The best vacations are the ones where you get to take a break from the reality and requirements of everyday life. Of course, the biggest hurdle to jump before going on your getaway is paying for it, which is why book now pay later plans are popular options for aspiring travelers.

However, book now pay later plans are more complicated than they seem. If you’re not aware of key factors like cancellation policies, late fees, and interest rates then your trip could cause you to crash down to reality well before you’re ready.

In this article, we break down the basics of book now pay later plans, their dangers, and the best alternatives.

On the surface, book now pay later payment plans are as simple as the name implies. If you can’t completely pay for your hotel room or airfare upfront, then a book now pay later payment plan will allow you to book them and pay through installment payments instead of putting it all on a credit card.

The benefit of these monthly payments is that you can book your travel when prices are at their lowest — even if you can’t pay upfront. Some lenders also offer interest-free loans, which can be too tempting to pass up.

But being able to book or fly now without paying does come with some strings attached. For example, to be approved for a payment plan, loan providers may do a hard credit check that affects your credit score. There may also be interest rates attached to your payment plan, and late fees if you miss your monthly payments.

Deferred payment plans are attractive options for those looking to take advantage of a great deal at the time of booking or avoid building credit card debt. However, there are several ways that the installments could leave you in more debt than if you paid for your hotel rooms or airfare upfront.

Overspending that results in debt

To start, everything looks possible when you can buy now without charging your debit card or credit card. Book now pay later payment plans make it easy for people to decide to “figure it out later” — but this deferred line of thinking also makes it too easy to overspend.

For example, you may be tempted to upgrade your hotel  room in Las Vegas or New York if you don’t have to pay the difference now. However, no matter how many installments it takes you to pay off your trip, you will still pay. 

As a result, book now pay later plans require discipline to use, otherwise you may end up paying more through interest and late fees than you would have paid upfront. 

Might negatively impact your credit score

Many lenders require credit checks for eligibility ahead of booking a book now pay later payment plan. As we mentioned earlier, that could mean a soft or hard credit check. In the case of the latter your credit score could be negatively affected.

But that’s not all you need to be aware of.

Between the interest rates, monthly installments, and late fees if you miss your monthly payments, it’s easy to end up behind on your payments with a book now pay later payment option — which can really hurt your credit score.

And that’s not all. Credit takes time to build up, so if your score takes a hit, then you could lose eligibility for other credit card deals, offers, and financing options later on. 

Potential additional fees and interest charges

The interest fees we mentioned earlier are far from the only ones that could make your book now pay later payment plan more expensive than paying travel providers upfront.

Many lenders advertise themselves as free or low-risk services since they don’t charge interest. However, there could be processing fees or other hidden fees that you don’t know about unless you read the terms and conditions thoroughly. 

Plus, if you miss an installment payment then the price of your payment plan could skyrocket. One survey finds that 25% of respondents’ total debt increased after using the book now pay later plans. On top of that, more than 20% in the same survey used credit cards to pay down their balances.

Inflexible refund policies if travel plans change or cancel

When you book your travel with a traditional travel provider like a hotel or airline, you’re typically offered additional or free cancellation protection in case your plans change and you can’t make your reservation. When you book those same accommodations through a third-party lender, you’re no longer guaranteed those protections.

For example, if you miss a connecting flight due to another delay that was out of your control then your tickets may be technically purchased through the lender and not the airline. That could mean you’re on your own to find and purchase new flights. Plus, any chance you have at a refund would have to come from the lender — not the airline. 

Book now pay later plans are tempting options for when you need to make a purchase but can’t completely cover it on your own. That’s why the amount of Americans using them shot up from 31% in 2021 to 43% in 2022. 

However, if you can pay for your travel upfront from your savings, you’ll benefit down the road. Not only will you have less debt and a lower risk of affecting your credit score, but using a service like Accrue Savings will reward you for saving, too.

It helps you earn 6% toward your next trip with CheapOair

Accrue savings rewards those who save by helping people establish savings goals, building in benchmarks, and then rewarding them through great partnerships once they reach their goals.

CheapOair and Accrue savings have a partnership that rewards those who save for airfare ahead of a trip. All you need to do is create a savings goal with Accrue, meet it, and CheapOair will reward you 6% of your goal once you book your tickets through their website.

It’s a smarter way to travel

The main appeal of using a payment plan is that you get to book your travel plans faster. When you save with Accrue Savings, you also get to book your travel plans sooner thanks to exclusive partnerships with brands like CheapOAir. Although it may not offer the same instant gratification as a book now pay later plan, you still get to your goal without building debt or hurting your credit score.

It’s a way to get ahead

When you’re planning for a getaway, there are a lot of moving pieces to square away. However, saving with Accrue gives you the flexibility to get started — even though you might not have all the details of your trip confirmed yet! Once you know you have travel plans coming up, you can start putting money away with Accrue and reach your savings goals faster. Then, you have the freedom to figure out your details later on.

It’s a safer way to book accommodations

Hotel prices fluctuate and you might be tempted to book a hotel through a payment plan to take advantage of a deal. However, if you save up to book your lodging and then pay for it upfront you’ll have the same ability to book immediately without being forced to pay the cost, and any accompanying fees or interest, through monthly installments.

It offers more consumer protection

Let’s not forget the consumer protections that also come with booking through CheapOair. After all, when you book with a site like CheapOair or Heli, you’re booking with a travel company, not a lender. That means there are more protections and policies in place for you to exchange or refund your tickets if necessary.

Start saving for your dream vacation with Accrue Savings

Book now pay later plans may seem like an easy way to book your next trip. Some may even say that they’re like an interest-free layaway plan. Still, many people end up paying more through hidden fees and late fees than they would have if they had budgeted and saved for their trip to begin with.

Accrue Savings is here to give you a leg up by rewarding you for reaching your savings goals. See how Accrue can help you save for your next trip — debt free!