More than half of buy now, pay later users have missed a payment at some point—but the surprising twist? It’s often the high-income borrowers who are the biggest offenders.
An increasing number of BNPL users treating their loans like credit card bills, weighing the convenience against the risk of a late fee. According to data from Lending Tree, in the past year, 41% of respondents reported a late payment, up from 34% the previous year. Nearly a quarter of BNPL users have had three or more active BNPL loans at once—and again, high-income borrowers top the list.
The Same Playbook as Credit Cards
BNPL providers often tolerate late payments, as the fees can be profitable. But for users, this convenience comes with hidden risks.
“Nearly half of credit card users are revolving debt, meaning they couldn’t pay the full debt on time,” said Ben Danner, Senior Analyst, Credit and Commercial at Javelin Strategy & Research. “A growing number of late fees indicates financial strain as households prioritize other areas of debt over BNPL loans. Any kind of late payment or failure to pay could cancel out any type of increase gained from taking out a loan with a vendor.”
“Late fees are a significant revenue driver for BNPL vendors,” he said. “As long as that money is eventually paid, it is not necessarily a bad indicator for the vendor. Many vendors are using proprietary underwriting standards, which may need to tighten. However, this goes against their marketing model, which suggests easy access to split payments.”
Confusion Over Credit Scores
Many users misunderstand how BNPL loans affect their credit score. Lending Tree found that more than 60% of users incorrectly believe that making on-time payments improves their credit. In reality, BNPL loans don’t always report to credit bureaus, meaning timely payments may not boost a credit score at all. For borrower, this creates a false sense of security and can contribute to larger financial strain over time.
“The CFPB calculated that late fees were around $10 on an average BNPL loan, not a disaster to the consumer budget,” said Danner. “But over time, they add up, and considering the potential hit to credit scores, the impact is alarming.”
