Millions are using “Buy Now Pay Later” to spend beyond their means, and experts are worried, as 40% are missing payments

Buy Now Pay Later was supposed to feel like the easier, friendlier cousin of the credit card.

That is how commentary creator Grant Rudow frames the pitch in his video, and his basic argument is that the whole thing has been dressed up as modern convenience when it is really just another way to get people comfortable spending money they do not actually have. In his telling, the danger is no longer theoretical. Nearly one in five Americans has used Buy Now Pay Later, and the number of missed payments is climbing fast.

That is the part that should get attention.

Rudow says more than 40% of Buy Now Pay Later users had a missing or late payment in 2025, and 57% of Americans using it admit they are doing so to buy things they cannot afford. That is not a sign of a harmless payment tool. That is a sign of a financial habit turning into a problem.

And the younger the users get, he says, the worse the pattern looks.

Why Buy Now Pay Later Feels So Easy

One of the strongest points Grant Rudow makes is that Buy Now Pay Later is not growing this fast by accident.

He says retailers and fintech companies have learned for years how to disconnect the feeling of pain from the act of spending. Cash makes you feel the loss immediately. Checks softened that feeling a little. Credit cards pushed it even farther away. But Buy Now Pay Later, in Rudow’s view, goes one step further by shrinking the pain into something that feels almost harmless.

Instead of seeing a $100 item and thinking about losing $100 today, the buyer sees $25 now.

Psychologically, he argues, that changes everything. It no longer feels like buying a full-priced product. It feels like saving $75 in the moment, even though the consumer is still committing to the full amount. That framing is incredibly powerful, especially for people already trying to justify a purchase they probably should not make.

Rudow says this is exactly why stores love these services.

Consumers consistently spend more when using Buy Now Pay Later than when using standard payment methods. That is the business point of the whole system. The companies may market it as flexibility, but the real purpose is to get more money out of shoppers at checkout.

That is not cynical. That is just how the incentive works.

It Is Not A Credit Card, But It Still Behaves Like Debt

Grant Rudow spends a good chunk of the video explaining why Buy Now Pay Later is different from a traditional credit card.

A credit card, he says, is a revolving line of credit. You keep using the same account, you carry a balance if you do not pay it off, and interest piles on. Buy Now Pay Later works more like a stack of mini-loans. Each purchase becomes its own separate bill with its own due date. Pay it off, and that little loan disappears.

That structure may sound cleaner, but Rudow argues it creates its own mess.

Because instead of managing one account, consumers end up managing dozens of little obligations scattered across the month. One pair of shoes here. A dinner order there. Concert tickets. Clothes. Electronics. Rent. It all starts to blur together. And while each one may look small on its own, the total can quickly become unmanageable.

That is how people talk themselves into trouble.

A person may honestly believe they can handle one $25 payment. But they forget about the other 10 or 15 $25 payments sitting behind it. Suddenly the month is full of random due dates, late fees, and financial stress, all created by things that felt affordable at the point of sale.

That is a dangerous illusion, and Rudow clearly thinks the industry knows it.

The Numbers Behind The Missed Payments Are Getting Ugly

The most alarming part of Grant Rudow’s breakdown is the missed-payment trend.

He says that in 2025, 41% of Buy Now Pay Later loans had a missing or late payment. That is nearly half. He also says that figure is up almost 10% from the year before, which suggests the problem is not stabilizing. It is getting worse.

That matters because these loans were often sold to the public as low-risk and easy to manage. But if such a large share of users are already falling behind, it tells you the product is not just being used for convenience. It is being used as a substitute for money people do not actually have.

That is where the whole thing starts to look a lot less like innovation and a lot more like old-fashioned debt stress in a new outfit.

Rudow asks the obvious question: how do companies like Klarna and Affirm survive if so many people are not paying on time?

His answer is that they have backup plans. Consumers usually do not.

The Business Model Is More Complicated Than It Looks

One of the more interesting sections of Rudow’s video is when he explains that these companies are not just handing out money from some giant vault of their own.

In his telling, firms like Klarna often act as middlemen. They connect consumer demand with capital providers who are willing to fund the loans in exchange for profit. The company’s job is to find enough borrowers, move enough volume, and keep the whole machine flowing.

