United’s New ‘Pay Over Time’ Option: Buyer Beware

United Airlines recently launched a partnership with a service called Uplift to provide “pay over time” options for flight bookings. In other words, United is now offering travel loans.

This option is embedded directly in the airfare checkout flow, under the total price of the ticket (highlights are ours):

Clicking on the question mark brings up this explanation:

This sales pitch makes it sound like a good opportunity to pay less upfront and avoid the sticker shock of expensive airfare. But the fine print reveals why you probably shouldn’t take United up on its offer.

We’ve explored these travel loans in the past (and explained why they’re almost never a good idea), but here are some specifics about the United program.

You’ll pay more

The interest rate of your loan will depend on your application, but United says that the annual percentage rate will fall between 7% and 36%. Using the moderate 15% APR that they state in their fine print example for an $800.75 fare, the math works out like this:

• An initial payment of $71.40 (includes downpayment of $56.82).

• 11 more payments of $71.40.

• Grand total: $856.80 (including $56.05 in interest).

Unless you need to make an emergency trip and simply don’t have the cash to book it, it’s hard to see how paying more is a good financial decision.

Your credit could be affected

Like any loan, you have to apply for Uplift financing, which means the loan and application will likely be added to your credit report.

That’s fine if you make your payments on time. In fact, it could build your credit to do so, but you also carry the risk of getting dinged for missing even a single payment. Unless you’re 100% confident you’ll make the payments, the risks outweigh the rewards.

It’s a hassle

United's marketing copy claims this service is “stress free," but that’s hard to square with the facts. In order to get one of these loans you have to fill out and submit an application, weigh the offer and how much you’ll pay over time given the APR, and then set up a payment system to ensure you don’t miss a payment. Sounds like a bit of stress to us.

The bottom line

In general, loans only make financial sense if you simply don’t have the cash to pay upfront. Excluding emergency travel when funds are running low, we recommend two ways to avoid these loans:

1. Save, then fly. If you don’t have the cash to pay for your dream vacation, defer your dream. You’ll enjoy the trip more knowing you paid for it upfront and won’t have it hanging over you for the next 12 months.

2. Simplify. Flying a family to Europe in business class could cost as much as a small car, which might make financing seem like a reasonable choice, but consider another possibility: simplifying your plans and making them more affordable. Your kids’ legs aren’t really long enough to justify lie-flat seats, are they?