The allure of spreading holiday costs through Buy Now, Pay Later schemes is tempting millions of British travellers, but experts warn this payment method could leave holidaymakers high and dry when things go wrong.
The BNPL Holiday Boom
With household budgets stretched tighter than ever, payment plans that allow travellers to book now and pay later have surged in popularity. Major travel companies and airlines are increasingly partnering with finance providers to offer these seemingly convenient payment options.
However, consumer protection experts are sounding the alarm about significant gaps in coverage that could see travellers losing thousands when holidays are cancelled or companies collapse.
Why BNPL Holidays Pose Serious Risks
Unlike traditional package holidays protected under ATOL and ABTA schemes, many BNPL arrangements fall into a regulatory grey area. When you pay through these financing platforms, you're essentially taking out credit rather than buying a protected holiday package.
This creates a perfect storm of potential problems:
- Refund nightmares when airlines or tour operators go bust
- Continued payment demands even for cancelled trips
- Limited Section 75 protection compared to credit card bookings
- Complex claims processes involving multiple companies
The Section 75 Protection Gap
One of the most significant concerns involves Section 75 of the Consumer Credit Act. While credit card payments over £100 provide automatic protection if services aren't delivered, BNPL arrangements often don't qualify for this safety net.
"Travellers assume they're protected, but the reality is much more complicated," explains Sarah Coles, head of personal finance at Hargreaves Lansdown. "When you pay through BNPL, you're dealing with a finance company rather than directly with the travel provider, which can muddy the waters considerably."
Real-World Consequences for Travellers
The financial fallout can be devastating. Families have reported being chased for payments on holidays they never took, while others found themselves unable to claim refunds when airlines collapsed mid-payment plan.
One couple from Manchester shared their experience of paying £2,300 through a BNPL scheme for a holiday that was cancelled during the pandemic. "We're still fighting for our money two years later," they revealed. "The travel company says it's the finance provider's problem, and the finance provider says it's the travel company's responsibility."
Expert Advice for Safe Holiday Booking
Consumer protection agencies recommend several strategies to protect your holiday investment:
- Always pay at least part of your holiday with a credit card to trigger Section 75 protection
- Verify ATOL/ABTA protection before booking any travel arrangements
- Read the small print carefully on BNPL agreements
- Consider comprehensive travel insurance that covers financial failure
- Keep detailed records of all payments and correspondence
While the convenience of spreading payments is undeniable, travellers must weigh this against the potential risks. As the travel industry continues to evolve, consumer protection frameworks are struggling to keep pace with new payment technologies.
The message from experts is clear: when it comes to protecting your hard-earned holiday money, traditional payment methods still offer the strongest safety net.
