$160B BNPL Credit Wave: Fed Data Raises Risk Questions

From a credit and markets perspective, the $160 billion BNPL figure is a fast-growing but still under-reported piece of consumer leverage. Investors and lenders should watch how quickly installment obligations migrate into everyday cash-flow categories, whether they appear on credit files, and what fee structures mean for actual borrower cost.

American consumers spent more than $160 billion through buy now, pay later plans in 2025, according to Federal Reserve economists, and the syndicated reports from iHeart stations on October 1 mark a data point that moves BNPL from a pandemic-era novelty into a structural piece of U.S. consumer spending. The most striking detail is not the headline number alone but where it is coming from: BNPL was initially associated with discretionary large purchases such as electronics or furniture, but Fed researchers note it is now routinely used for groceries, utility bills, and even rent. That shift means installment credit has entered the household cash-flow cycle, not just the shopping cart.

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Pay-in-four plans, the most common structure, accounted for roughly half of the total, implying about $80 billion in 2025 volume, and usage of these plans has risen nearly 80% since 2023, according to the Federal Reserve research.

Pay-in-four plans, the most common structure, accounted for roughly half of the total, implying about $80 billion in 2025 volume, and usage of these plans has risen nearly 80% since 2023, according to the Federal Reserve research. This growth rate is far faster than overall card spending, but context matters. The Federal Reserve Bank of Richmond cautions that BNPL remains a small share of total U.S. credit card spending, and the product has so far maintained relatively low default rates compared with other credit products. That mix—high growth, low aggregate share, low defaults—is exactly why Walmart, Amazon, and platforms like Afterpay and Klarna have kept pushing checkout integration, and why Affirm's merchant partnerships are seen as durable revenue channels.

Yet the consumer finance picture is more nuanced. Sara Rathner, a credit card expert at NerdWallet, argues that BNPL can be beneficial when timed with guaranteed cash flows but can create financial stress when payments collide. Ed deHaan of Stanford Graduate School of Business adds that some BNPL products charge hefty fees for missed payments, which can turn a zero-interest split into an expensive obligation. A key structural issue is data opacity: many BNPL loans are not consistently furnished to the credit bureaus, so a borrower can stack multiple plans across different providers and present an incomplete picture to lenders, landlords, or even future employers. The Fed's acknowledgment that missed payments could eventually affect credit scores is a signal that more reporting integration may be coming.