Buy Now, Pay Later -- one of the darlings of the personal credit world -- got a boost on Wednesday when Uplift announced a new deal with Southwest Airlines to offer travelers an added financing option at checkout.
Starting immediately, customers can book a flight on Southwest to more than 100 domestic and international destinations and take advantage of the new flexible payment options. Travelers will be able to see them for purchases as low as $100.
Both parties cited an example where a $300 flight could be spread over 11 months at $29 a month with $0 down, which would make the total cost of the flight $319. Mind you, that’s only an example. The actual terms are based on the customer's credit score and other factors. The companies also noted that not everyone is eligible, and some states are not served, including Iowa and West Virginia.
"Southwest Airlines is one of America's most beloved airlines, with a strong brand reputation based on a spirit of freedom and empowering customers with affordable travel," said Brian Barth, CEO of Uplift. "For travelers who already appreciate the low fares and world-renowned hospitality that Southwest is known for, the payment flexibility of Uplift's Buy Now, Pay Later solutions will be another addition to Southwest's customer-friendly offerings."
Driven by pent-up demand
With COVID-19 restrictions starting to ease in the U.S. and vaccinations continuing to rise, there is a pent-up demand for finally being able to jump on an airplane and go somewhere after more than a year of laying low.
That’s not only good for airlines but for finance companies like Uplift that can make an escape more affordable. Business is good for Uplift. It’s signed partnership deals with several domestic airlines, including Alaska Airlines, United, Allegiant, Spirit, and Frontier.
“Buy Now, Pay Later (BNPL) services like Uplift are definitely having a moment,” travel expert Sara Rathner told ConsumerAffairs. “Yes, any time you take on debt, it’s a bit scary, and depending on the payment service and options you can choose from, you may be subject to fees or interest on your purchases. However, there’s transparency. You know exactly how much a purchase will cost you before you agree to the payment plan.”
Rathner said the sweet spot for consumers is unexpected, last-minute travel where fares are higher. She said that services like Uplift make those situations a little less troublesome and a little more affordable.
“Of course, take care to avoid getting in over your head. Keep your other monthly obligations in mind when you add on paying over time for a purchase. If you already struggle to afford your bills, it may not be the right time to add more to your plate unless you’re experiencing an emergency,” Rathner stated.
Beware of overusing BNPL
While higher conversion rates and an improved customer experience are good for retailers who offer BNPL, consumers should be cautious about using that option to satisfy their whims.
“While they are marketed as consumer-friendly finance products, [one] drawback of BNPL is that it often encourages customers to purchase more products than they can afford,” said Martha Pearson, a Content Marketing Manager at Finturf. “This can put consumers in a difficult financial situation, and even hurt their credit scores if they are unable to pay on time.”