You can now book Southwest flights now and pay later, but should you?
Last week, Southwest Airlines became the latest carrier to offer travelers the option to book flights now and pay later with the travel finance services company, Uplift. (Previously, this service was only available on Southwest Vacations packages.)
The service's main focus is making travel more attainable for some by offering monthly payment options when purchasing flights. The service is currently available for a number of airlines, including Alaska Airlines, Allegiant, Air Canada, Frontier, Spirit, United and others. It also has partnerships with a handful of online travel agencies, cruise lines and resorts.
It's always great to have more payment options, but there's a question on all our minds: is taking out a loan for travel a good idea? Here, I'll show you how Uplift works when booking airline tickets and the costs associated with using the service.
Let's dive in!
How Uplift works
Using Uplift is simple. Head to Southwest's website, enter your desired itinerary and continue through the booking process as usual. You'll see a "pay monthly" option at the check-out screen where you can quickly apply for an Uplift loan. Uplift can be used on purchases of $100 or more.
The loan application asks for basic information like your address, income and last-four of your Social Security Number. The website states that loan applications are processed immediately and that checking loan eligibility doesn't affect credit, so it's likely a soft credit pull.
If approved, you'll be presented with your loan options. This includes a 6-month and 11-month loan term alongside their respective interest rates and monthly payments. There's may be a downpayment due at the time of booking on some bookings. Uplift states that your loan terms are based on your itinerary, trip price and credit profile.
You'll also be prompted to set up payments before completing your booking. You can pay with a debit card and have the monthly payment automatically charged to your debit card.
Related: 6 simple rules to stay out of credit card debt
costs associated with Uplift
There are a few costs associated with using Uplift to pay for your travel. As you'd expect, the most obvious expense is your interest. Uplift charges simple interest on all bookings, and — as discussed — your rate depends on your credit profile. Unlike carrying a balance on a credit card, Uplift only charges interest on the purchase, not the interest incurred over the life of the loan.
According to Uplift's website, APR can range between 0% and 36%. At the high-end, this is an incredibly high interest rate that's more than most credit cards. It's unclear when the company offers a 0% interest rate, but I suspect this is reserved for special limited-time offers. For example, Carnival Cruises is currently offering 0% promotional loans on cruises with $0 down.
You may be subject to a loan origination fee on some Uplift loans too. This fee varies based on your loan and doesn't look to be charged on all loans. Thankfully, Uplift has confirmed that origination fees are not charged on Southwest bookings. You'll also be asked to pay a downpayment when you first open your loan.
Related: 5 personal finance strategies that will help you to travel more this year
Does it make sense to finance travel with Uplift?
As a general rule of thumb, it's not the best idea to buy something you can't afford. However, there are certain situations where it's out of our control and having an option like this can save the day. For instance, if you have to book a last-minute emergency flight and can't swing the cost then this could be an option worth exploring.
If you do take advantage of Uplift's payment option, then you'll want to pay it off as soon as you can to avoid accumulating interest. However, you may be better off putting it on a credit card that has 0% or a low APR rate to avoid unnecessary interest charges. It depends on what interest rate you're quoted for and how soon you expect to pay the loan back.
At the same time, it's easy to see why airlines are adding Uplift as a payment method now. Leisure travel is recovering after being put on pause during the coronavirus pandemic. Splitting a travel expense up into monthly payments may be attractive to some travelers, even if it means paying interest and other fees.
Oh, and if you're curious: flights booked with Uplift will still earn miles like any other flight.
Related: 13 expenses that you should not put on your credit card
Bottom line
Using Uplift could be a great option if you have to take a last-minute emergency trip. Otherwise, it's generally best to not get yourself into debt just to take a spontaneous vacation. There are plenty of ways to earn points and miles every day that could ultimately lead to booking your dream vacation.
As the old saying goes: "Good things come to those who wait." In this case, don't rush a trip that you're not financially prepared for — focus on upping your points and miles game instead.
Additional reporting by Liz Hund
Feature photo by VDB Photos / Shutterstock.com
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
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- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.