TULSA, Okla. — The "buy now, pay later" option has become popular among travelers facing cash shortages, with many travel sites offering it as an incentive for vacationers. However, experts warn many people don't realize this type of payment plan is a loan.
According to Consumer Reports, 95 million Americans used some form of "buy now, pay later" loans in 2023, with travel as one of the fastest-growing categories. This payment method appeals to consumers due to quick approval processes, no hard credit checks, and installment payments.
Lisa Gill of Consumer Reports stated, "Unlike credit cards, buy now, pay later 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."
While some buy now, pay later options offer interest-free installments—typically split into four payments over two months—others can include conventional loans with annual interest rates as high as 36 percent. Gill added, "Some consumers end up with unexpected fees or sky-high interest rates, turning what seemed like a good idea into a costly purchase."
In the event of a trip cancellation, consumers should reach out to their lender and ask to pause payments until their trip cancellation refund is resolved.
Consumer Reports suggests that a better payment option may be a credit card, especially if it offers an interest-free option. Credit cards come with stronger consumer protections and facilitate easier refunds and dispute resolutions. However, the best approach is to set aside cash in advance to pay for your trip.
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