How BNPLs like Sezzle Could Help Shoppers Avoid Debt Cycles and Stacking Effects

Americans like the convenience of credit. Credit cards and other tools can make it easier to manage cash flow, make payments, and shop more securely.

Around 90% of consumers appreciate those benefits, according to data from the American Bankers Association.

However, outsized spending habits can lead to debt cycles and stacking effects.

According to Bankrate, almost half of all credit card holders (and a third of Americans) have some level of credit card debt, meaning they don't pay their balances off every month. The average American carried just over $6,500 in credit card debt in Q4 of 2024, with figures rising for several years now.

According to data from Experian, the average total credit card limit for each person has also increased over the years. From 2022 to 2024, total credit limits increased by 4.4% to $33,980. With thousands available on cards, it can be easy to keep swiping, even when budgets don't back up the spending.

When spending outpaces cash flow, credit stops being convenient. At best, it becomes a crutch. At worst, a trap. Cardholders can fall into a cycle of making minimum payments that feel manageable in the moment, even as balances quietly grow.

In recent years, an alternative has gained traction: Buy Now, Pay Later. Shoppers who want to avoid such debt cycles are flocking to BNPL options, such as Sezzle or Klarna.

What Are BNPL Options?

BNPL lets shoppers split purchases into smaller payments over time. Many options don't charge interest on short-term payment plans as long as payments are made on time. Instead of carrying a revolving balance, consumers agree to a short repayment plan when they check out and pay with a BNPL option. For instance, they may make four automated payments over six weeks.

As BNPL adoption grows, a range of providers offer installment payment options across retail categories:

• Affirm
• Sezzle
• Klarna
• Afterpay

How BNPLs Can Help Shoppers Avoid Debt Cycles and Stacking

For shoppers who want to break or avoid debt patterns associated with revolving credit, intentional use, structure, and accountability are essential. Buy-now-pay-later options often include built-in guardrails to help keep debt in check and defined timelines to encourage intentional spending.

Built-in Guardrails Prevent Debt Spirals

Credit cards can support continued spending, letting consumers layer new purchases on top of old balances. Many BNPLs take a more restrictive approach.

For instance, Sezzle pauses accounts after a missed payment, preventing additional purchases until the outstanding balance is resolved. This structure helps limit debt accumulation and reduces the risk of consumers slipping into a revolving cycle.

BNPL plans also typically avoid interest accruals that can cause balances to grow over time. With fixed payment schedules and no ongoing, revolving balance, consumers have greater clarity about when a purchase will be paid off and its total cost.

Responsible Underwriting Sets Appropriate Spending Limits Early

Another way BNPL providers help limit debt stacking is through upfront underwriting that determines spending limits before checkout. Approvals may be limited to single purchases or involve a maximum amount of spending power based on a consumer's demonstrated ability to repay the amount borrowed.

Sezzle uses a proprietary risk model that evaluates factors such as consumer behavior and payment reliability to set individualized spending power. Those limits are designed to align with repayment ability and may increase over time as consumers demonstrate consistent repayment behavior, offering flexibility without encouraging overextension.

Other BNPL providers, including Affirm and Klarna, also rely on transaction-level underwriting rather than open-ended credit lines. While approaches vary, the shared objective is to expand access to short-term financing while reducing the risk of unchecked spending that can lead to mounting debt.

Opt-In Credit Reporting Creates Functional Benefits without Adding Pressure

Most BNPL providers don't automatically report repayment behavior to credit bureaus, which means missed payments are less likely to have immediate credit consequences. This approach can reduce pressure for consumers who are still actively building their credit profile.

At the same time, some consumers want the opportunity to use BNPL responsibly as a way to build credit. Sezzle offers an opt-in program called Sezzle Up, which lets users choose whether their repayment activity is reported to major credit bureaus, including TransUnion, Equifax, Experian, and Innovis. The program is free, and participation is entirely voluntary, giving consumers control over whether BNPL usage affects their credit profile. To date, more than 700,000 consumers have opted in.

Well-defined Timelines Encourage More Intentional Spending

BNPL makes future payments visible at the point of checkout, which can encourage more deliberate decision-making—particularly for discretionary purchases. Rather than carrying a balance indefinitely and accruing interest, shoppers who use BNPL are likely to complete a payment plan before using credit to buy something else.

BNPL Online Payment Security Is Comparable to Credit Cards

BNPL options generally offer many of the same payment security features consumers expect from credit cards when shopping online. Transactions are processed through established payment networks, and sensitive financial information is typically tokenized rather than shared directly with merchants. This reduces the amount of personal data exposed during checkout and can lower the risk of fraud.

BNPL providers are also subject to the same level of dispute resolutions as traditional credit card providers. In 2024, the Director of the Consumer Financial Protection Bureau said that BNPL customers are "entitled to important consumer protections under longstanding laws and regulations already on the books." Although this interpretive rule was later withdrawn, BNPLs such as Sezzle did adopt it.

BNPL Still Requires Thoughtful Use

While BNPL tools can reduce certain risks associated with revolving credit, they aren't a substitute for responsible budgeting. Stacking multiple BNPL plans across different providers can create the problem these tools are designed to solve, and ignoring missed payments can be difficult to recover from.

Recognizing this, some BNPL providers, including Sezzle, emphasize responsible usage through features that encourage on-time payments and tools designed to help consumers manage spending more intentionally.