China’s millennials pay for Lunar New Year travels in installments

The holiday season can be a stressful time. Just think about all the money spent on travel and gifts. In the US, shoppers can opt for layaway plans to buy toys and electronics at big-box stores. In China, millennials are increasingly turning to installment plans to pay for air and train tickets, too.

It’s hard enough to snatch a ticket during Chinese New Year, with hundreds of millions of people all traveling at the same time. But even for those who manage to grab one, tickets don’t exactly come cheap. For example, one-way travel from Beijing to the southern city of Guangzhou on a high-speed train costs around US$130. That’s roughly 15 percent of the average monthly pay for a college graduate.

One delivery driver aged under 30 told state broadcaster CCTV that he spent nearly 10,000 yuan (US$1,484) buying tickets for his whole family: his wife, parents, and three children. His solution? Spread the cost using Alipay.

Alipay being used at a store in China / Photo credit: Ant Financial

This Lunar New Year, the Alibaba payment app let users pay for their train tickets in three interest-free installments.

Another app called Fenqile (or Happy Installment) offers a 12-month installment plan for air tickets. A white-collar worker in Shenzhen told Economic Daily that she’s paying for her US$445 ticket back home in installments at US$19 per month.

But layaway plans aren’t just for the holidays. Fenqile also offers payment plans for apartments and cars, as well as much cheaper products like snacks and makeup. Two pounds of Snickers candy can be paid for at US$0.79 a month for three years. There’s even a limited Fenqile edition of the DJI Mavic 2 Zoom drone sold for around US$1,180 which can be paid in installments at US$78 monthly for 15 months.

Unlike the Lunar New Year deals, though, some of these loans aren’t interest-free. It may feel more affordable to come up with less than a dollar every month instead of paying US$19 in one go, but that also translates to a heavy annual interest rate of 28 percent.

Still, there’s no lack of interested users. As of September 2018, Fenqile boasts 32.6 million registered users, around 30 percent of which have taken loans through the app.

(Abacus News is a unit of the South China Morning Post, which is owned by Alibaba.)

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