If you’ve been grocery shopping any time in the last few years, you know that food prices are too damn high. Like everything else, food prices experience inflation, normally about 2% a year. But last year, the rise in food costs was dramatic, soaring nearly 12%. For folks who were already approaching grocery shopping like a military operation, hunting coupons and meal-prepping like mad to try to stretch their budgets, this has made feeding themselves and their families a nightmare—especially as the cost of literally everything else goes up dramatically at the same time. If you have zero money left over after paying rent, utilities, and car insurance, how do you buy food?
Some folks have turned to buy now, pay later (BNPL) services to bridge that gap. These services, like Klarna, Zip, or Affirm, essentially loan you the money to make a purchase at 0% interest and break it into four payments over a period of months. If you pay the whole thing off on schedule, you’re golden.
It’s easy to see why this is attractive to people who are struggling to buy food, so it may not be surprising to learn that the use of BNPL services in grocery stores rose a whopping 40% in early 2023. If you’re broke and hungry, you can essentially push your grocery bill off into next month’s budget, theoretically without any penalty. But buying your groceries with buy now, pay later services is a bad idea.
The hidden costs of BNPL services
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One of the main reasons BNPL services are tricky is their status: They’re loans, but they’ve largely escaped regulation because they don’t charge up-front interest. Unlike a credit card purchase, Klarna will pay for your groceries and if you pay them back as agreed, there’s usually no cost to you.
You might wonder, then, how services like Klarna make money, because they’re not buying your groceries out of the goodness of their hearts. They charge merchants some hefty processing fees, and sometimes get extra fees from the merchant in exchange for offering the service at the checkout, but their main profit source is their late fees, which can sometimes double the amount of monthly payments, which can absolutely trash a fragile and carefully planned budget.
There’s also the psychological factor: BNPL makes it easy to spend more than you normally would, and to buy more expensive items. Grocery stores are already essentially food-based Escape Rooms designed to upsell and manipulate you, so adding BNPL to the mix can drive you to have higher grocery bills than usual—when you couldn’t afford your normal grocery bill in the first place. And missed payments to BNPL services can negatively affect your credit score just like any other debt, making it harder for you to get a loan in the future.
Finally, buying groceries with BNPL also means you’re lowering your future food budget. If you don’t have $200 for food today and defer the grocery bill, you’ll need to come up with $50 a month for the next four months to pay it off, which will make it that much harder to scrape together that food money going forward.
Alternatives
Using BNPL services for groceries is a bad financial idea. But that’s easy to say when you’ve got a fridge full of food. If you’re unable to pay your grocery bills without going into debt, what choice do you have?
The U.S. food safety net is horribly insufficient—and getting worse. After a spurt of growth inspired by the pandemic, many programs designed to support struggling people in the U.S. are ending or scaling back, and that includes many food and meal services that were helping people feed themselves and their kids. So it’s easy to see why people find BNPL services so tempting at the grocery checkout. But there are options to feed your family that don’t involve putting yourself in financial peril:
- Supplemental Nutrition Assistance Programs (SNAP). Contact your state SNAP office and find out if you’re eligible for this program (each state has its own system and requirements). If you are, apply as soon as you think you’re in danger of not being able to afford groceries. It can take a long time to get your application processed, so the sooner you apply, the better. You’ll receive a card that can be used at specific stores to buy food and even seeds to plant a garden to grow your own food. Feeding America offers assistance to apply for SNAP benefits and has lots of other information about support programs. If you’re feeding a family, you should also look into the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
- Food banks. Feeding America can help you locate a food pantry in your local area. You can also check out Full Cart, a “virtual” food bank that will ship boxes of groceries to you (be warned, there’s a waiting list). And FoodFinder is another website that has a slightly wider net for free food resources, and it also offers a smartphone app.
- Local services. Many areas have community centers that often maintain food pantries, or offer local services to help people struggling to buy food. Local churches and religious groups also frequently offer food assistance, even to non-members. If you’ve never interacted with your local government or community organizations, you can try calling 211 to find out what services are available near you.