Canadians are feeling the pinch from the climbing cost of living, with growing numbers of people turning to “buy now, pay later” approaches to their spending.

Experts warn that while it can help ease the up-front pressure, it can be a risky tactic in the long run.

“I have noticed that it’s on every single retail website, and if one is not disciplined, I can see how it’s so easy for people to agree to buy now, pay later because the payments look so low,” said Stacy Yanchuk Oleksy, CEO of the Edmonton-based non-profit credit counselling agency Money Matters.

“If one is struggling financially and they’re told that if they paid $5 or $10 a month, it’s a really easy hook for people to make that purchase. However, my concern with those buy now, pay later apps is that people lose track of what they’ve committed to.”

‘Buy now, pay later’ offers are not new — effectively, it is a loan or a credit line normally used for a large purchase.

“Our mortgages are the original ‘buy now, pay later,’ and it seems like companies have found a way to capitalize on that concept,” said Kelly Ho, a Vancouver-based certified financial planner.

‘Buy now, pay later’ offers have increased rapidly during the years since the pandemic.

According to research from Morgan Stanley, such loans financed two per cent of all e-commerce sales in 2020. By 2024, that was up to six per cent.

By the end of this year, the Canadian market is expected to grow 12 per cent annually to US$7.5 billion, a report by market research firm R&M said.

Typically, consumers might use these services for big purchases like TVs, laptops and other electronics. But research suggests Canadians are also dipping into them for small purchases such as takeout.

Canadian fintech firm Koho said the share of eligible users splitting up repayments has risen from 38 per cent to 44 per cent in the last six months. The top categories were groceries, telecom and restaurants. Based on 10,000 users, the average transaction was $187, with an average loan amount of $345.

While these services can break up a big payment and help you through a rough patch, making them a habit could lead to a debt trap, Oleksy warned.

“Credit is neither good nor bad. It is just a tool. A good butter knife spreads good butter on your bread, but you drop it on your foot and it can stab you in the foot,” she said.

The lure for financially stressed Canadians can be strong, but the payments can easily add up to financial pain down the road, Ho added.

“If you have 15 or 20 of those ‘buy now and pay later’ for the 15 or 20 items that you purchased off of different websites … no matter how organized you are, unless you have a very meticulous spreadsheet detailing every single payment, we have a problem,” Ho said.

And if you miss a payment? “That’s where they get you,” Oleksy explained. “If you use it perfectly, it’s a decent tool every once in a while. It’s when you miss a payment — that’s where, boom, the interest tacks on.”

How to weigh the risks

For some, “buy now, pay later” loans can be a way to avoid even riskier credit card debt.

“In a way, if one is disciplined, ‘buy now pay later’ could help people mitigate those 20 per cent credit card interest rates,” Ho said.

An Equifax report released Monday showed 1.4 million Canadians missed credit card payments in April–June 2025. While that’s 7,000 fewer than last quarter, it’s still 118,000 more than the same period last year.

“‘Buy now, pay later,’ if it’s used very, very strictly, isn’t a bad product. It allows someone to break up a payment into equal payments. It might allow someone to delay a payment or even get something on zero per cent interest,” Oleksy said.

Keeping it for bigger purchases can help mitigate risks, she added.

“Most of us don’t have $1,500 or $2,000 to just drop on a laptop. So maybe you break it up into four payments and that just makes it easier. And you still get what you need for work, school or life. It’s just when it becomes a habit, when you’re relying on it for the small day-to-day purchases, that’s where I start to worry,” Oleksy said.

With the new school term approaching, experts urge families to plan ahead rather than rely on installment loans.

“We know that back-to-school is an annual event when you have school-age children. So it’s not a surprise that this event is coming up. And like with anything else, planning in advance is key,” Ho said.

Buying school supplies second-hand can also be a great option, she added.

“Don’t spend money that you don’t have,” Ho advised.

By Uday Rana, Global News
Posted August 20, 2025