MW Americans are using buy-now-pay-later for gas and groceries, showing just how expensive daily necessities are now
By Genna Contino
Cash App cardholders can now make buy-now-pay-later payments through Afterpay
Consumers are using buy-now-pay-later loans to fill up their cars, as gas prices remain above $4 a gallon.
With gas prices up more than $1 a gallon from last year's average, Americans are turning to buy-now-pay-later at the pump.
That's according to new data from Block (XYZ), which announced Tuesday the availability of its BNPL service Afterpay on the Cash App debit card. A pilot program of the integration found that BNPL usage is expanding into everyday spending categories, with the average customer using Afterpay nearly 3.6 times for gas purchases and 2.2 times for grocery purchases between Feb. 4 and May 15.
With the average gas price sitting at about $4.26 a gallon as of Monday afternoon and grocery prices up nearly 3% year over year in April, budget-squeezed households are seeking out flexible payment options. Some are even dipping into their emergency savings just to cover the cost of a tank of gas. While some might be turning to these short-term loans to ease the inflation burden, Owen Jennings, Block's executive officer and head of business, said it's also part of a broader shift away from traditional revolving credit toward BNPL products.
Read more: More Americans are raiding their emergency savings just to fill up their gas tanks
"My diagnosis would more be that there's a mixed shift, especially for younger folks, away from traditional credit cards and toward these more transparent, simpler, non-revolving solutions," Jennings said in an exclusive interview with MarketWatch. "What we're seeing with Afterpay on the Cash App card is just everyday spending. We're really over-indexing toward gas stations and fuel, grocery stores, food."
44% of consumers are concerned about their ability to afford gas
While Block views consumers using BNPL to pay for fuel and food as a shift in their preferences, market data suggests that deep financial anxiety is behind the immediate need for flexibility. Nearly half of consumers, 44%, remain highly concerned about their ability to afford gas, according to data from consumer analytics firm Numerator.
"More broadly, consumers are feeling slightly worse about their current financial situation than they were at the start of the year, and significantly less optimistic about their future financial outlook," Numerator analyst Amanda Schoenbauer said.
Read more: U.S. inflation rate escalates to three-year high. And it might get worse before it gets better.
Schoenbauer also noted that today's consumer behavior mirrors past periods of high inflation, with 32% of shoppers reporting they feel uncomfortable spending money on non-essential purchases like dining out and entertainment as they prioritize the basics.
BNPL providers divided over using installment loans for everyday essentials
While Block is positioning the integration of Afterpay into the Cash App card as a tool for consumers to smooth out their cash flow to cover everyday necessities, other BNPL providers are hesitant to do the same.
BNPL has historically faced sharp criticism from consumer advocates and regulators who warn that the ability to easily stack multiple small payments can quickly spiral into unwieldy debt. Unlike a single credit-card bill, managing a dozen different repayment schedules across multiple apps can easily cause shoppers to lose track of their obligations, resulting in missed payments and steep late fees.
Read more: Americans just spent a record $20 billion with buy-now-pay-later. Here's what to do if you overdid it.
It's a reputation that some competitors are eager to avoid, particularly when it comes to low-value purchases.
Swedish BNPL giant Klarna $(KLAR)$ told MarketWatch that it doesn't break out data for gas, food or essentials as a specific purchase category, but noted that customers typically bypass installment financing for lower-value orders.
For these purchases, "customers typically use our Pay in Full product, which lets people pay at checkout straight from their debit card or bank account," Klarna spokesperson Clare Nordstrom said. "It isn't credit and it isn't BNPL."
From the archives (Sept. 2025): Klarna goes public as more people say buy-now-pay-later is the only way they can afford to buy things
A spokesperson for PayPal (PYPL) said they couldn't provide categorical spending data for its Pay In 4 loans and declined to comment when reached by MarketWatch.
While BNPL provider Affirm (AFRM) also said the company could not provide granular data, CEO Max Levchin said in a recent shareholder letter that he has noted a shift in consumer preference away from traditional credit cards.
"The single largest category for us is general merchandise - Affirm is truly the everything product at this point," Levchin said on CNBC in May.
BNPL flat fees vs. revolving credit
The structural differences between traditional revolving credit cards and the BNPL model ultimately boil down to how interest is calculated. Some BNPL loans are advertised as interest-free, but still charge retroactive interest or a hefty late fee if a payment is missed.
Under the terms of the new integration, Afterpay on the Cash App card charges a flat 7.5% finance fee over a six-week repayment window. When looked at over a 12-month period, a recurring math model would equate that simple fee to an annualized percentage rate of roughly 65% - much higher than your typical credit-card APR.
Read more: A record 111 million Americans can't pay their credit-card bills in full
However, Jennings said the simple flat fee makes things less confusing for consumers: "Let's say they're getting $100 of gas, they pay $107.50. That's a simple deal and transaction," he said, compared to credit-card interest that's passed on to the next billing cycle if a cardholder doesn't pay off their entire balance. He also noted that if an Afterpay customer doesn't pay back their loan, they aren't able to take out another.
Still, balancing affordability with consumer access is a reality that Jennings admits the company weighs heavily, particularly since its primary user base skews younger, lower-income and non-white - demographics that have historically been locked out of traditional bank underwriting. Block has also tested out different durations of installments to determine what makes the most sense for its customers, Jennings said.
"We feel like we're really well-calibrated," he said. "If we make things more affordable [by reducing] the fee by a certain amount, access decreases because you can underwrite fewer folks, and vice versa."
Read next: Is gambling culture taking over shopping? New crypto debit card lets you 'buy now, pay maybe'
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-Genna Contino
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June 02, 2026 09:00 ET (13:00 GMT)
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