Buzz
Grocery shopping in recent years has become increasingly challenging due to skyrocketing food prices. While inflation typically raises food costs by around 2% annually, last year saw an unprecedented spike of nearly 12%. For many, this has turned grocery shopping into a strategic mission, involving coupon clipping and meticulous meal planning to make every dollar count. The simultaneous surge in the cost of essentially every other necessity has made putting food on the table a daunting task, especially for those with little to no disposable income after covering rent, utilities, and car insurance.
To cope, some have turned to buy now, pay later (BNPL) platforms such as Klarna, Zip, and Affirm. These services allow you to split your purchase into four interest-free payments over several months. As long as you repay on time, there’s no additional cost.
This approach is undeniably appealing for those struggling to afford groceries, which explains why BNPL usage in grocery stores surged by 40% in early 2023. For the financially strained, it offers a way to defer grocery expenses to the next month without immediate consequences. However, relying on BNPL services for groceries is a risky and ill-advised strategy.
The unseen pitfalls of BNPL services
BNPL services are complex primarily because of their classification: they function as loans but have largely avoided regulation due to their lack of upfront interest charges. When you use Klarna for groceries, they cover the cost upfront, and if you repay as agreed, there’s typically no additional fee.
You might question how platforms like Klarna generate revenue, as they certainly aren’t funding your groceries out of charity. They impose significant processing fees on merchants and occasionally receive additional fees for providing the service at checkout. However, their primary income comes from late fees, which can sometimes inflate monthly payments to double the original amount, wreaking havoc on a carefully managed budget.
There’s also a psychological aspect to consider: BNPL encourages overspending and purchasing pricier items. Grocery stores, already designed as food-centric mazes aimed at upselling, become even more manipulative when BNPL is introduced. This can lead to unusually high grocery bills—especially problematic when you couldn’t afford your regular expenses to begin with. Additionally, missed BNPL payments can harm your credit score, just like any other debt, complicating future loan approvals.
Lastly, using BNPL for groceries reduces your future food budget. If you can’t afford $200 for groceries today and defer the payment, you’ll need to allocate $50 monthly for the next four months, making it even harder to manage your food expenses down the line.
Alternatives
Relying on BNPL services for groceries is financially unwise. However, this advice is easier to follow when your fridge is stocked. If you’re struggling to cover grocery costs without accruing debt, what options remain?
The U.S. food assistance system is woefully inadequate and continues to deteriorate. Many programs that expanded during the pandemic to aid those in need are now being reduced or discontinued, including essential food and meal services that helped families feed themselves and their children. This makes BNPL services at grocery stores seem like a lifeline. However, there are safer ways to ensure your family is fed without jeopardizing your financial stability:
Supplemental Nutrition Assistance Programs (SNAP). Reach out to your state SNAP office to determine eligibility, as each state has its own criteria. Apply immediately if you foresee difficulty affording groceries, as processing times can be lengthy. Approved applicants receive a card usable at designated stores for food purchases, including seeds for home gardening. Feeding America provides application assistance and details on other support programs. Families should also explore the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
Food banks. Feeding America can help you find a nearby food pantry. Additionally, Full Cart, a virtual food bank, delivers grocery boxes (though waitlists may apply). FoodFinder is another resource offering a broader range of free food options, complete with a smartphone app.
Local services. Many community centers and religious organizations operate food pantries or provide assistance to those in need, often regardless of membership. For those unfamiliar with local resources, calling 211 can connect you to available services in your area.
