'Uncertainty' leads to a record number of Americans who are financing their groceries

"Buy now, pay later" (BNPL) has typically been associated with purchases for luxury items. But a new report suggests that it's now becoming a way many Americans are buying basic needs like groceries.

Fortune reported Monday that roughly one in four Americans are now financing purchases for groceries and food delivery, according to a new survey by LendingTree. In that survey, approximately a quarter of the 2,000 respondents polled said they used BNPL for food purchases, which is a stark increase from the 14% figure in last year's LendingTree survey. Roughly one-third of respondents in the Gen Z demographic said they used a BNPL service to pay for food last year.

“It’s pretty clear that as people struggle with inflation and other kinds of economic uncertainty, people are looking to things like BNPL loans to help them extend their budget,” LendingTree consumer finance analyst Matt Schultz told Fortune.

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“When buy now, pay later started, it was typically about designer handbags and appliances and things like that,” Schulz said. “But now, people are looking at it for things like groceries and food delivery.”

Some BNPL services — like the Swedish company Klarna — are preferable to some Americans who want to avoid the steep interest rates associated with credit cards. However, Fortune cautioned that those who don't make their loan payments on time can be made to pay much higher costs over time due to the hidden fees that BNPL companies rely on for their profits.

According to the survey, 41% of those who took out BNPL loans in the last year were late on at least one payment. Men, young people and high-income earners were among the demographics who were most likely to get behind on BNPL payments. Respondents who financed food purchases said they viewed BNPL programs as a "bridge" to their next paycheck. And Schultz said that given the current economic climate and concerns over how President Donald Trump's trade policies are driving up prices, the popularity of BNPL loans for basic needs is likely to go up over time.

"I don’t think there’s any reason to believe that this is going to do anything but increase," Schultz said.

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