BNPL and financial fragility in U.S. households

This study examines the relationship between Buy Now, Pay Later (BNPL) usage and financial fragility among U.S. households. Using nationally representative survey data, we assess how indicators of financial vulnerability, such as lack of emergency savings, income irregularity, and perceived financial insecurity, relate to both the likelihood and frequency of BNPL use. Employing ordered probit and probit models, as well as propensity score matching and instrumental variable probit estimators, we find consistent evidence that financially fragile individuals are significantly more likely to use BNPL services, and to use them more frequently. These results suggest that BNPL is not merely a convenient payment alternative to traditional credit but may serve as both a marker and a consequence of financial stress. Subgroup analyses reveal that this relationship is particularly strong among middle- and higher-income households, while financially fragile individuals with lower incomes or younger age are less likely to use BNPL, possibly due to access barriers. The findings underscore the importance of integrating BNPL into broader financial health monitoring frameworks and suggest the need for stronger regulatory oversight to protect economically vulnerable consumers. Overall, this research contributes to the growing understanding of how emerging fintech products intersect with household financial stability.