43% of Grocery BNPL Users Hit With Late Fees or Overdraft Charges

Quick Facts

43% of consumers who used buy now, pay later for groceries or food delivery were charged a late fee and/or incurred a nonsufficient funds fee, compared to 26% of all BNPL users.
29% of Americans now report using BNPL for groceries, nearly double the 14% recorded two years ago, according to a LendingTree survey of more than 6,000 U.S. consumers.
More than half of BNPL users (54%) say they could not make ends meet without the loans, rising to 62% among parents with children under 18.

Buy now, pay later loans have moved from discretionary purchases into the grocery aisle, and the financial consequences are mounting. A new analysis finds that 43% of consumers who used BNPL for groceries or food delivery were charged a late fee, an overdraft fee, or a nonsufficient funds fee in the prior year.

That figure dwarfs the 26% late payment rate recorded across all BNPL users by the Federal Reserve’s 2025 nationally representative household survey. Among BNPL users earning less than $25,000 per year, the late payment rate climbs to 40%.

Grocery Use Is Surging

The share of Americans using BNPL for groceries has nearly doubled in two years. A July LendingTree survey put that figure at 29%, up from 14%. The Federal Reserve found that 1 in 6 U.S. adults used BNPL during 2025, with 20% of those users applying it to groceries or food delivery.

Gen Z is driving the trend. Among Gen Z BNPL users, 38% report using the loans for groceries. Overall BNPL late payments are also climbing: 47% of users say they paid late in the past year, up from 41% in 2025 and 34% in 2024.

Overlapping Payments Create Risk

Groceries are a recurring expense, not a one-time purchase. Consumers running multiple BNPL grocery orders at once can face overlapping installment payments hitting their accounts in the same week, leaving little room for other obligations.

Eleven percent of all BNPL users said a BNPL payment triggered an overdraft or NSF fee from their bank. That rate jumps to 18% among users whose maximum savings coverage is under $100. For users who can cover at least $2,000 in expenses from savings, only 4% reported a BNPL-triggered overdraft fee.

Academic research reinforces the pattern. An analysis of more than 570,000 pairs of BNPL users and non-users found that users incurred 4% more overdraft charges, 1.1% higher credit card interest, and 2.3% more credit card late charges. For the most active users, those fees added up to $176 per year on average and as much as $252 for especially vulnerable borrowers.

Market Scale and Expert Warnings

The BNPL market is large and growing. CapitalOne Shopping projects U.S. BNPL transactions will reach $122 billion this year and $184 billion by 2030. An estimated 86.5 million Americans used the product last year.

Matt Schulz, chief consumer finance analyst at LendingTree, said convenience is the primary driver. “Far and away, the biggest reason why people said that they like buy now, pay later loans was that they’re easy to use and easy to get,” he said. Schulz added that the data raises “real concerns.”

Lauren Saunders, associate director at the National Consumer Law Center, said BNPL “can make things look more affordable than they really are.” Stanford GSB accounting professor Ed deHaan noted the product functions as “basically free credit if you pay it off on time,” but carries real risk of late charges, overdraft fees, and interest payments when it does not.

What This Means for Retailers

Grocery and food delivery brands offering BNPL at checkout face a dual risk. Merchants pay processing fees to BNPL providers, and if BNPL adoption increases cart sizes but drives consumer financial stress, repeat purchase rates and brand trust may suffer.

Medical and veterinary BNPL purchases showed a similar risk profile: 34% of those users also faced late fees or NSF charges. Retailers in both categories should weigh whether the short-term conversion lift justifies long-term customer financial strain.

The data makes clear that BNPL on essential goods carries different risk than BNPL on discretionary items. For operators considering or currently offering BNPL, understanding which customer segments are most exposed is no longer optional.