Consumers Are Financing Their Groceries. What Does It Say About the Economy?

[milestogo]

Increased use of “buy now, pay later” loans may signal shifting consumer habits, but could also be a troubling sign of financial stress.

Published June 2, 2025
Updated June 3, 2025, 11:47 a.m. ET

For some American consumers, “buy now, pay later” loans aren’t just for big-ticket items like televisions and vacations. They’re for groceries, too. When Tia Hodge stocked up at her local Kroger in early April, her bill was nearly $400. At checkout, she scanned her app from Klarna, a buy now, pay later company that offers short-term loans. Klarna paid the grocery store for the 71 items in the cart. Mrs. Hodge split her payments to Klarna into four installments of about $100, with zero interest.

“Food prices have skyrocketed,” said Mrs. Hodge, of Austell, Ga., who plans how much she’ll spend on each trip to the grocery store based on her cash flow and other expenses that month, including credit-card debt and student loans. Being able to spread out the payments for groceries has helped her family of four — soon to be five — budget better, she said.

Mrs. Hodge, 29, is hardly alone. Nearly a quarter of consumers using buy now, pay later loans finance groceries, up from 14 percent a year ago, according to a recent LendingTree survey. And it’s not just groceries; more Americans are using these loans to pay for recurring monthly bills, such as electricity, heat, internet and streaming services like Hulu. Consumers can break up gasoline purchases into installments or pay for the burrito or burger order delivered to their home in bite-size pieces. People are going on social media to share tips on how to use the short-term financing even for rent.

While some borrowers say the loans are a useful way to manage cash flow, others say the increased use of buy now, pay later plans for day-to-day essentials is a troubling sign that more consumers are financially stressed. “I don’t think there’s any question that it is at least a sign of how much people are struggling,” said Matt Schulz, chief consumer finance analyst at LendingTree. “If you’re living paycheck to paycheck and you’re on a tight budget and you have several of these loans out at one time, it can be very easy to get over your skis here.” Others don’t see a problem, and view this type of financing for day-to-day expenses as part of the industry’s growth and a better option than paying with traditional credit cards.

https://www.nytimes.com/2025/06/02/business/buy-now-pay-later-groceries.html

[getagrip_already]

1. not just groceries - fast food also....

You can use these apps to buy taco's. Financing a taco, now there is a concept.

Sure, if you pay on time, every time, they aren't terribly different than credit cards Banks hate you when you do this though. You are essentially using their money free for up to 30 days.

But banks still make 3% on those buys, as long as you don't have a cash back card, which people with poor credit can't get.

But these bnpl apps charge merchants up to 6% as a transaction fee, and up to 36% interest. This is pay day loan territory.

And that 6% isn't absorbed by the vendor any more than the 3% is They spread that out over all transactions since they can't charge a surcharge for using a particular payment choice.

So these apps end up costing everyone. And they are credit traps for users.

[Initech]

2. Hey! Haven't you heard? We must feel economic pain now, because there's a golden age coming!

Or something. Fuck this wretched administration to hell.

[FadedMullet]

3. "Financing", not just charging. Stretching out payments, albeit with no interest in this case. What's up with.....

......this, you ask? Just another sign that the American economic system has been distorted by greed and unequal distribution of wealth to the point that a collapse of some kind is probably imminent.

[woodsprite]

4. We were just discussing this at the dinner table last night.

I had gotten an Instacart order and was wondering how many people took them up on Klarna to pay. It makes no sense to me because as soon as (or even before) you pay it off you turn around and need another order. Our Instacart grocery orders run between $200-$300 with tip/wk. I'm spoiled with Instacart, but I can see a day sooner rather than later where we'll be giving it up due to the cost of the tips. We have the same 4 or 5 shoppers we rotate through depending on the store we're using. Those orders are about 2/3 for our household, the rest of the order helps out my son and his finance and my retired/disabled brother and nephew. It feels like we've been bleeding grocery money for the past year or more. I wanted to get a 2.5lb eye roast for this weekend to fix. Instead we're going with a pork roast - same weight, but the price was $35 for the eye roast, $18 for the pork roast.