British travellers are increasingly falling into a dangerous financial trap by using Buy Now, Pay Later services to fund their dream holidays, with experts warning of severe consequences for those who can't keep up with payments.
The Allure of Instant Holidays
The convenience of spreading holiday costs across several months has proven irresistible to many UK consumers. With household budgets stretched thin, services like Klarna and Clearpay offer what appears to be an easy solution for booking that much-needed break without immediate financial pain.
Hidden Dangers in Paradise
However, financial experts are sounding the alarm about several critical risks:
- No Section 75 protection: Unlike credit cards, BNPL purchases don't offer the same consumer protections if travel companies collapse or services aren't delivered
- Debt spiral danger: Multiple BNPL agreements can quickly accumulate, leaving travellers with unmanageable repayment schedules
- Credit score impact: Missed payments can severely damage credit ratings, affecting future loan applications and mortgage prospects
- Hidden fees: Late payment charges can rapidly escalate what seemed like an affordable payment plan
Expert Warnings
Financial counsellors report seeing increasing numbers of clients struggling with BNPL holiday debt. "What starts as spreading the cost of a £500 holiday can quickly become a £2,000 debt problem when multiple bookings accumulate," explains one debt advisor.
The Financial Conduct Authority has expressed concerns about the sector, particularly regarding inadequate affordability checks and the normalisation of debt for non-essential purchases like holidays.
Protecting Yourself
Consumer groups advise travellers to:
- Always check what consumer protections apply before booking
- Consider using credit cards for significant travel purchases to benefit from Section 75
- Create a realistic repayment plan before committing to BNPL agreements
- Avoid multiple simultaneous BNPL arrangements
- Seek free debt advice immediately if repayments become unmanageable
As the holiday season approaches, the message from financial experts is clear: that affordable-looking payment plan could cost you far more than you bargained for.
