Holiday Shoppers Beware: 'Buy Now, Pay Later' Could Cost You More Than You Think
Many travelers are being lured by the convenience of "buy now, pay later" (BNPL) options for booking holidays, but experts are warning that this popular payment method might leave them exposed to financial risks they aren’t fully aware of.
BNPL has exploded in popularity in recent years, with travel companies and hotel chains increasingly offering it as a way to make trips more affordable and accessible. The appeal is obvious: instead of paying the full amount upfront, customers can spread the cost over several instalments.
Take Travelodge, for example. The budget hotel chain has recently introduced a "Stay now, pay later" option, allowing guests to pay via Klarna, Clearpay, or PayPal—the three giants of the UK BNPL market. Similarly, many travel agents and flight booking platforms now advertise "Fly now, pay later" schemes, giving travelers the flexibility to pay for flights in instalments rather than all at once. Airbnb also jumped on board in late 2023, partnering with Klarna in the UK to let guests split payments for stays ranging from £35 to £4,000 over weeks or months.
The trend is backed by data: searches on Google for terms like "buy now pay later flights" and "buy now pay later hotels" have surged compared to earlier this year, showing a growing appetite for more flexible ways to book travel.
BNPL essentially works as a short-term credit option. Typically, the cost of a purchase is divided into three or four payments. If you stick to the repayment plan, you usually won't face interest or fees. However, if payments are missed, charges can quickly accumulate, potentially plunging users into debt and harming their credit scores.
But here’s where it gets controversial: paying for holidays with BNPL doesn’t offer the same consumer protections as credit cards. Matthew Sheeran from Money Wellness, a site specializing in debt solutions and budgeting, points out, "While BNPL can be very convenient, it lacks the safety net of a credit card. Under section 75 of the Consumer Credit Act, credit card purchases between £100 and £30,000 mean the card provider is jointly responsible with the retailer if something goes wrong. With BNPL, you’re often left to deal with the travel provider yourself, which can be stressful and time-consuming. Some BNPL providers offer dispute resolution, but these are not as robust or guaranteed as section 75 protections."
For smaller, low-risk purchases, BNPL may be fine, but when it comes to significant expenses like travel, a credit card still provides a critical safety net. Maisie Blewitt from Transfer Travel, an online marketplace for unused trips, adds, "BNPL is creeping into travel because it lets people 'buy now, budget later.' But if an airline or hotel collapses, your money could be at risk. Refunds can also become a nightmare: if a trip is canceled, instalments may continue to be withdrawn from your account until the refund is processed, which can take weeks."
Since regulations are still evolving, terms and protections vary across providers. Blewitt advises, "Before using BNPL for a holiday, read the small print carefully and make sure you fully understand the terms."
Another factor to keep in mind is timing. Many BNPL users won’t pay off their trips until after they return home, meaning instalments may continue months after the vacation. Additionally, there is no universal borrowing limit—how much you can spend depends on your creditworthiness, the provider’s policies, and their risk tolerance.
Sebrina McCullough from Money Wellness cautions, "It feels risk-free, and that’s the real danger. Interest-free offers make BNPL seem like just another payment option, but it is still credit. If you use it for purchases you can’t actually afford, the potential problems escalate."
Regulation is on the horizon. From July 2026, the UK’s Financial Conduct Authority will regulate BNPL, turning these loans into officially recognized credit agreements. This change will extend section 75 protections to BNPL purchases and allow customers to access the Financial Ombudsman Service if issues arise.
So, while BNPL can make holidays more financially manageable in the short term, travelers need to weigh convenience against protection. Are the small instalments really worth risking a credit headache or the potential loss of your hard-earned money? The debate is open, and opinions vary widely—what’s your take on using BNPL for travel? Share your thoughts below and let’s discuss.
