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 don’t 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’re 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.