Why are Buy-Now-Pay-Later (BNPL) delinquencies rising in 2025?

Two big shifts—soaring BNPL volume and new credit-bureau reporting—have made missed payments more visible and more expensive. As usage tops $100 billion this year and firms like Klarna and Affirm start reporting to Experian and TransUnion, late fees and charge-offs are climbing.

Can late BNPL payments hurt my credit score?

Yes. Since spring 2025, most major BNPL providers furnish data to the big credit bureaus. A single missed installment can now ding your FICO score just like a traditional credit-card late payment.

Is BNPL riskier than using a credit card?

It can be. BNPL plans may feel interest-free, but stacking multiple ‘pay-in-4’ loans can inflate your debt-to-income ratio without showing up in traditional budgeting tools. If cash isn’t already in the bank, treating BNPL like a short-term loan—not a perk—is safer.

What’s the smartest way to manage existing BNPL balances?

Start with a full credit report to see what’s reported, automate payments so nothing slips, and beef up emergency cash reserves to avoid domino defaults if income dips. Consolidating BNPL through a single rewards card (paid in full each month) simplifies tracking.

How can Halter Ferguson Financial help if I’m concerned about BNPL debt?

We craft a custom financial blueprint tailored to your individual situation.

Buy-Now-Pay-Later Hangover: Is Rising “Pay Later” Debt Telling Us the Consumer’s Had One Too Many?

HFF Staff Writer
Jun 30
3 min read

Shop window with colorful socks on display. Text reads "buy now or cry later." Wooden shelves in background, creating a playful mood.

Remember when Buy-Now-Pay-Later (BNPL) felt like harmless fun—four cute payments and a shiny new gadget? Fast-forward to mid-2025 and the tab is coming due. Klarna just admitted credit losses jumped 17 % in Q1—their worst spike since the pandemic (neworleanscitybusiness.com). At the same time, Equifax’s latest dashboard shows mortgage delinquencies climbing while card and auto lates have only inched down, leaving the overall delinquency rate stuck above 4 % (equifax.com).

That little wobble in consumer credit isn’t a random hiccup; it’s the sugar crash after a BNPL binge.

Why the Numbers Finally Matter

For years, defenders crowed that BNPL defaults were “only” 2 %—way below credit-card charge-offs (files.consumerfinance.gov). Two big things have changed:

Volume. U.S. shoppers are on track to run $108 billion through BNPL check-outs this year, up 15 % from 2024 (wsj.com). Even a small default rate on a bigger pie is real money.
Transparency. Since April, Affirm loans are hitting Experian credit files; TransUnion followed in May (bankrate.com). Miss a “pay-in-4” plan now and it can ding the same FICO score you’ll need for a mortgage refi.

Put differently: BNPL has graduated from optional side hustle to the grown-up credit bureau.

What Rising BNPL Delinquencies Signal

Stress at the margins. BNPL skews toward subprime borrowers—over 60 % of 2022 originations came from sub- or deep-subprime credit tiers (files.consumerfinance.gov). When those folks stumble, the ripple shows up in overdraft fees, higher card balances, and, yes, softer retail earnings.
“Stealth leverage.” Because most BNPL plans don’t show up on traditional debt-to-income ratios (yet), consumers can stack obligations well past healthy limits. We’ve seen echoes of this playbook before—think 2005’s interest-only mortgages.
Potential policy whiplash. The CFPB’s June 24 request for comment on BNPL suggests a tougher rulebook could be only months away (federalregister.gov). Regulation usually lags trouble, not leads it.

Practical Moves for Clients (and Anyone Who Advises Them)

Audit the hidden tabs. Pull a full credit report and cross-check BNPL balances that aren’t there yet. Treat them like any other liability in a cash-flow plan.

Prioritize liquidity. If delinquencies keep trending higher, lenders will tighten first and ask questions later. A beefier emergency fund—think six months instead of the classic three—buys time.

Mind the credit mix. New data reporting means a single missed Afterpay installment can sandbag that hard-won 760 score. Automate payments or funnel BNPL through a rewards card (paid in full) so one account, not five, reports activity.

Don’t chase every promo. “0 % for six weeks” sounds harmless—until the cart holds Peloton-sized items. Encourage clients to treat BNPL exactly like a short-term loan: If the cash isn’t sitting in checking today, swipe left.

Portfolio Implications

On Wall Street, early-stage cracks often show up in small-cap consumer lenders before the majors. Keep an eye on fintechs that rely heavily on BNPL fee revenue—margin compression plus higher charge-offs is a nasty combo. Conversely, high-quality dividend payers in staples or utilities can buffer volatility if consumer credit stress deepens.

The macro backdrop isn’t all doom: overall credit card delinquency growth slowed to 1.5 % QoQ through Q1, down from 3 % during 2022’s surge (stlouisfed.org). Translation: we’re not staring at 2008, but pockets of over-leverage are flashing yellow.

Bringing It Home—Your Financial Plan

If you’re wondering how a techy payment trend finds its way into a retirement projection, remember the domino path: BNPL delinquencies → consumer spending slowdown → earnings hits → market volatility → your portfolio’s ride gets bumpier.

At Halter Ferguson Financial we stress-test plans for exactly this kind of surprise. We’ll:

Map out every liability—card, BNPL, HELOC—so no hidden debt sneaks up.
Rebalance toward quality when leading indicators (like delinquency upticks) tilt risk-off.
Build a flexible withdrawal strategy so retirees aren’t forced to sell into a dip.

Curious where your own “stealth leverage” might lurk? Let’s talk. Schedule a quick, no-obligation call and we’ll walk through your balance sheet—BNPL tabs included—so you can swipe with confidence instead of crossed fingers.

Halter Ferguson Financial: Helping you see the whole picture—before the bill comes due.

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