The Buy Now, Pay Later revolution, otherwise known as BNPL, marches in on 2025 with aggressive interest from consumers, especially younger, struggling consumers who are more likely to need the extra time to pay off smaller loans.
A case in point. The BNPL payment market in the United States is expected to grow by 12.2 percent on an annual basis to reach $122.26 billion in 2025, according to Research & Markets. By the end of 2030, the BNPL sector in the United States is projected to expand from its 2024 value of $109 billion to $184.05 billion, the same report noted.
"The BNPL market is currently strong and growing, especially among Gen Z and Millennial consumers. Its rapid rise can be attributed to its user-friendly appeal, particularly the 'pay in four' model, which breaks purchases into manageable, interest-free installments,” Tushar Bagamane, CEO of Vola Finance, in New York, told NTD via email. “This structure reduces the psychological burden typically associated with credit card debt and has been instrumental in democratizing access to short-term credit, especially for consumers with limited or no credit history.”
No doubt, BNPL loans, which usually come in smaller loan amounts between $50 and $1,000, are resonating with the American public. A new Lending Tree study noted that active BNPL users have grown from 24 percent in 2024 to 25 percent in 2025, almost doubling their usage rate. The same study also added that 41 percent of BNPL users have at least one late payment on their ledger, up from 34 percent.
Maybe that last figure can explain why banks and credit card companies are making it tougher for BNPL users to get credit cards and loans. Legacy financial institutions say that when BNPL data is included in the upcoming and updated FICO credit scoring model, they’ll be paying attention. That could be a benefit to BNPL borrowers who pay their bills on time, although creditors are more likely to scrutinize the Buy Now, Pay Later credit report section, mostly to see if potential borrowers are using their BNPL credit responsibly.
For consumers who are using BNPL loans and who may be in line for a larger loan or a credit card with a sizable balance, it’ll be important to recognize how lenders will view a credit report that includes Buy Now, Pay Later data. Here are three red flags that could lead to trouble for borrowers.
A regulatory blind spot that bigger lenders don’t like
While BNPL adoption is high, especially in e-commerce and retail sectors, the market’s stability is under scrutiny. Currently, BNPL represents less than 3 percent of total credit card transactions, but its high delinquency rates and inconsistent repayment terms have raised concerns among financial institutions and credit bureaus.
“These factors suggest that while BNPL's popularity is surging, its long-term viability depends on greater regulation and responsible usage,” Bagamane noted.
More chances to reach financial instability, and more reason for big lenders to say no
Since BNPL services typically don't require a credit check, they attract users who might already be underserved or considered high-risk by traditional lenders.
“When banks see multiple BNPL loans, especially if repaid late or left unpaid, it can suggest a pattern of financial instability,” Bagamane said. “As a result, lenders may respond by raising interest rates, lowering credit limits, or denying future credit, even if the BNPL loans are not yet reflected in credit reports."
BNPL is a huge threat to legacy credit
Banks and credit card companies likely view BNPL as a major downside risk to their bottom lines. Primarily, when a credit card company or a bank client uses BNPL, historically reliable revenues will likely fall with robust BNPL use.
“BNPL allows expanded periods of free interest that compete with a credit card company’s revenue strategy,” Ryan McCallister, founder at F5 Mortgage in Traverse City, Michigan, told NTD by email. “This will eliminate that possible revenue stream.”
Additionally, late payment fees have been a major revenue channel for banks, but those revenues will decline with the ascent of BNPL plans, as borrowers opt for BNPL options that offer more leniency with late payment timelines. “Again, that keeps late payment fees away from banks and credit card providers,” McAllister said.
Chances Are, Legacy Financial Institutions Will Come Around on PNPL Plans
While banks and credit card companies are increasingly in direct competition with existing BNPL providers, there are signs that those companies will play ball with BNPL consumers.
“Although their adoption hasn’t been as widespread as other BNPL options, both Visa and Mastercard have created installment programs for cardholders,” Tim Tynan, CEO of Chargeback Gurus, in Bedford, New York, told NTD by email. “Major banks such as Chase, Citi, and U.S. Bank have also started offering their own versions of BNPL plans.”
Those same banks may also not be taking a shot or two at BNPL users; they’re just being pragmatic with their lending dollars.
“It’s less about punishment and more about risk management,” Tynan said. “BNPL can lead to overextension, and many of those who use BNPL heavily do so because they’re unable to obtain additional credit.”
Also, traditional lenders don’t have the same insight into BNPL loans as they do into credit cards. “Consequently, many of them are adjusting pricing or terms to reflect the possibility of greater risk,” Tynan said.
These BNPL Usage Tips Can Keep You Clean With Legacy Lenders
BNPL users can take action steps of their own to mitigate any credit or debt hassles with traditional lenders. Bagamane suggests these tips to keep your credit in good standing as a Buy Now, Pay Later user.
Track your financial obligations in one place. A good personal finance app can help by offering real-time cash flow insights, bill tracking, and smart budget recommendations.
Avoid using BNPL to fill income gaps. If you're turning to it frequently for necessities, it might be time to reevaluate your broader financial plan or seek alternative solutions.
Check your credit report regularly. As credit bureaus begin to incorporate BNPL activity, make sure your repayment behavior is accurately reflected.
Be prudent with BNPL spending. Gen Z and Millennials, in particular, believe BNPL feels modern, flexible, and frictionless, which is exactly why it’s so appealing. “But that same convenience can become a trap if not managed carefully,” Bagamane said.
The views and opinions expressed are those of the interviewees. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.