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Pay later is becoming a popular travel tool. In 2019, $10 million was spent on travel-related "buy now, pay later." However, by 2021, $800 million was spent on travel-related buy now, pay later.
With pay later becoming more widely available and used for travel expenses, we'll dive into what you need to know to see whether this financing option is a smart money move for you.
There are different types of pay later travel options
“Pay later” travel is a broad term, but it generally falls into one of two categories:
Buy now, pay later services where you pay for your travel in equal installments, sometimes with added interest. Examples include travel booked using Affirm and Uplift.
Travel that you book in advance but don’t pay for until later. An example is Hotels.com, which will sometimes let you reserve a room and pay for it at check-in.
Basically, as long as you’re not paying in full for the travel upfront, it qualifies as pay later travel.
Some travel companies offer pay later travel options directly
There are several ways to book pay later travel, including booking directly with certain airlines, hotels and other travel companies that offer pay later at checkout, including:
» Learn more: The best travel credit cards right now
Some of these companies offer pay later travel through a partner, and others offer buy now, pay later travel directly.
For instance, Southwest offers buy now, pay later through Uplift, whereas Hilton allows you to book certain reservations by putting a credit card down and then paying in full when you check out.
» Learn more: Are buy now, pay later flights worth it?
There are companies that specialize in pay later that you can use for travel
If you want to use pay later travel for your trip and the airline, hotel or travel company doesn’t offer pay later travel directly, you may be able to pay for your travel later by using a company that specializes in that option — companies like Affirm, Zip, Uplift and Afterpay.
You may also be able to use your credit card for pay later travel. For instance, Chase has a service called My Chase Plan where you can split a purchase of $100 or more into equal monthly installments for a fixed monthly fee instead of credit card interest.
Pay later travel may cost you more
Using a pay later service may cost you more money overall, so be sure to read the fine print before opting for pay later travel.
Do the math to compare how much you’ll pay over time versus how much you’ll pay if you pay for the travel upfront.
For example, CheapOair — which offers buy now, pay later travel through Affirm — has a disclaimer:
"Rates from 10–36% APR. For example, a $800 purchase might cost $72.21/mo over 12 months at 15% APR. Payment options through Affirm are subject to an eligibility check and are provided by these lending partners: affirm.com/lenders. Options depend on your purchase amount, and a down payment may be required."
In CheapOair’s example, you would either:
Pay $800 by paying for your travel upfront.
Pay $866.52 by using pay later travel ($72.21 per month times 12 months).
Because paying later on travel can end up costing you more, unless you’re able to get pay later travel at a 0% interest rate, you should use it only occasionally and stick to paying upfront when you can.
» Learn more: How to make a flight payment plan with no credit check
Your credit may be affected by paying later
Deferring payments on travel may affect your credit score — another reason that this shouldn’t be your go-to option. Affirm, one of the major players in pay later travel, says this about whether using the company will affect your credit:
"Creating an Affirm account and seeing if you prequalify will not affect your credit score. If you decide to buy with Affirm, these things may affect your credit score: making a purchase with Affirm, your payment history with Affirm, how much credit you've used, and how long you’ve had credit."
When using pay later travel companies like Affirm, Zip and Uplift, you should consider it as a loan that can help and hurt your credit score, and it should not be taken out lightly.
» Learn more: Could a buy now, pay later loan affect my credit?
The bottom line
When it comes to travel expenses, these installment loan options generally fall into one of two categories: buy now, pay later services where you pay in equal partial payments (sometimes with an added fee or interest rate) and travel that you book and then pay in full later, like a hotel reservation that doesn’t require payment until checkout.
Although there are travel companies that offer pay later services directly, like Alaska Airlines, Hilton and Priceline, you can also turn to other companies — like Affirm and Uplift — to pay less upfront.
Before financing travel with a pay later service, note that it may cost you more money in the long run and also may affect your credit score, so be sure to do research and read the fine print.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Bank of America® Travel Rewards credit card
Flat-rate travel rewards: Capital One Venture Rewards Credit Card
Bonus travel rewards and high-end perks: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card