The Dangers of Phantom Debt

What Credit Bureaus Don’t Track — and Why It Should Scare You

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Buy Now, Pay Later Is the Phantom Debt Powering America’s Consumption Boom

It’s invisible to credit bureaus. Untouched by federal lending laws. And increasingly responsible for keeping U.S. consumer spending afloat.

In 2025, Buy Now Pay Later (BNPL) isn’t just a payment method — it’s a shadow credit system growing in plain sight. With no credit checks, no disclosures, and no federal reporting, millions of Americans are piling up microloans across Klarna, Affirm, Afterpay, and PayPal — all while flying under the radar of banks, regulators, and their own credit scores.

This is the Phantom Debt. And it’s now large enough that pulling it out of the economy could erase over $50 billion in annual consumer spending.

Read on to understand how BNPL is distorting risk, inflating demand, and quietly reshaping the foundation of the U.S. credit system.