We've seen the buy now, pay later trend in retail during the pandemic. Now, it’s getting more popular for travel too.
Companies including Uplift, Affirm, and Klarna offer these services that may be tempting with the uncertainty on the exact timing of when it will be safe travel again.
Also appealing is the thought of spreading out the cost of your purchase by not having to put it on a credit card. But you need to know what you're getting into.
“The number one rule is to be really conscious of the specific terms that you are being offered, because in some cases, this is even higher than you might get on a credit card. The average credit card rate is 16%, so a lot of times people gravitate to buy now, pay later because they're afraid of credit card debt, but buyer beware, you might be facing a high interest rate,” said Ted Rossman, an industry analyst at Creditcards.com.
Rossman says a lot of the time, the best interest rates with these services are reserved for people with good credit and high income. He also says sometimes the companies won't be clear about the rate, maybe just telling you the total fees and leaving you to do the math to figure it out.
Here's his advice instead.
“For a lot of us, we're probably at least a few months away from getting vaccinated, from really feeling comfortable traveling. Start saving now, get that money aside every month. By summer, you might have a nice vacation fund to tap into interest free,” said Rossman.
Airlines continue to waive cancelation and change fees. Rossman expects this trend to stay for a while still, so that may be a better way for you to deal with the uncertainty of travel without racking up interest. You won't get actual money back, but you get a voucher you can use for a set amount of time.