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Kristin Herman expressed that utilizing a “buy now, pay later” (BNPL) service for an impromptu Miami getaway was a game changer for her. She appreciated the swift approval process and the absence of initial fees, but a missed payment led to unexpected charges. “One missed reminder turned into fees,” she recounted during an interview with CNBC Travel.
Rane Teo shared a contrasting experience using a BNPL option to stagger payments for a family weekend trip to Batam, Indonesia, describing the process as “easy and convenient.” Both Herman and Teo are part of a growing trend among travelers who are increasingly turning to BNPL services to manage costs associated with flights, hotels, and cruises, often enjoying the benefits of interest-free options or reduced late fees.
According to BNPL provider Klarna, the value of travel bookings processed through its platform surged by 50% over the past year. Similarly, Affirm reported a 38% increase in travel and ticketing volumes year-on-year for the last quarter of 2024, surpassing the $1 billion milestone.
A report by NerdWallet indicates that nearly 20% of American travelers are planning to adopt BNPL for their summer vacations in 2025. The uptake of all payment types is also evident in China, where the travel platform Fliggy reported a more than 20% increase in BNPL travel purchases from 2023 to 2024, with expectations for further growth into 2025, particularly among younger demographics.
Fliggy’s press release highlighted that approximately 25% of BNPL customers were born between 1995 and 1999, often classified as Gen Z, with significant growth seen in those born from 2000 onwards. Additionally, data from financial services firm Bread Financial revealed that younger generations, including Gen Z and millennials, are more inclined to utilize BNPL for attending live events.
Notably, around 60% of general admission ticket buyers for the recent Coachella festival opted to use a payment plan, which included a $41 processing fee. Ticket prices have markedly increased from $50 per day in 1999 to starting at $539 for a three-day pass in 2026.
Assessing the Benefits and Risks of BNPL
Experts opine that BNPL can serve as a useful financial tool for booking vacations when employed responsibly. Sunil Sachdev, who leads embedded finance at fintech firm Fiserv, noted that the service has evolved over recent years, and the concern of widespread defaults has diminished.
Carrington Labs CEO Jamie Twiss reinforced this viewpoint, indicating that default rates for travel-related BNPL are notably lower than those for other categories as many users view it as a primary payment method rather than a means of obtaining funds.
However, the potential downsides of BNPL cannot be overlooked. A report from NerdWallet referenced a finding from the Consumer Finance Protection Bureau indicating that 63% of BNPL borrowers had multiple loans at once in 2022. This “stacking” could lead to financial strains, as highlighted by Andrew Lokenauth, founder of TheFinancialNewsletter.com. He pointed out that challenges can arise regarding customer service accessibility and repayment challenges due to unforeseen life events, such as job loss.
Lokenauth noted an increasing trend among his clients using BNPL for essential travel costs like family visits and weddings, emphasizing that it extends beyond luxury trips. He has encountered numerous clients burdened by BNPL travel-related debt, emphasizing the built-in inflexibility of these loans; missing a payment often incurs late fees and affects one’s credit score.
Nonetheless, it’s worth noting that each BNPL provider operates differently. For instance, Affirm claims not to charge late fees, and they prescreen potential customers. The company’s investor information specifies that traditional “pay in four” loans aren’t reported to credit bureaus; however, it recently began reporting all longer-term products to credit agencies.
Travel consultant Precious Caroll advises clients to consider BNPL only if they can already afford the trip. Nevertheless, she acknowledges its utility for booking opportunities that may arise without immediate full payment. Disney vacation planner Jackie Steele highlighted a similar trend, noting that many travelers have leveraged BNPL for their Disney experiences, albeit emphasizing caution for those on tight budgets to examine the total financial implications beyond monthly payments.
Last-minute bookings can be particularly problematic, as the motivation to pay may decrease once the trip has concluded. Travel experts recommend committing to BNPL earlier and opting for full payment prior to the trip to mitigate this issue.
Benson Varghese, managing partner at a law firm in Texas, remarked that a noteworthy proportion of his clients face legal challenges or financial difficulties due to BNPL purchases in the travel sector. This concern has led to the incorporation of guidance on BNPL in their financial literacy workshops, an increasing issue being encountered in comparison to traditional credit card disputes.
Lokenauth shared his candid perspective about BNPL for potential travelers, stating, “If you can’t pay for a vacation outright, you probably shouldn’t take it.”
Clarification: This article has been updated to clarify Affirm’s credit reporting policy changes.
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