Short-Term Payment Apps Expand into Rent and Utility Bills
Washington, Tuesday, 18 August 2026.
As living costs rise, Americans spent $160 billion through pay-later programs last year, increasingly turning to short-term loans to cover basic necessities like rent and electricity.
Market Expansion
Financial technology firms are increasingly extending ‘Buy Now, Pay Later’ (BNPL) credit structures to basic consumer necessities, including electricity, broadband, and municipal utility services [1][2]. As household energy and living costs continue to climb in 2026, alternative credit providers are stepping in to cover short-term liquidity gaps for stretched retail consumers [1][4]. In 2025, Americans utilized $160 billion in BNPL loans, a volume nearly double the amount recorded in 2023 [2][4]. Despite this rapid growth, total BNPL spending remains a small portion of the more than $3 trillion U.S. shoppers spend annually on consumer credit cards, representing approximately 5.333 percent of that broader market [1][4].
Market Expansion
This structural shift highlights growing pressure on household balance sheets and carries significant credit risk implications for both utility providers and private lenders monitoring consumer default trends [1]. On 2026-08-17, the average US gasoline price reached $4.06 per gallon, the highest mid-August level on record, compounding the pressure on disposable income [1]. Federal data indicates electricity prices have risen 18% since the start of President Trump’s second term, further driving the need for alternative payment structures [1].
Provider Strategies
Leading BNPL lenders currently include Affirm, Klarna, Afterpay, PayPal, Synchrony, Splitit, Sezzle, and Zip, but more are popping up by the day, largely funded by private equity firms and venture capitalists looking to cash in on families’ financial desperation [1]. The lending apps Flex and Zip allow customers to take out loans to pay for their broadband, electricity, health insurance, mobile phone service, mortgage, and water bills [1][4]. Affirm has started providing some tenants loans to extend their monthly rent payment for a few weeks, while Intuit promotes ‘File Now, Pay Later’ loans to TurboTax users who owe money in their tax return [1][4].
Provider Strategies
The rapid expansion of BNPL into essential services has raised concerns about whether the product’s popularity is driven by consumer preference or financial desperation [2]. Karen Webster, chief executive of Pymnts, noted that BNPL loans are becoming the ‘working capital for the modern middle class’ as consumers use it more for essential, everyday things [2][4]. However, half of those using them said they could not make ends meet otherwise, according to a survey compiled by LendingTree [4].
Financial Risks
Protect Borrowers released a report in July 2026 detailing BNPL fee structures, including late fees of $7 to $8 per missed payment, capped at 25% of the purchase price [1]. Standard BNPL loan structures often include additional charges for non-default payment methods, rescheduled payments, or non-sufficient funds [1]. Jennifer Zhang, a policy analyst at Protect Borrowers, stated that BNPL loans are expensive and risky, and often worsen financial outcomes for borrowers who come to rely on them to make ends meet [1].
Financial Risks
On 2026-08-15, ABC 7 Chicago issued a consumer warning regarding BNPL services, highlighting the risk of rapid debt accumulation despite the illusion of affordability for large purchases [3]. The offers from companies can make big purchases feel painless, creating an illusion of affordability, but the debt can pile up fast [3]. Critics argue that BNPL providers function like ‘sharks’ targeting financially illiterate or desperate consumers, necessitating regulation of loan design to prevent usury [5].
Economic Implications
As of August 16, 2026, fintech lenders are expanding BNPL credit models to cover essential household expenses, specifically targeting utilities, rent, and grocery debt for populations unable to afford basic needs [5]. Critics argue that the U.S. economy has relied on sequential waves of declining-quality consumer credit for 50 years to mask household wage stagnation and corporate profit inflation [5]. Some of my work has involved getting people off the treadmill that is BNPL for water bills, indicating the personal toll of these financial products [6].