Australians are planning to use buy now, pay later services to fund their post-pandemic travel adventures, but experts are urging caution.

Finder data shows 9 per cent of Australians plan to pay for their overseas flights using either BNPL services or a personal loan.

But with one in three BNPL users finding themselves in financial trouble, splurging on travel expenses this way comes with some dangers.

Finder credit card expert Amy Bradney-George said most Australian-based airlines offer BNPL services, including Virgin and Jetstar.

Both have partnered with Zip and Afterpay respectively.

Consumers can also often use BNPL for international carriers when booking with a travel agent, she said.

“If you’re booking something overseas, it can be thousands of dollars in one go that you have to pay, but buy now, pay later can make it feel more accessible,” Ms Bradney-George said.

“But the flip side of that is you do still have to pay it all off.

“And you do really need to make sure that you’re making those payments on time.”

Pay on the dot to avoid debt

BNPL is a popular payment option because it allows people to make an immediate purchase that can be paid off in multiple interest-free instalments.

But finance experts warn that users can easily fall behind on repayments and find themselves with a pile of late fees.

RMIT University senior finance lecturer Angel Zhong said many people forget that BNPL is just another form of debt.

Dr Zhong said although credit cards are seen as a liability, the different application process for BNPL services, which often don’t even involve a credit score check, can lead to due payments not being treated as debt.

This hidden risk could result in a “debt spiral”, she said.

“Let’s say you have a cap of $6000 [on your credit card], so that’s all you can spend,” she said.

“But now you have your credit card and … multiple buy now, pay later platforms, in total maybe … you can borrow up to $20,000.

“People tend to easily lose control.”

Curtin University senior lecturer Lien Duong said this sort of impulse buying among younger people is especially risky as they might not have the income to meet their repayments.

Although thousands of Australians plan to use BNPL to buy international flight tickets, the percentage among Millennials and Gen Z is much higher, with 15 per cent of each group planning to use these services to pay for their travel.

Dr Duong said while working with Financial Counselling Australia, she was struck by the millions of young people using BNPL to fund their “luxury living”.

She said when booking travel with BNPL, young people could be tempted by extra costs, such as upgrading their seat from economy to business.

“The thing that is worrying me [is] whether people can afford this,” she said.

“If they’ve got enough money in their bank account, that could be fine.

“But [if] a student is working part-time [and] they don’t have enough money … they would incur a lot of late fees later on, equivalent to more than the interest [on a] credit card.”

Dr Duong said BNPL can be a great product, as long as people take the time to work out spending limits and learn about the consequences of late payments.

No such thing as a free lunch

BNPL users need to budget wisely, pay attention to repayment due dates, and avoid committing to a debt they can’t afford to repay, Dr Zhong said.

Different BNPL platforms also have different monthly account and late payment fees.

“Make sure you look at the terms and conditions carefully – there’s never a free lunch,” Dr Zhong said.

When using BNPL for travel, Ms Bradney-George said you should always look at an airline’s cancellation policies.

If you can get a refund, you should easily be able to pay your BNPL debt.

If you’re only eligible for credit for future travels, you are still on the hook for your repayments, she said.