This summer, millions of Americans are planning trips — and a growing number are using buy now, pay later services to help cover the cost. These short-term installment loans, offered by companies like Klarna and Affirm, are being used to pay for flights, hotels, cruises, and even event tickets.
According to a NerdWallet survey, 18% of summer travelers planned to use BNPL this year. Klarna reported a 50% year-over-year jump in travel bookings, and Affirm (AFRM:NASDAQ) said its travel-related volume rose 38% in late 2024, topping $1 billion.
While BNPL may seem appealing — especially when it comes with no upfront costs or interest — experts caution that it's not always a smart choice.
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It's Not Just Luxury Travel Anymore
BNPL was once associated with high-end purchases, but that's changing. Andrew Lokenauth, founder of TheFinanceNewsletter.com, told CNBC that many of his clients now use BNPL to pay for basic travel, such as visiting family or attending weddings.
"It's not just luxury vacations anymore," he said. "I've worked with over 100 clients drowning in BNPL travel debt, and it's not pretty."
BNPL loans typically have zero flexibility — miss a payment, and you might face late fees or damage to your credit score. Even Affirm, which doesn't charge late fees, began reporting pay-over-time products to credit bureaus this year.
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The Debt Can Outlast the Trip
The biggest risk with BNPL travel financing is that the fun may end, but the debt lingers. NerdWallet found that 30% of travelers who used credit cards for summer travel in 2024 still haven't paid off their balances. The average credit card interest rate, according to the Federal Reserve Bank of St. Louis, is over 22%.
BNPL doesn't charge interest in many cases, but it can still lead to overextension. A recent Consumer Finance Protection Bureau report found that 63% of BNPL borrowers had more than one loan at a time — also known as "loan stacking" — at some point in 2021 and 2022.
Disney vacation planner Jackie Steele said he's seen more clients use BNPL to pay for Disney trips, sometimes to make last-minute travel happen or to upgrade their experience. "I always caution people — especially younger adults or families on tight budgets — to look beyond the monthly breakdown," he told CNBC.
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Use Caution and Have a Backup Plan
Some travelers say BNPL made their trips possible. One traveler told CNBC she used it to book a last-minute trip to Miami, calling it a "lifesaver." But when she missed one payment reminder, she was hit with extra fees.
Some experts say that BNPL can work if used wisely. Fiserv Head of Embedded Finance Sunil Sachdev told CNBC that the service has matured in recent years and, so far, hasn't resulted in widespread defaults.
Still, Lokenauth doesn't sugarcoat it: "If you can't pay for a vacation outright, you probably shouldn't take it."
Smart Alternatives for Summer Travel
Before reaching for BNPL, consider alternatives. According to NerdWallet, 91% of travelers are already looking for ways to save — such as using credit card points or choosing budget hotels.
"Travel rewards aren't fine wine — they don't get better with age," NerdWallet spokesperson Sally French says. "In fact, with airlines and hotels constantly tweaking their loyalty programs to a level that's usually not in your favor, your points could be worth less next summer than they are right now."
No matter your destination this summer, planning ahead — and paying responsibly — can help you avoid turning your dream vacation into a long-term debt burden.
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