Don’t Let a Burrito Put You Into High-Interest Debt. Beware of BNPL
- More people are using Buy Now, Pay Later (BNPL) for groceries and food delivery.
- Some BNPL loans charge high interest. Even when they don’t, you could get hit with interest and fees if you pay late.
- Paying cash, cutting other expenses, and cooking at home can help you avoid BNPL “burrito debt.”
- If you’re struggling with debt from credit cards, BNPL, or other debts, it may be time to research debt solutions.
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If you’ve used an online checkout or food delivery app lately, you’ve probably seen the Buy Now, Pay Later (BNPL) option. More retailers are offering BNPL as a way to pay for your purchase instead of using a credit card or debit card. A recent LendingTree survey found that 25% of BNPL customers used BNPL to pay for groceries (including 33% of Gen Z), and 16% had used BNPL to pay for restaurant takeout or delivery meals.
With BNPL, you take out a short-term loan and pay off purchases in a few installments. But sometimes, BNPL can leave you in need of debt relief.
Let’s look at how BNPL works, how to avoid “burrito debt,” and how to pay for the things you want in a way that doesn’t lead to too much debt.
How Buy Now, Pay Later (BNPL) Works
Some people might want to use BNPL because it’s not the same as credit card debt. It’s true that BNPL doesn’t work exactly the same way as credit card debt, but BNPL can be risky and expensive.
BNPL loans can be zero interest if you choose a short-term repayment plan and pay off your purchase in a few weeks. But if you take longer than that to pay off your BNPL account, you get charged interest—often between 19.99% and 36% APR.
For people with lower credit scores, a BNPL loan interest rate might be lower than a credit card APR. But if you don’t pay off your BNPL bill in time, these loans for everyday purchases could cost you more than you expect. BNPL customers run the risk of getting charged big fees for “burrito debt.” And recently, some BNPL companies announced that they will start reporting BNPL purchases to credit bureaus—so negative history with BNPL could hurt your credit standing.
Better Ways to Get What You Want When It’s Unaffordable
If you find yourself going into BNPL debt for everyday purchases, here are a few other ideas for how to buy what you want.
Cut other items from your budget
Running out of money between paydays? Look at your monthly budget and try to cut non-essential spending. Can you cancel some subscriptions, or change your car insurance to a lower-cost policy? Any amount you can free up could help you avoid high-interest debt.
Pay cash when possible
A big trend on personal finance TikTok in recent years for younger adults has been “envelope stuffing”—people plan ahead and use actual cash (in envelopes) to pay their bills. If spending money online feels too easy and invisible, like money is flying out of your account, you might want to switch to cash. Actually feeling every dollar in your hands could help you feel more in control of your spending.
Cook at home
It’s understandable to feel tempted to spend money on BNPL for something like a burrito. You’re busy and tired, and it feels too hard to cook dinner at home, so you order food delivery and pay for it with BNPL. But you could save a lot of money on food by cooking at home. If a typical burrito food delivery order costs $20 (with tax, tip, and fees), you could use that $20 to buy a few days’ worth of beans, rice, tortillas, and other DIY burrito ingredients at the grocery store.
What to Do if You’re Already Struggling with Debt
If you have too much credit card debt or too many BNPL loans and you’re struggling to pay your bills, you might want to get help with your debts. Here are a few options to get debt relief:
Consumer credit counseling
With consumer credit counseling, you can talk to a credit counselor, get help with your monthly budget, and work out a debt management plan (DMP). With a DMP, your credit counselor helps you review your budget and your debt to come up with a repayment plan that pays off your debts within three to five years. They may be able to negotiate with your creditors for a lower interest rate or to waive some fees. You have to stick with the plan and keep making those monthly payments or you could lose those negotiated benefits.
A debt management plan is for someone who has enough income to fully repay their debts.
Debt settlement programs
If you want to get rid of debt faster than by making minimum payments, debt settlement might help, especially if you’re experiencing a financial hardship that will make it difficult or impossible to fully repay your debts. A professional debt settlement company can help you negotiate debts by asking your creditors to accept less than you owe. You can also negotiate debts on your own, by talking directly with your creditors.
Debt settlement is for someone experiencing financial hardship who can’t afford to fully repay their debts.
Bankruptcy
If your debts are overwhelming and you have no reasonable path to pay them off, you might choose to file bankruptcy. If you qualify, bankruptcy could let you walk away from your unsecured debts, such as credit card debt. The exact details depend on your state, your financial situation, and what kind of debts you owe. Not everyone qualifies to have their debts wiped clean. Talking to a bankruptcy attorney is the first step to filing bankruptcy.
BNPL: When It Works, and When It Doesn’t
With BNPL, it’s easy to end up with more debt than you wanted. When that happens, you might end up paying extra fees—and even hurting your credit.
BNPL could be a useful way to pay for purchases if you plan ahead, can afford the repayment plan, and you understand how to pay off the loan.
Insights into debt relief demographics
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during December 2025. The data provides insights about key characteristics of debt relief seekers.
Credit utilization and debt relief
How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In December 2025, people seeking debt relief had an average of 74% credit utilization.
Here are some interesting numbers:
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Collection accounts balances – average debt by selected states.
Collection debt is one example of consumers struggling to pay their bills. According to 2023, data from the Urban Institute, 26% of people had a debt in collection.
In December 2025, 30% of debt relief seekers had a collection balance. The average amount of open collection account debt was $3,203.
Here is a quick look at the top five states by average collection debt balance.
| State | % with collection balance | Avg. collection balance |
|---|---|---|
| District of Columbia | 23 | $4,899 |
| Montana | 24 | $4,481 |
| Kansas | 32 | $4,468 |
| Nevada | 32 | $4,328 |
| Idaho | 27 | $4,305 |
The statistics are based on all debt relief seekers with a collection account balance over $0.
If you’re facing similar challenges, remember you’re not alone. Seeking help is a good first step to managing your debt.
Support for a Brighter Future
No matter your age, FICO score, or debt level, seeking debt relief can provide the support you need. Take control of your financial future by taking the first step today.
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Author Information
Written by
Ben Gran
Ben Gran is a personal finance writer with years of experience in banking, investing and financial services. A graduate of Rice University, Ben has written financial education content for Business Insider, The Motley Fool, Forbes Advisor, Prudential, Lending Tree, fintech companies, and regional banks like First Horizon.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Does debt relief hurt your credit?
When you begin a debt relief program, it’s normal for your credit to experience a step back before an even bigger step forward. People needing debt relief don’t usually go in with high credit scores. Generally speaking, the lower your score, the less it will be hurt by any negative event.
What’s on a credit report?
A credit report is a statement that has information about your credit history and current credit situation, such as your payment history and the status of your credit accounts. Credit reports commonly include the following details:
Personal information, like your current and former names, current and former addresses, birth date, Social Security number, and phone numbers.
Credit account information, including the account type (mortgage, installment, revolving, etc.), credit limit, account balance, payment history, account age, and name of the creditor.
Collection accounts, if you have any.
Public records, such as liens, foreclosures, bankruptcies, and judgments.
Inquiries from companies that have accessed your credit report.
What interest rates do people with low credit scores pay for personal loans?
Personal loan interest rates top out at about 36%. That’s much lower than rates for payday or title loans. The exact rate you're offered depends on your credit history, income, and other qualifications.