In Trump’s Economy, Companies Offer ‘Buy Now, Pay Later’ for Utilities as Costs Surge

 In Trump’s Economy, Companies Offer ‘Buy Now, Pay Later’ for Utilities as Costs Surge

## Introduction: The $280 Question

The national average monthly utility bill hit **$280** in early 2026. That's a **12% increase** since the end of 2024. For millions of American families, that's not just an inconvenience—it's a choice between keeping the lights on and putting food on the table.

Enter the new solution from Silicon Valley: buy now, pay later for your electricity bill. For your water. For your rent. For your groceries. For your health insurance. For the very basics of survival in Donald Trump's America.

Lending apps including **Flex, Zip, and Affirm** are now offering credit to consumers struggling to afford basic necessities. What was once a way to finance a new couch or a pair of sneakers has become a lifeline for families who can no longer afford the essentials. Flex has financed nearly **$40 billion** in rent payments for 3 million tenants. Its customer base has a median credit score **below 600**—subprime territory.

This is the hidden story of the Trump economy: **record stock markets and record household debt, side by side**.

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## The BNPL Explosion: From Sneakers to Survival

### The Numbers That Tell the Story

Buy now, pay later started as a checkout option for discretionary purchases—a way to split a $200 jacket into four payments over six weeks. It was convenient, often interest-free, and relatively harmless.

That was then.

U.S. consumers spent approximately **$160 billion** through pay-later loans last year, **nearly double** the level two years earlier. BNPL providers originated nearly **$157 billion** in consumer credit products in 2025, up from nearly $116 billion in 2024.

Half of BNPL users in a recent LendingTree survey said **they could not make ends meet** without this form of credit. **44% of Americans** expect to apply for a BNPL loan in the next six months, including 13% who expect to take out three or more.

The shift is fundamental. This isn't about financing discretionary purchases anymore. It's about **survival**.

### What People Are Actually Buying

The latest data reveals just how desperate things have become:

| Category | BNPL Usage |

|----------|------------|

| **Groceries** | 29% (up from 14% in 2024) |

| **Medical/Dental Care** | 42% |

| **Utility Bills** | 39% |

| **Rent** | 13% |

| **Vehicle Repairs** | 18% |

"A substantial share of BNPL users report going into debt to pay for everyday essentials like groceries, utilities, and rent," according to a Protect Borrowers investigation. **46%** have used BNPL for groceries. **39%** for utility bills.

As Senator Elizabeth Warren put it: "Everyday costs are through the roof, forcing more people to take out 'Buy Now, Pay Later' loans just to make it through the month".

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## The Economic Engine: Why Americans Can't Keep Up

### The Trump Economy in Two Sentences

During a recent press appearance, President Trump hailed "the best market in history" as the S&P 500 hovered near its all-time high. He told Americans to just "hold on a little while" longer for lower prices.

Meanwhile, the personal savings rate is at its lowest since 2022. Consumer sentiment fell in August after two consecutive months of improvement. And **millions of Americans cannot afford the basic necessities of life**—food, housing, and utilities.

The disconnect is staggering. Wall Street is booming. Main Street is drowning.

### The Causes: War, Tariffs, and Policy

The administration's policies have directly contributed to the affordability crisis:

**The Iran War:** Trump's "illegal war against Iran" has driven up household costs, notably at the gas pump but also for all sorts of consumer goods because transportation is now more expensive. Gas, groceries, electricity, and insurance are all up.

**Tariffs:** Trump's sweeping tariffs have raised prices on imported goods, with estimates indicating American households are paying for **95%** of the tariffs. The average family has lost about $1,700 in purchasing power.

**Consumer Protection Rollbacks:** The Trump administration withdrew a Consumer Financial Protection Bureau rule that would have held BNPL providers to credit regulations under the Truth in Lending Act. The CFPB has repeatedly pulled back from enforcing key rules.

Emily DiVito, senior adviser for economic policy at Groundwork Collaborative, put it bluntly: "The steady rise in the use of buy now, pay later loans to cover the basics, like groceries and rent, is a warning sign that working families are under real financial strain. Prices for essentials are climbing as a result of the president's reckless economic policies, wages aren't keeping pace, and hardworking Americans are being pushed into cycles of debt just to make ends meet".

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## The Lenders: Who's Offering Credit for Survival

### Flex: The $40 Billion Rent Machine

Flex has emerged as the dominant player in the essential-expense BNPL space. The company says it has financed nearly **$40 billion** in rent payments for **3 million tenants**. Its customer base has a median credit score **below 600**, a range generally associated with subprime credit.

