As summer officially comes to a close, interest in winter getaways is rapidly increasing. Global Google searches for “winter sun holidays” have surged by 122% in the past week alone. At the same time, flexible payment methods, particularly Buy Now, Pay Later (BNPL) schemes, are also growing in popularity, with usage projected to rise by 107% by 2028.
BNPL has become especially attractive within the travel industry, offering people the option to spread payments for flights and accommodation over multiple weeks or months. However, as more travellers turn to BNPL options to fund their trips, financial experts are urging caution. GigaCalculator, alongside Paul Ferrara, senior wealth counsellor at Avenue Investment Management, have raised concerns about the rising use of these popular schemes, urging consumers to consider the financial risks before using them to fund their winter holidays.
Buy Now, Pay Later schemes can make holiday costs feel more manageable, but they can often come with hidden fees, high interest rates for missed payments, and the risk of accumulating multiple loans, the experts warned. Without careful budgeting, they can lead to debt, damaged credit scores and long-term financial strain.
Responsible borrowing, thorough research, and a clear understanding of one’s budget are key to ensuring repayments can be made without difficulty, the experts said.
According to GigaCalculator, it’s wise to use tools like a loan calculator before committing to a payment plan. Comparing monthly instalments, interest rates and total repayment costs can help determine whether a BNPL option is really more affordable than saving in advance or opting for a traditional loan.
Paul Ferrara, senior wealth counsellor at Avenue Investment Management, warned: “Buy Now, Pay Later (BNPL) products may appear to be a tempting finance method to finance a holiday trip, and indeed it may seem appealing with the prospect of interest-free payment terms.
“But there are dangers attached to them. In the event of the failure to pay on time, high interest-rates may be charged and these will be considerably higher compared to those charged on conventional loans.
“Moreover, it is easy to lose control over several BNPL agreements and forget about payments, which will harm your credit rating.”
He added: “Although the BNPL concept has the benefit of immediate access to goods and services, it has a disadvantage of having short repayment periods that pressure individuals to meet the deadlines without reflecting on other financial obligations.
“This can result in a debt spiral of late payment and more debts. To people who want to evade the financial burden, it is recommended to read the conditions, keep the payments in order, and, where possible, save money on the holiday or choose less expensive ways of travelling.”
This story originally appeared on Express.co.uk
