The checkout button is right there. A new bike for your son, a coat for your daughter, a gift for Grandma, and a cheerful little line underneath: pay in 4 interest-free installments. One click, and Christmas feels a lot more affordable.
Buy now, pay later (often called BNPL) has become part of how many families shop, especially this time of year. It is simply a loan. Knowing how it works can help your family enjoy the season without carrying a stack of surprise payments into January.
What the numbers tell us
The Consumer Financial Protection Bureau (CFPB), the federal agency that watches over consumer lending, has studied these loans closely. In a December 2025 data report, it found that six large BNPL companies made about 336 million loans in 2023, up 23% from the year before, and counted 53.6 million users. The bureau also noted something every parent will recognize: buying jumps sharply before and during the holiday season, and has every year since these products began.
An earlier CFPB report, released in January 2025, looked at how people actually use the loans. More than 60% of BNPL borrowers had several loans open at the same time at some point during the year, and about a third borrowed from more than one company. The CFPB also found that BNPL users tend to carry higher balances on other debts, like credit cards and personal loans, and that young adults ages 18 to 24 are more likely to use these loans than older shoppers.
Here is the good news in that report: BNPL default rates were lower than credit card default rates, partly because payments come out automatically. Used carefully, these loans can work. The trouble usually starts when one small plan becomes four or five.
Why it can sneak up on you
Financial educators at the University of Wisconsin-Madison Division of Extension point to a few common traps:
- Stacking. Several small plans, each with its own due dates, are hard to track. A missed payment can bring late fees.
- Spending more. When a $200 purchase “costs” $50 today, it is easy to say yes to more. The Extension article cites research showing people spent more after they started using BNPL.
- Returns and problems. If an item never arrives or you send it back, you may still need to sort out the loan with the lender, not just the store.
Credit reports are changing, too. In June 2025, FICO announced new score versions, FICO Score 10 BNPL and 10 T BNPL, that can include buy now, pay later loans. Lenders decide which scores they use, so the effect will vary, but it is a reminder that these payments may matter for your credit more than they used to.
A simple family plan before you click
- Set the gift budget first. Decide the total you can spend this season from money you have or will have by December. BNPL should fit inside that number, never stretch it.
- Use the “one plan” rule. Keep no more than one BNPL loan open at a time. If you want a second, pay off the first.
- Put every due date on the family calendar. Write the date and the amount, and make sure the money will be in the account that day.
- Ask the January question. Will this payment still feel fine when the lights come down and the heating bill arrives? If not, wait.
- Compare your choices. Saving for a few weeks, a smaller gift, or a credit union option may cost less in the end.
- Talk with your teens. Young adults use these loans the most. Show them how a “small” payment adds up across several stores.
The gift that does not come with a bill
Jesus once asked a crowd a very practical question about planning ahead:
“For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?”
Luke 14:28 (KJV)
Counting the cost is not stinginess; it is giving with a free heart. Children will not remember how a toy was paid for. They will remember a peaceful home, a parent who was not worried about money on Christmas morning, and time spent together. If this season is tight for your family, take heart. You are not alone, and God is faithful in lean years and full ones. A smaller pile of presents and a calmer January may be one of the best gifts you give.
Has buy now, pay later helped or hurt your family’s holiday budget, and what rule keeps your spending on track?
Sources: Consumer Financial Protection Bureau, “The Buy Now, Pay Later Market Data Spotlight” (December 2025); Consumer Financial Protection Bureau, report on consumer use of BNPL loans (January 13, 2025); University of Wisconsin-Madison Division of Extension, “What to Know About Buy Now, Pay Later Loans” (2026); FICO via Business Wire, “FICO Unveils Groundbreaking Credit Scores That Incorporate Buy Now Pay Later Data” (June 23, 2025); KJV Luke 14:28
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