Should you pay for your trip with a “Buy Now, Pay Later” plan?

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When it comes to paying for trips, you now have more options to explore.


Key points

  • The use of the BNPL plan has increased in recent years.
  • Although BNPL plans are convenient, they have their drawbacks if you don’t have the cash to cover your purchase.
  • If you have most or all of the money saved for a trip, a BNPL may be worthwhile.

Consumers are more than familiar with the concept of buying things and paying for them over time. This is called swiping a credit card and paying off the balance over months or even years. But there’s a downside to having a credit card balance: earning interest on those charges and spending even more. If only there was a better way.

In fact, there could be. With the increasing availability of “buy now, pay later” or BNPL plans, you can enjoy the flexibility of a credit card without automatically incurring interest charges.

How does BNPL work?

BNPL plans allow you to spread your payments for a given purchase over a short period of time – usually up to 12 weeks. As long as you stick to the terms of your installment agreement, you won’t accrue interest charges or end up with pesky fees.

Nowadays, many retailers (both physical and online) allow customers to pay with BNPL packages. And now it seems that the option is available to the travel industry.

Expedia, for example, now allows travelers to pay for their reservations in a series of payments instead of having to pay for an entire trip up front. It’s an option that gives travelers a lot more flexibility, but is it the right decision for you?

A mixed bag

When you’re making a big purchase, like paying for a flight and hotel, it can be difficult to pay for everything all at once. With an BNPL plan, you don’t have to. Instead, you can spread this payment over several months so that you don’t empty your bank account or incur debt that incurs interest.

But one thing you should know is that BNPL plans do not give you that plenty of time to refund your purchases. Usually you only get about 12 weeks. And if you miss your payment schedule, there can be costly penalties and interest to pay.

Additionally, if you fall behind on your BNPL plan payment schedule, this negative activity could be reported to the credit bureaus. The result? Damage to your credit score that makes it harder to borrow affordably next time.

Should you use a BNPL plan to cover travel expenses?

As a general rule, you really should only take trips that you know you can afford. Going into debt to travel is a decision you might regret. However, if you have the cash to cover a trip but want a little wiggle room so you don’t feel cash-strapped, then using an BNPL plan to pay for the trip isn’t a bad idea.

Say you’ve saved $3,000 to cover a trip to Europe, and that money is already in your savings account. If the idea of ​​shelling out all that money at once is unsettling, you might want to spread those payments out over three months — and that’s fine.

Also, let’s say you need $3,000 to cover your trip and you’ve saved $2,500 so far. If you’re sure you can save the remaining $500 within a few months, you might want to sign up for an BNPL plan. That way, by the time the last $500 comes due, chances are you’ve managed to rack it up.

But if you don’t have money set aside for a trip, a BNPL plan won’t be very useful. In this situation, you better postpone your trip until you have saved enough to cover its cost. And if it’s an emergency – say, you’re traveling to visit a sick relative or friend – then you might be better off using a travel credit card, even if it means earn interest on your flight and hotel.

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