The buy now, pay later financing option has experienced remarkable growth over recent years, changing how many fund their purchases. According to Ed deHaan, a professor at Stanford Graduate School of Business, this interest-free installment method has become a common credit tool, and he expects its popularity to continue rising without showing any signs of a slowdown.
A report released in 2025 by a federal consumer protection agency reveals that about 21% of those with a credit record engaged with installment payment services offered by six leading companies during 2022. Among these users, roughly 20% were considered frequent borrowers, accessing an installment loan at least once every month. This represents an increase from figures in 2021, when 17.6% of consumers used the service and 18% of them were frequent users, highlighting growing appeal among shoppers.
Preyas Desai, a professor at Duke University’s Fuqua School of Business, noted that this payment alternative can be very helpful for individuals who do not have easy access to traditional credit cards or prefer not to use them. He explained that for many, installment plans provide a practical way to address short-term cash requirements without the complexities of standard credit. Such flexibility allows consumers to manage immediate financial needs, making the service an attractive option for a wide range of buyers.
Some financial specialists have also raised concerns regarding potential drawbacks. A study published in 2023, co-authored by deHaan, found that users of these plans tend to see rapid rises in bank overdraft fees as well as extra charges on credit card accounts when compared with those who do not use installment financing. In addition, research from Harvard in the previous year linked the use of these services with increased spending and a higher probability of having to use personal savings. Desai advised that consumers must thoroughly understand these financing options and exercise caution when taking on multiple loans from different providers. In 2022, research showed that around 63% of installment plan borrowers started several loans at once, with about 33% obtaining loans from more than one company and the average loan amount falling below $100 when adjusted to 2024 values.
This rising trend has reshaped consumer credit practices, and many find the system appealing due to its flexibility and convenience. Still, careful financial decision-making remains crucial for maintaining long-term monetary stability.