The cost structure is revealing: Flex charges a **$6 monthly membership fee**, a fee equal to **3% of the borrowed amount**, and a processing fee. It has expanded this year to utilities and auto-loan payments.

### Affirm, Zip, and Others

**Affirm** has begun a pilot that lets some tenants extend a monthly rent payment for several weeks. The company allows only one rent loan at a time and prevents a new advance until the prior month's obligation has been repaid.

**Zip** allows customers to take out loans to pay for their broadband, electricity, health insurance, mobile phone service, mortgage, and water bills.

These apps have essentially become **de facto utility lenders**, stepping into a role that traditional banks have been unwilling to fill.

### The Business Model: Profit from Desperation

BNPL providers make money through fees, interest, and merchant commissions. Protect Borrowers found that late fees of **$7 to $8 per payment** are common in some programs, while interest and financing charges can reach **36%**. Interest-bearing installment products accounted for more than **37%** of annual BNPL issuance in 2026, almost twice their 2021 share.

The providers' value proposition is straightforward: help customers match the timing of expenses to the timing of income. That's particularly relevant for consumers with irregular pay cycles, including gig workers, tipped employees, and households facing unexpected expenses.

But the consumer-protection issue is whether BNPL is functioning as a temporary payment-timing tool or becoming a **recurring substitute for insufficient income and exhausted traditional credit**.

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## The Debt Trap: How BNPL for Essentials Creates a Vicious Cycle

### The Monthly Recurrence Problem

A loan used for a one-time purchase can be paid down and retired. A loan used to cover rent or electricity solves only the current month's payment problem. The same bill is due again the next month, potentially before the borrower has cleared the prior installment balance.

This creates the central compliance and consumer-protection issue: **BNPL is becoming a recurring substitute for insufficient income**.

### Exhausted Credit Cards

"Often they just, they've exhausted their credit cards, and buy now, pay later is their only option," said Jim Triggs, CEO of Money Management International, a non-profit credit counseling firm.

Credit card debt in the U.S. hit **$1.25 trillion** in the first quarter, up 5.9% from a year earlier. When the cards are maxed out, BNPL becomes the last resort.

### The "Shadow Default" Risk

Formal default rates are increasingly poor diagnostics for the health of this market. More revealing signals include "shadow defaults"—instances where borrowers are struggling but haven't officially defaulted.

As one observer put it, "BNPL loans are the latest peonage scheme to infest society". Another warned: "More debt peonage. We all 'owe our souls to the company store'".

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## The Regulatory Vacuum: Who's Watching the Store?

### The Biden Rule That Never Was

Under the Biden administration, BNPL products were beginning to receive more regulatory oversight. The administration proposed to hold these products to credit regulations by implementing the Truth in Lending Act.

### The Trump Rollback

The Trump administration put the kibosh on those efforts when it withdrew the Consumer Financial Protection Bureau rule, claiming it did so in the interest of "focusing resources on supporting hard-working American taxpayers, servicemen, veterans, and small businesses".

Senator Richard Blumenthal has released a report on the administration's gutting of consumer protections, noting that the administration has been "removing protections for Buy Now, Pay Later consumers".

### The Legislative Response

The "Buy Now Pay Later Protection Act of 2025" has been introduced but faces an uncertain future. Senator Warren and other Democrats have been vocal in their criticism of the administration's approach.

But for now, the regulatory vacuum persists. BNPL providers are operating with far less accountability than traditional banks, under the illusion that their products are less costly than credit cards.

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## The Human Cost: Real People, Real Struggles

### Ashley's Story

Ashley Reed, a 40-year-old paraeducator who also works part-time as a radiology assistant, became a frequent BNPL user after maxing out her credit cards to pay for caregiving expenses after her mother suffered a ruptured brain aneurysm.

"I wound up maxing out my credit cards to get hotel rooms and things like that to stay with her and to get her transferred back to Baltimore. It was about $2,500 for an ambulance ride," she said.

Having reached her credit limit, she turned to BNPL services to help make ends meet, including for groceries. She's one of a growing number of consumers doing so amid inflation and other price pressures, such as higher gas prices stemming from the U.S. war with Iran.

### The 85% Who Say Brands Use Inflation

A USA Today survey found that **85% of respondents believe brands often use inflation as an excuse to raise prices**. **30%** said they used a credit card to pay for essentials—groceries, gas, utilities, or medical bills—in the past three months.

