Are
you thinking about booking your next vacation but don’t have the cash up front?
Many travel sites now offer Buy Now, Pay Later loans, allowing you to split the
cost over time. It might seem like a great deal, but experts say these loans
can come with risks, especially when it comes to unexpected trip cancellations
or refunds. Consumer Reports has important advice before you sign on the dotted
line.
Daniel Iraheta says he has traveled to many countries over
the years, but there’s one experience he’s never had—a cruise. Recently, while
planning his trip, he came across Buy Now, Pay Later loan options. Daniel says
it will
be something that he will look into.
More than 95 million Americans used Buy Now, Pay Later Loans
in 2023. While these loans cover a variety of purchases, travel is one of the
fastest-growing categories. They offer quick approvals, no hard credit checks,
and easy installment payments.
But Consumer Reports’ Lisa Gill warns that these loans
aren’t always smooth sailing. Unlike
credit cards, BNPL loans do not always come with the same consumer protections.
If your trip is canceled or delayed, getting a refund can be a nightmare,
sometimes leaving travelers stuck making payments for a vacation they never
took.
And then there’s the fine print. While some BNPL offer
interest-free payments – typically split into four installments over two months
– others also include conventional loans with interest rates as high as 36%. So make sure you know exactly what you are signing up for.
Some consumers end up with
unexpected fees or sky-high interest rates, turning what seemed like a good
deal into a costly purchase. And if your trip gets canceled, you may still be on the hook
for payments. If this happens to you, contact the BNPL lender with proof that
your refund is underway and ask them to pause payments until it’s resolved.
Because when it comes to travel, things don’t always go as expected.
If possible, use a credit card to book your travel—depending
on your credit score, many offer interest-free periods and provide stronger
consumer protections, including easier refunds and dispute resolution. Another
option is setting money aside in advance to avoid debt altogether.
