The research offers some insight into which demographics are gravitating toward BNPL platforms. While consumers with an annual household income of $100,000 or more made up the smallest group of BNPL users (39%), consumers earning between $80,000 and $99,999 made up the highest share of BNPL customers at 43%.

More than half of millennials (55%) and Gen Z (51%) consumers have used BNPL services, a bigger share than Gen Xers (31%) and boomers (25%). 

Some BNPL providers charge interest depending on the transaction, and others may charge late fees for missed payments. The report’s missed payment and overspending findings build upon other research suggesting that consumers with constrained budgets are turning to BNPL services.

According to a Federal Reserve Bank of New York report released earlier this year, “financially fragile” BNPL consumers “appear to have embraced BNPL as a regular payment option.” About 60% of that group used BNPL services five or more times in the previous year, far more than the 20% of financially stable consumers. Additionally, financially fragile users are turning to BNPL to make purchases under $250, while financially stable users are more likely to use it for purchases between $1,750 and $2,000.

“While buy now, pay later can be a useful way to spread out the financial impact of a big purchase, it also represents a slippery slope that can lead to overspending,” Ted Rossman, senior industry analyst at Bankrate, said in a statement. “It’s easy to trick yourself into thinking it’s only $50 here and $50 there, but many people have multiple BNPL plans running at the same time, which can add up in a hurry.

The payment method grew in popularity last year, particularly during the holidays. An Adobe Analytics report found that shoppers spent $16.6 billion online using BNPL services during the 2023 holiday season — a 14% jump year over year and an all-time high. Throughout 2023, consumers spent $75 billion online through BNPL platforms, up 14.3% from 2022.