The holidays are fast approaching, and\u00a0the time to book holiday flights\u00a0is even closer. But as travelers securing end-of-year trip reservations begin to reach for their wallets, another payment option is on the table.<\/p>\n
A growing list of airlines offers travelers the chance to buy expensive flights now and get an interest-free loan to pay off the purchase in smaller monthly installments. These \u201cbuy now, pay later\u201d financing options are available through third-party providers, like Affirm Almost 1 in 5 holiday travelers (about 18%) plan to use a buy now, pay later service to pay for their holiday travel expenses, according to a NerdWallet survey conducted by The Harris Poll in September among over 2,000 U.S. adults. For the purposes of the survey, holiday travelers were defined as people who plan to spend money on flights\/hotels for 2023 holiday travel.<\/p>\n Buy now, pay later is a way for holiday travelers to finance the $1,947 they plan to spend on holiday flights and hotels this season, according to NerdWallet\u2019s findings. This is an increase of more than 23% from last year\u2019s holiday travel spending ($1,582 on average). That\u2019s despite a\u00a0decline in airfare prices\u00a0since last year, according to the consumer price index data released in October.<\/p>\n The question is whether using these programs is a good idea.<\/p>\n Plus:<\/strong> More people plan to use \u2018Buy Now Pay Later\u2019 for holiday shopping this year \u2014 but there\u2019s one \u2018troubling sign\u2019<\/p>\n Buy now, pay later programs with five major lenders grew 970% from 2019 to 2021, according to a\u00a0September 2022 report from the Consumer Financial Protection Bureau\u00a0(CFPB).<\/p>\n The agency also noted the dollar value of loans doled out by those companies rose from $2 billion before the pandemic to a whopping $24.2 billion in 2021. Buy now, pay later usage included everything from beauty products to groceries, gas, pet care and travel.<\/p>\n Experts say the jury is still out on whether\u00a0buy now, pay later programs\u00a0benefit consumers. A big reason for the uncertainty is the rapid rise of these financing options.<\/p>\n \u201cThere\u2019s a lot we still don\u2019t know about consumer uses of these,\u201d says Michael Collins, an expert in consumer and personal finance at the University of Wisconsin.<\/p>\n According to the CFPB, these loans, paid down monthly by consumers, range in size from $50 to $1,000.<\/p>\n Don\u2019t miss:<\/strong> 6 ways to get your chocolate fix with a \u2018Wonka\u2019-inspired escape this winter<\/p>\n There are some benefits to using buy now, pay later for travel.<\/p>\n For one, buy now, pay later can keep travelers from immediately paying for a sizable airfare expense when holiday gifts and other year-end costs can quickly add up.<\/p>\n Plus, there\u2019s a convenience factor to making a buy now, pay later purchase, Collins says.<\/p>\n \u201cYou can instantly finance it even if you don\u2019t have cash in the bank and you don\u2019t want to use your credit card,\u201d he says, noting its appeal to those who might not have stellar credit or who don\u2019t have a credit card.<\/p>\n Unlike a credit card, though, many of these programs don\u2019t charge interest if you make the minimum monthly payment.<\/p>\n Read:<\/strong> If you want to be a more climate-friendly traveler, tough it out on the budget airlines\u2014here\u2019s why<\/p>\n Buy now, pay later programs do carry risks, especially if you miss your monthly payment.<\/p>\n In the CFPB\u2019s report on buy now, pay later trends, the explosion in popularity of these financing options last year is discussed, and users are cautioned about the risks of data harvesting, inconsistent consumer protections, minimal dispute resolution options and the potential to accumulate debt and late fees.<\/p>\n \u201cWe will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a Buy Now, Pay Later loan,\u201d the bureau\u2019s director, Rohit Chopra, said in the report.<\/p>\n The agency also found that 10.5% of buy now, pay later borrowers were charged at least one late fee in 2021.<\/p>\n
\n AFRM,
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\n Uplift, Klarna or PayPal
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\n Credit, directly on the airline\u2019s checkout page.<\/p>\nThe rise of buy now, pay later services<\/strong><\/h2>\n
Benefits of using buy now, pay later for travel<\/strong><\/h2>\n
Drawbacks of using buy now, pay later for travel<\/strong><\/h2>\n