Credit vs Buy Now, Pay Later vs Savings

One of the biggest reasons we stop ourselves from traveling is because of the financial burden it can be to book a trip.  However, if we change the way that we relate to it, depending on the way we pay for our trips we can gain something more from it. In this blog post, we will compare Credit, “Buy Now, Pay Later”, Savings and Debit as options of payment when booking our trips.

Credit (great if you want to build credit)

If you have good credit or want to improve your credit score, this is the way to go. When you pay with a credit card, you don’t necessarily have the ability to pay for the trip upfront. However, you still have to make sure you are able to pay at least 20% of it each credit cycle. This way, you don’t create a financial burden for yourself! You also should remember that if you are not someone that is diligent with their bills, this can worsen your credit score.
Another thing about credit cards is that you can use a travel-specified card which means that you will be able to make points out of trips that you book.  These points can be used to upgrade your flights, gain access to airline lounges,  free airplane tickets, and other travel discounts.   

Buy Now, Pay Later 

If you don’t have access to a credit card and don’t have the ability to pay for your trip upfront, you should consider the “Buy Now, Pay Later” options. Nowadays, you are able to find them as an option during the checkout, meaning that you don’t have to apply for a loan. There is still an approval process, but it usually doesn’t take more than 10 min.  To ensure your approval, you need to have a good credit score and no delinquencies (this is when you don’t pay for a bill or forfeit payment).  With that being said, once you are approved make sure you are diligent about your monthly payments. If you are not, this can mess up your credit score.
One last thing you have to remember about this payment option is that your trip will cost more. This happens because you have to pay interest on your small loan.

Savings

Paying with your savings is a great option especially if you have designated savings for your trips. Depending on how much you make per month, set aside some money for your vacations. This is a good option if you don’t want to feel the financial impact of booking your dream trip and if you are good at saving money each month. Please do not tap into your emergency funds for this, your emergency funds are for emergencies only! 
The downside about using your savings is that unlike when you use credit cards, it won’t allow you to receive any perks or build your credit for easier future travel bookings.

Debit Card

You can always just pay with money from your current account. This is good if you have the financial leverage to pay for your trip upfront. You can go one step forward to using a debit card that is travel-friendly like Revolut, which allows you access to airline lounges for free, to endure low international payment fees, as well as to own different currencies while paying with the same card. 
This is a terrible option if you are living paycheck-to-paycheck. Travel shouldn’t be a problem for your quality of life, it should only improve it. 

 

Now which one of these is better? It really just depends. It depends on your financial situation, your credit score and your diligence to pay your bills. If you are financially comfortable, paying up front with a debit card is better for you. If you have a good amount in your savings, then cash out your savings. Regardless of how you intend to pay for your trips, PYNKIWI is here to help you find the best options for your trips.