Travel is increasingly divided between those who cannot afford to go anywhere in the cost of living ... [+]Getty Images
In the cost of living crisis, more and more people are cutting back on travel. And statistics show that people who are using schemes to travel now and pay later for their holidays, could be on a fast track into debt.
More People Are Cutting Back On Travel Due To The Cost Of Living Crisis
As the cost of petrol, energy and food has increased, more people have been looking to cut back on travel:
- A recent survey by investment platform Saxo revealed that more than a quarter of Brits (28%) have had to cancel their holiday plans in the past year due to the cost of living crisis. The same percentage have also cut back on takeaways and eating out and one in five have turned their heating off altogether.
- Jess Twitchin, CEO and Founder of QuirkyAccom.com, a travel company that offers unusual places to stay around the U.K. says that after the surge in travel following the pent up demand during Covid, the demand for package holidays has dropped and one third of people are looking to cut down on holiday spending. Twitchin added that the travel chaos caused by airlines and strikes and the fear of price hikes in EU destinations due to inflation are also leading to lots more plans to stay local.
- In the U.K., google searches for ‘staycation’ recently surged by 233% as people tried to find a way to take holidays without going very far.
Buy Now Pay Later Schemes For Travel Can Lead To Debt
With statistics that show that 82% of Americans who are currently planning a trip need to save up for it, people are increasingly turning to Buy Now, Pay Later schemes.
Kayak recently announced a partnership with Affirm to help travelers buy now and pay back the cost over time. In this case, Affirm confirmed that they always underwrite every transaction, only extending credit to those they believe can responsibly afford to repay and they don’t charge hidden or late fees, or compound or deferred interest.
In other cases though, these new strategies to finance travel can lead to debt. For example, it’s increasingly common to find monthly payment schemes with cruise companies to repay the cost of an all-inclusive cruise—after you’ve been.
Accrue Savings, a company that helps you save for things before you buy, recently conducted a survey of Buy Now Pay Later platforms and concluded that 1 in 5 U.S. consumers have gone into debt because of travel (1 in 4 men).
Accrue Founder and CEO Michael Hershfield says that many users fail to make payments and rack up late fees. Almost half of those who use Buy Now, Pay Later have missed a payment, and more than a third use a credit card to make payments on the scheme.
So, for the 50% of Americans who already have credit card debt, such Buy Now, Pay Later schemes might not be the ideal solution.
Thursday 9 February—This article was amended in two ways. 1) Reference to a possible 600% increase in the charge paid by British holidaymakers under the ATOL scheme was taken out, as it was deemed to be misleading. This charge is under review and might also be reduced, depending on industry responses. 2) Affirm responded with a comment that was added in response to the article’s publication.
I have written for The Guardian, Time Out and the Sunday Times and have a background in research, business and finance.
Source: The Rise Of Fly Now, Pay Later. Is It Leading To Travel Debt?
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