That sounds manageable until you remember that missed payments are rising and that these companies still have to make their own economics work.

Rudow says the supposedly “free” installment model is not really free at all. Retailers pay for the privilege of offering it, because they know shoppers spend more when the option is there. But even then, the companies often struggle to turn a profit, partly because creating and funding the loans is expensive.

He points to origination costs as a major drag. In his telling, Klarna loses a large percentage of each purchase because of the cost of opening the loan, and Affirm faces similar pressure. That means these businesses are already operating on a thin and awkward model before the missed payments even enter the picture.

So they adapt.

And that is where the story gets more unsettling.

“Free” Turns Into Fees Pretty Fast

Rudow says the game is changing because these companies are no longer content to live only on retailer fees and volume growth.

Klarna, he notes, launched a debit card in 2025 and quickly attracted a huge number of new users. That matters because once customers start parking money inside the company’s ecosystem, the firm has more direct funding to work with and less dependence on outside capital.

At the same time, he says, the companies are increasingly pushing consumers toward longer-term payment plans that carry actual interest or fees.

That is the quiet shift a lot of people may miss.

A customer may start with a “pay in four” plan that feels harmless and interest-free. But once they are inside the system, the company can offer ways to stretch payments further. Rudow points out that some of these plans can run as high as 36.99%.

That is no longer a friendly checkout tool. That starts looking a lot more like expensive debt.

And according to him, this fee-based side of the business is one of the fastest-growing revenue chunks these companies have. That should probably tell consumers all they need to know about where the real money is being made.

This Probably Will Not Crash The Whole Economy, But It Can Wreck Individuals

Grant Rudow is careful not to overhype the macro danger.

He says the total Buy Now Pay Later market, around $128 billion, is still tiny compared with the full household debt market, which he pegs at roughly $18.8 trillion. So even if the entire Buy Now Pay Later segment went bad, he argues it would not produce a collapse on the scale of the 2008 housing crisis.

That is an important point.

It keeps the conversation grounded. This is probably not the next global meltdown.

But his bigger warning is that it can still be devastating at the individual level, and that is where the article’s real weight sits. Bad spending habits do not need to trigger a national financial crisis to ruin someone’s credit, block them from getting an apartment, raise their insurance costs, or keep them trapped in a cycle of payments they can barely track.

That kind of damage is quieter, but it is real.

And now that many of these loans are being reported to credit agencies, the stakes are growing.

The Credit Score Problem Is Sneakier Than People Think

Rudow makes another point that a lot of younger consumers may not realize until too late.

Because Buy Now Pay Later accounts are individual loans that open and close quickly, they do not help build long-term credit history the way some people imagine they do. In fact, he says constant short-term account openings and closures can work against one of the important ingredients in a credit score: the length of credit history.

That means paying these loans off does not necessarily help much, and missing payments can hurt badly.

So the trap becomes even uglier. A person may think they are being financially savvy by using installment plans instead of credit cards, when in reality they are piling up dozens of short-duration debts that are doing little to strengthen their financial profile and plenty to damage it if things go wrong.

That is not a great trade.

And it is part of why Rudow believes these products are especially dangerous for lower-income consumers with limited financial education. In his view, the industry is targeting people who have not been taught how credit really works, then handing them complex debt products under soft, harmless names like “pay over time.”

Grant Rudow’s Bottom Line

By the end of the video, Grant Rudow’s message is pretty clear.

Buy Now Pay Later is not just a trendy checkout button. It is a system built to make spending feel smaller, easier, and less painful than it really is. That helps stores sell more, helps fintech companies pull people deeper into their ecosystem, and leaves consumers juggling a growing pile of tiny debts that can become much heavier than they look.

He is not saying the whole economy is about to explode because of burrito loans and sneaker installments.

He is saying millions of people are being nudged into bad financial behavior by products designed to feel harmless, and the missed-payment numbers suggest that nudge is working. Once almost half of users are falling behind and more than half admit they are buying things they cannot afford, the warning signs are hard to ignore.

And that may be the real danger here.

Not a national collapse. A personal one, repeated millions of times in smaller, quieter ways.