"There's no joy in living this way," one respondent told USA Today. Families have maxed out their credit cards and are buying only what they can afford each week with cash.

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## The Political Angle: A Fault Line in 2026

### Trump's Broken Promises

Trump promised to lower costs "on Day One". Instead, everyday costs are through the roof.

The Urban Institute found that American families are increasingly relying on savings and credit—including BNPL programs—to meet their grocery needs. The economy that Trump calls "unbelievably good from the standpoint of Wall Street" is a nightmare for Main Street.

### The Democratic Response

Senator Warren has been the most vocal critic: "Donald Trump promised to lower costs 'on Day One.' But everyday costs are through the roof, forcing more people to take out 'Buy Now, Pay Later' loans just to make it through the month".

She has also warned that these loans—"originally marketed as no interest—are ramping up fees on Americans".

### The Stakes for November

The BNPL crisis is a political liability for the administration. As one analysis put it, "Everywhere you look across Donald Trump's economy, debt is masking a... Americans are in debt to pay for basics like rent and groceries".

The question for voters in November: is a record stock market worth it when you can't afford your electricity bill?

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## Frequently Asked Questions (FAQs)

### 1. What exactly is "buy now, pay later" for utilities?

BNPL for utilities allows consumers to take out short-term loans to pay for electricity, water, broadband, health insurance, rent, and other essential bills through apps like Flex, Zip, and Affirm. Instead of paying the full bill immediately, users can split it into installments or defer payment.

### 2. How much are Americans spending on BNPL?

U.S. consumers spent approximately **$160 billion** through pay-later loans last year, nearly double the level two years earlier. BNPL providers originated nearly **$157 billion** in consumer credit products in 2025.

### 3. What are people using BNPL for?

Recent surveys show BNPL is being used for essentials: **29%** for groceries (up from 14% in 2024), **42%** for medical or dental care, **39%** for utility bills, and **13%** for rent.

### 4. Why are people using BNPL for essentials?

The average monthly utility bill hit **$280** in early 2026, a 12% increase since the end of 2024. Credit card debt hit **$1.25 trillion**. Many families have exhausted their credit cards and see BNPL as their only option.

### 5. What are the risks of using BNPL for essentials?

BNPL for essentials creates a debt cycle because the same bill is due again next month. Late fees of **$7 to $8 per payment** are common, and interest can reach **36%**. Half of BNPL users said they could not make ends meet without this form of credit.

### 6. Has the government done anything to regulate BNPL?

The Biden administration proposed regulating BNPL under the Truth in Lending Act, but the Trump administration withdrew that rule. The Consumer Financial Protection Bureau has repeatedly pulled back from enforcement.

### 7. Is this just a problem for low-income Americans?

No. While low-income families are disproportionately affected, rising costs are squeezing middle-class families too. **44% of Americans** expect to apply for a BNPL loan in the next six months.

### 8. What does this say about the Trump economy?

The Trump economy is a tale of two worlds: Wall Street is booming with record stock markets, while Main Street is struggling with record household debt. The BNPL crisis reveals the hidden weakness beneath the surface of the economic headlines.

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## Conclusion: The Lights Stay On, But at What Cost?

The rise of BNPL for utilities is a symptom of something deeper: an economy where the basics of survival—electricity, water, groceries, rent—are becoming unaffordable for millions of Americans.

The numbers are stark: $280 average monthly utility bills, $160 billion in BNPL spending, $1.25 trillion in credit card debt. The stories are heartbreaking: families maxing out credit cards, turning to payday-loan alternatives just to keep the lights on.

President Trump touts record stock markets and calls the economy "unbelievably good." But for the millions of Americans who are one missed paycheck away from losing their electricity, the economy doesn't feel good at all.

The BNPL industry has stepped into the breach, offering credit where banks won't lend. But the fees, the interest, and the debt cycles are creating a new form of peonage—a system where the poor pay more for the privilege of survival.

As Senator Warren put it: "Everyday costs are through the roof, forcing more people to take out 'Buy Now, Pay Later' loans just to make it through the month".

The lights stay on. But the cost—financial, psychological, and societal—keeps rising.

And that's a bill that's coming due.

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## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. The views expressed are based on publicly available information as of August 18, 2026. Economic conditions, regulatory policies, and personal financial situations are subject to change. The author does not endorse any specific financial products or strategies. Before making any financial decisions based on the content of this article, please consult with qualified professionals who can evaluate your specific situation. The author is not affiliated with any of the BNPL providers or advocacy organizations mentioned in this article.*