BNPL holidays: Holidaymakers rack up debt as travel loan searches spike

Global Google searches for “travel loans” have surged 233% in the past month as holidaymakers stretch their budgets to cover rising flight and hotel costs.

More travellers are looking for ways to spread the cost of trips abroad.

In 2025, nearly one in five travellers said they plan to use a BNPL service to pay for their summer vacations. with Gen Z and millennial consumers more likely to use them for travel.

GigaCalculator and Paul Ferrara, Senior Wealth Counsellor at Avenue Investment Management outline what consumers need to know.

What are buy now, pay later payment options? 

Buy now, pay later (BNPL) payment options are rapidly increasing in popularity, especially in the travel industry, allowing you to split the full cost of something into smaller payment instalments over a longer period of time.

Typically BNPL options don’t charge interest on your payments on shorter term loans, however, when payments are split over a longer period of time interest rates can surge, as well as fees for any missed or late payments.

What are the risks?

Buy now, pay later options can be beneficial, convenient and the difference between you having a summer holiday or not. However, it’s important to practice responsible lending, research fully and manage your finances to make sure you can complete the repayment plan comfortably. 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”.

Gigacalculator said: “Before committing, it’s worth running the numbers through a simple tool like a Loan Calculator. Seeing the monthly instalments, interest, and total repayable side by side helps to decide if BNPL really stacks up against a personal loan or saving in advance. For many travellers, that quick reality check can mean the difference between a manageable holiday and a financial hangover.”

Hidden fees can apply: 

Although many BNPL payment schemes seem like no fees are attached to the repayments, it’s important to fully research this so you are aware. Many schemes market themselves as “no-fee”, but dig deeper and you’ll find penalties for late payments, extra charges for longer repayment periods, and in some cases interest rates higher than traditional loans.

Distorted view of travel costs:

NerdWallet found that 30% of travellers who used credit cards for summer travel in 2024 still haven’t paid off their balances.

You need to be aware when utilising BNPL payment options that it can trick your mind into thinking you are paying less than the reality. Although the smaller payments may seem more manageable, and budget friendly, it must not warp your view of how much the total holiday is. Your holiday spending budget should remain the same, based on what you can afford by the final payment, compared to increasing your budget as the small instalments seem more manageable.

Changing financial circumstances over time: 

When taking out any loans or repayment options it’s crucial to have a wider view of your financial situation. You shouldn’t be borrowing more than you can realistically afford to pay back. Additionally, it’s important to plan ahead and make sure you are comfortable if any hidden costs arise in your budget. Although it might seem that you can repay the instalments straight away, will this still be the case if you have a new unavoidable bill that crops up?

It’s also important to make sure you don’t lose track of any BNPL schemes you are using. The individual payments might seem within your budget initially, but does this factor in for any other BNPL scheme you have taken out? Make sure you are aware of what your bills are going to add up to collectively to make sure you can still afford them.

Paul Ferrara, Senior Wealth Counsellor, advises to proceed with caution: “Buy Now, Pay Later (BNPL) products may appear to be a tempting finance method for 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.”

“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.”