Buy now pay later (BNPL) is a payment option that allows you to book flights now and pay for them later in monthly installments. BNPL has become increasingly popular in the travel industry as it makes lavish getaways more achievable for consumers.
You don't have to worry about paying the full cost upfront, as you can spread out payments over a period that suits your budget. You may also save money by avoiding expensive last-minute ticket price spikes and enjoy greater flexibility when planning your travels.
But are BNPL flights really all they’re cracked up to be? The truth is, while there are some great advantages to using this payment method, there are also some drawbacks to be aware of before opting for a BNPL flight.
This comprehensive guide provides all the scope you need to know about BNPL flights and other alternatives you should consider.
The concept of BNPL flights is simple. You book your flight as usual, but select the BNPL option at checkout. The airline will charge you a down payment upfront at the time of booking, usually 25% of the total cost, and the remaining balance will be divided into interest-free monthly installments spread out over an agreed-upon term.
You can pay off your flight in weekly, biweekly, or monthly installments, depending on the BNPL provider. Your BNPL provider will run a soft credit check to assess your creditworthiness, but it won't affect your credit score. You must be 18 years old, have a working mobile phone number, and have a valid credit or debit card to use BNPL.
Here is how the BNPL flight process happens:
- Shop for flights: Search for your ideal flight from participating airlines such as American Airlines, Delta Airlines, and United Airlines. You can filter the results by destination, departure and arrival times, and the number of passengers.
- Choose any fly now pay later option: You will have a list of all available BNPL options in your region. They can include popular providers like Uplift, Apple Pay, and PayPal Credit.
- Submit your details: Select your preferred BNPL option and submit an online application form with your personal information, including your full name, email address, phone number, and the last four digits of your Social Security number. Your lender will run an eligibility check and decide within seconds.
- Pick your payment plan: If approved, your BNPL merchant will provide you with a loan offer, including the loan amount, APR, and repayment terms. You can choose between four interest-free payments made biweekly or fixed monthly payments, usually 3, 6, or 12 months at varying interest rates.
- Grab your flight tickets: Once you approve the loan offer, you can pay the initial down payment and secure your plane tickets. The remaining balance will be split into monthly installments according to your selected payment plan. You will receive a confirmation email with all your flight details and repayment schedule.
Unlike credit cards and other financing options, BNPL doesn't charge any interest on items paid in full within a certain period. However, you may incur late fees and interest charges if you miss a payment or are late. Research different lenders and compare the terms and conditions of each loan offer before signing up.
The growth in the use of BNPL is reflective of the rising demand for more flexible and accessible payment options, especially when it comes to airline tickets. According to statistics by Juniper Research, global BNPL users are projected to grow to over 900 million by 2027, up from 360 million in 2022. However, as with any financing option, there are pros and cons to consider before using BNPL, which we’ll dive into now.
Pros of BNPL flights
- Flexible paying option: Airfare prices vary greatly, especially during peak season. Forking out $394 on average for domestic flights can be a huge financial strain for many travelers. With BNPL, you can book now and pay later in small, manageable installment payments. This makes budgeting for trips much easier and offers more flexibility when planning your vacation.
- Quick approvals: You will receive an approval decision almost instantly after submitting your loan application request. The BNPL provider will perform an eligibility check and then provide you with a loan offer if you qualify.
- Easy to set up: Setting up a BNPL account is easy and fast. You only need a valid credit card, debit card, or bank account and personal information like your name, email address, phone number, and the last four digits of your Social Security number. This makes it an excellent option for emergency or last-minute flight bookings.
Cons of BNPL flights
- Potential hidden fees: While BNPL solutions are marketed as interest-free and low-cost options, there may be additional fees for late payments or missed installments, which come with interest. Read the fine print carefully to know the total cost of the loan and any additional fees.
- Might impact credit score: Your BNPL provider might send your account to a collections agency if you default or fail to make timely payments. This could hurt your credit score as collections stay on your credit report for up to seven years. A damaged credit score can affect your ability to qualify for other types of loans or financing in the future.
- Fewer consumer protections than credit cards: The Fair Credit Billing Act (FCBA) is a federal law that protects credit card users from unauthorized purchases, fraudulent activities, and chargebacks. However, BNPL firms are not subject to the same regulations, meaning you may have fewer legal protections in case of a flight cancellation or delay and you want to dispute the charge.
Despite the convenience and flexibility of BNPL flights, 66% of consumers consider it a risky venture, while 59% agreed to purchasing unnecessary items they otherwise couldn't afford. If you’re looking to finance your travel plans without the risks of BNPL, here are some great alternatives:
1. Accrue Savings
Saving up money for travel is the best way to avoid debt and keep your finances in good health. Accrue Savings, a free online savings and budgeting platform, helps you earn 6% in cash rewards for short- and long-term travel goals.
With Accrue, you set up a savings goal — for instance, vacation packages — make weekly or monthly deposits as low as $1, and earn money when you reach your goal. You can slow down, speed up, or pause deposits anytime without any penalties.
Once you realize your goal, you can pay for your flights in full with cash debt free. Sign up for Accrue Savings today and shop with CheapOair to earn money toward your next trip as you save.
2. 0% interest credit cards
A 0% interest credit card is a great option if you can pay off your balance before the introductory or promotional period ends, usually between 12 and 24 months. You can enjoy 0% APR and no interest charges on purchases and balance transfers during this period.
However, bear in mind that after the 0% interest period ends, the regular APR rate will apply to any outstanding balance on your card. Look for low APR and fees, flexible repayment options, balance transfer capability, and great rewards when choosing a credit card. Practice good card-holding habits like paying your monthly bill on time and in full to keep your financial health in check.
3. Small personal loans
Alternatively, you can take a small personal loan and pay for your flights in full. Small personal loans come with fixed interest rates, longer repayment periods, and an opportunity to build your credit score if you make timely payments.
You may qualify for a small personal loan of between $1,000 and $5,000, depending on your credit score, income, and debt-to-income ratio. It helps to shop around and compare rates at multiple lenders. Read the terms and conditions of each lender and look out for hidden fees, prepayment penalties, loan origination fees, or late payment charges.
Save up for your next flight with Accrue Savings
BNPL solutions may be a quick and accessible way to pay for your next flight, but they can also lead to serious financial hardship if you cannot keep up with your installments. High interest rates and late fees can cause more financial damage than you bargained for.
Accrue Savings is a secure, easy-to-use platform that helps you navigate the complexities of saving money for travel. Our platform helps you save money for your vacation debt-free and take advantage of cash rewards when you reach your goal.
Register for a free account today and earn 6% in cash rewards when you book your next flight with CheapOair.