Struggling with buy now, pay later? You’re not alone.

Images by GettyImages; Illustration by Hunter Newton/Bankrate

Buy now, pay later (BNPL) products give the illusion of inexpensive payments — something that can make it easy to get carried away, resulting in loan stacking and financial risk. This is an especially acute risk as millennials and Gen Zers feel more strapped for cash than ever and looking for ways to stretch their cash flow.

The uptick in usage has been shown recently in Bankrate’s Buy Now, Pay Later Survey. Over a third of U.S. adults (39 percent) have used at least one BNPL service at checkout, according to the survey. If you have taken out multiple BNPL plans and find yourself in a bind, you’re not alone and you have solutions. You’ll just need to act quickly to avoid credit damage.

What is loan stacking?

Loan stacking involves juggling multiple loans or other credit products. While many consumers typically employ this method to achieve a certain goal, like paying down credit card debt or a payday loan, it’s become an unfortunate side effect of frequent BNPL usage.  Credit stacking is one of the most common risks among BNPL users, according to a 2023 Consumer Financial Protection Bureau (CFPB) report.

Unlike other credit products, like personal loans, which typically require a hard credit pull, BNPL platforms typically approve users based on a soft credit check and bank account activity. That means they lack visibility of the user’s full financial state and creditworthiness.

The lack of guardrails, along with the initial payment requirement of 25 percent of the total purchase, make it easy for users to overspend, increasing their chances of default.

How stacking BNPL payments are affecting consumers

The most recent CFPB report found that BNPL users had significantly more debt — retail accounts, personal loans and student loans — than non-users. It also reported that nearly 95 percent of BNPL borrowers have a credit account, compared to 86 percent of non-users.

The higher debt loads among BNPL users may explain why many are having difficulty keeping up with payments. According to the CFPB, they were more than twice as likely to be delinquent on a loan or credit product by 30 days or longer.

In line with the increased overall debt loan, users were more likely to have higher utilization ratios. “In addition to having lower savings and liquidity, respondents who reported using BNPL in the previous 12 months showed higher levels of credit card debt and rates of credit card utilization compared to non-BNPL users,” the report reads.

What to do if you’re struggling with your BNPL payments

If you’re already having issues keeping up with your BNPL payments, there are some ways you can get the situation under control, including the following:

• Seek a payment extension: Some BNPL platforms allow you to change — or extend your deadline, which can help you avoid a late or missed payment. For instance, Klarna offers a 14-day payment extension upon request.
• Contact your lender: If extending your due date won’t help solve your problem, the next step is to contact the BNPL lending platform and ask about any hardship programs they may have in place. This can be especially helpful, if your financial situation has changed significantly since you first took out your loan (hours reduction, loss of employment, etc).
• Use a credit card with a 0 percent introductory rate: If you have good credit and qualify for a 0 percent introductory rate credit card, you could transfer multiple BNPL balances into that account. This can buy you some additional time to pay off your balance, interest-free. However, you need to be mindful of your spending habits when using this option and make sure to not take on more debt while paying off your balance. Otherwise, you could be stuck with a higher interest rate, and more debt, than when you started.
• Consolidate your debt: If you have multiple BNPL balances that amount to $1,000 or more, consider applying for a debt consolidation personal loan. It can help you save money in interest and pay down your balances in a more organized fashion. However, your credit needs to be good enough to get a lower interest rate than your current rates, if any of your BNPL products have one. Otherwise, you’ll end up having paid more than necessary in interest charges by the end of your loan term.

The bottom line

It’s easy to lose track of your spending when using BNPL, but this can lead to financial trouble — especially if your financial circumstances change. If you’re having trouble keeping up with multiple payments, there are ways to get your finances back on track, but it may take a deep dive to figure out how you got there in the first place.

Once you understand your situation better, investigate the repayment options available to you. However, wherever you are in this process, don’t stop making the monthly payments until your balances are completely paid down.

At the end of the day, it may be necessary to reevaluate your budget and stop using BNPL services. Avoid online shopping and shop at retailers that offer BNPL to help you rebalance your budget and prevent excessive debt accrual.