a separate July 2026 report, borrower advocacy group Protect Borrowers and polling organization Data for Progress reported that 38% of BNPL users had used these services to purchase gasoline. The same poll found that 46% had used them for groceries, 39% for utility bills, 42% for medical or dental care, and 33% for rent or other housing costs, according to Protect Borrowers’ published findings.
These figures come from a different poll focused on consumers’ experiences with essential expenses, so its grocery result should not be treated as directly interchangeable with LendingTree’s 29%. Survey dates, samples and questions can produce different percentages even when researchers are examining similar behavior. Taken together, the findings indicate that installment financing now reaches beyond shopping for optional goods and into bills that households must regularly pay.
Pay-in-four offers a simple promise
Buy-now, pay-later covers several types of financing, but the traditional pay-in-four format is particularly straightforward. In its August 2026 analysis of BNPL use, the Federal Reserve describes a typical arrangement in which a consumer pays one installment at checkout and three more over the following six weeks. Under that structure, a $100 purchase would be divided into four payments of $25.
The smaller initial payment can make a purchase feel more manageable because the buyer does not need the full amount immediately. Many traditional pay-in-four products do not charge interest when consumers meet the required terms, making them appealing to shoppers who want to spread out spending. However, dividing the price does not eliminate the debt, and the outstanding installments remain obligations even after the purchase has been brought home.
The next paycheck may already have a claim on it
A payment plan that looks affordable for one purchase can become more complicated when several transactions occur close together. Each financed purchase can create its own series of due dates, potentially overlapping with rent, utilities, insurance and other routine household expenses. The result is that part of a future paycheck may already be committed before it reaches the consumer’s bank account.
The Federal Reserve notes that pay-in-four repayments are commonly collected through automatic withdrawals from checking accounts. Automatic payments can make repayment easier to manage, but they can also create problems when an account does not contain enough money on the withdrawal date. A purchase that seemed manageable at checkout may therefore contribute to a larger cash-flow problem later.
Loan stacking can hide the full commitment
LendingTree’s 2026 report found that approximately one in four BNPL users had three or more active loans at the same time. That figure was slightly higher than the 23% reported the previous year. The survey also found that 68% of BNPL users agreed that these loans could cause them to overspend.
The number of individual loans does not automatically reveal how much someone owes, but it illustrates why checking each installment separately can obscure the total commitment. Several relatively small payments can accumulate into a substantial amount due across a single pay period. LendingTree also found that 54% of BNPL users had regretted a purchase financed this way, including 18% who had regretted more than one.
Late payments have risen in the latest survey
Repayment difficulties are another important part of the picture. LendingTree reported that 47% of BNPL users said they had made a late payment during the previous year, compared with 41% in 2025 and 34% in 2024. These results refer to survey responses from users of the services, not to all American consumers.
Among respondents who had paid late, 72% said their most recent late payment was no more than a week or so overdue. Even a brief delay can matter when a lender charges a fee or when the payment coincides with other withdrawals from a bank account. The results suggest that late payments affect a substantial share of users, although they do not establish that every delayed payment leads to additional charges.
Grocery borrowing often comes with repayment trouble
A separate analysis from the Urban Institute provides another perspective on borrowing for necessities. Its July 13, 2026, report on families’ grocery expenses, based on findings from the 2025 Well-Being and Basic Needs Survey, found that nearly one in ten working-age adults had used BNPL to pay for groceries. Among those who had financed grocery purchases this way, 34.8% had missed a BNPL payment.
That percentage applies specifically to the group of working-age adults who used BNPL for groceries, rather than all households or all BNPL users. The Urban Institute also found that 51.3% of working-age adults reported that their grocery costs had increased a lot over the preceding 12 months. Its findings connect the use of credit for necessities with a broader household-budget challenge, especially for families already struggling to keep up with rising food expenses.
Fees can chip away at the appeal
The promise of splitting a purchase into smaller payments can lose some of its appeal when additional charges appear. According to the Consumer Financial Protection Bureau’s guidance on BNPL fees, many pay-in-four products do not charge interest when borrowers meet the terms, but most BNPL providers charge late fees for missed payments. Banks may also charge overdraft or nonsufficient-funds fees when automatic repayments are attempted without enough money in the account.
The Federal Reserve’s analysis of 2025 household data found that 11% of BNPL users had a payment trigger an overdraft or nonsufficient-funds fee in the preceding year. The figure reached 18% among users who said they could cover an emergency expense of less than $100 with their savings, compared with 4% among those able to cover an expense of at least $2,000. That difference highlights how the same repayment can have very different consequences depending on a borrower’s financial cushion.
Not every plan carries the same terms
The BNPL label covers more than one lending arrangement, and the terms can vary considerably between products. A short pay-in-four loan may have different costs and repayment requirements from a longer monthly installment plan. Consumers cannot determine whether a particular loan charges interest, imposes fees or allows payment dates to be changed simply by recognizing the name of the service.
Before accepting a plan, borrowers need to understand the total amount due, the repayment schedule and the consequences of missing an installment. They also need to check how automatic withdrawals work and what happens if a purchase is returned or disputed. A smaller amount due today is useful only if the remaining payments fit the household budget as well.
Missed payments can reach beyond an app
The consequences of falling behind may extend beyond losing access to a BNPL service. The Consumer Financial Protection Bureau explains that missed payments can lead a provider to freeze an account, while an unpaid balance may eventually be sent to a debt collector. Its consumer guidance on BNPL and credit scores also explains that most providers generally do not report routine pay-in-four payment histories to the major credit bureaus, but debt sent to collections may still be reported.
This means consumers should not assume that a loan is consequence-free simply because routine on-time payments may not appear on their credit reports. Unpaid debt can still create problems if a lender or collection agency reports it to a credit reporting company. The credit implications also depend on the particular product and how the lender handles repayment information.
Convenience remains a major reason people use BNPL
Despite the concerns about financial pressure and repayment difficulties, the evidence does not suggest that every consumer uses these loans out of desperation. In the Federal Reserve’s analysis of its 2025 household survey, the most frequently selected reasons for using BNPL were wanting to spread out payments, cited by 87% of users, and convenience, cited by 82%. Having it as the only available payment method was the least commonly selected reason.
These findings provide useful context for understanding the increase in everyday spending financed through installment plans. Some consumers value predictable payments or prefer to spread a purchase across several weeks, while others report needing BNPL to make ends meet. A single financed purchase therefore does not establish that a household is in financial trouble, but the broader combination of grocery borrowing, missed payments and reported dependence points to genuine concerns for a portion of users.
The real test comes after checkout
The findings from LendingTree, the Federal Reserve and the Urban Institute examine different populations and time periods, but they reveal a common development: installment credit is increasingly being used to cover necessities as well as optional purchases. The surveys also show that some users struggle to repay their loans, encounter overdraft charges or say they cannot make ends meet without the services. Those patterns do not describe every borrower, but they show why the way BNPL fits into a household budget matters.
Ultimately, the important figure is not just the first installment displayed at checkout. It is the combined total of every payment already scheduled, measured against the money available after groceries, fuel, housing and other obligations are covered. When a payment method makes purchases feel smaller in the moment, keeping track of the full amount still owed is essential to understanding what those purchases will actually cost in the weeks ahead.
