Here's What Happens When You Default on 'Buy Now, Pay Later' Travel Payments

Travel can be pricey at any time of the year. And as we approach the holiday season, we’re likely to see even higher prices for things like airfare and lodging.

Hopper reports that airfare for Thanksgiving is expected to average $268 per ticket this year. That’s actually a 14% drop from last year, but it’s a lot of money nonetheless. Airfare for Christmas, meanwhile, is expected to average $400 per ticket.

If you’re worried about paying for your holiday travel in one fell swoop, that’s understandable. Charging your flight or rental car on a credit card might be a viable option. But if you carry a balance forward, you’ll risk accruing interest on that sum. That’s not ideal at a time when you’re already looking at spending extra money on things like holiday gifts and decorations.

But you may not have to rack up credit card interest when paying for travel over time. Many “buy now, pay later” plans, or BNPL plans, allow you to pay for travel in installments. In many cases, that means avoiding interest charges and fees.

But if you’re going to sign up for one of these plans, you’ll need to be careful. Falling behind on payments could have serious consequences.

Don’t fall into a dangerous trap

BNPL plans might seem like a good thing at first. After all, you get the leeway to spread your payments out over a period without incurring extra costs. But that assumes you’re able to stick to your payment plan. If you fall behind, interest and fees could apply.

And that’s not all. Just as failing to make your credit card payments when you’re supposed to can result in credit score damage, so, too, can defaulting on BNPL plan payments. So if you’re gearing up to apply for a big personal loan in 2024, using a BNPL agreement to pay for holiday travel and then falling behind on your payments could easily wreck those plans.

Read the fine print of BNPL plans

It’s easy to see why a BNPL plan may be a more appealing way to pay for travel than a credit card. But do know that there are consequences to falling behind. Before you sign up for one of these plans, read the terms and conditions carefully so you know what you’re getting into.

You may also want to consider choosing a credit card over a BNPL plan if you’re confident in your ability to pay off your travel quickly. With a BNPL plan, you won’t rack up rewards or cash back for your purchases, whereas with a credit card, there’s the potential to get rewarded financially for the costs you incur to book a flight, rental car, or hotel room.

To be clear, though, whether you’re using a BNPL plan or a credit card to pay for your holiday travel, you should really only move forward if you’re confident in your ability to pay right away. If not, you may want to skip that travel this year, or encourage your family to come to you instead if their financial situations lend to that.

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