36% of Americans plan to take out debt to travel this summer
Some people may find themselves struggling with summer travel bills after Labor Day.
To that point, 36% of Americans said they had a plan debt burden to travel this summer, according to a March survey by Bankrate. Payment methods for summer travel expenses range from personal loans (5%) and Buy now, pay later service (8%) borrowed from family and friends (6%).
Additionally, 26% of summer travelers said they intend to use a credit card and pay for their vacation over multiple billing cycles.
“The reason this is concerning is because the average credit card fee is over 20%, near a record high,” said Ted Rossman, a senior credit card industry analyst at Bankrate.
“I don’t want to tell people they can’t have any fun,” he said. “But this shows a lot of people are saddled with expensive debt and this is something that could last a long time.”
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According to Bankrate, Millennials (47%) and Gen Z (42%) are the demographics most likely to say they plan to go into debt to pay for a vacation.
“There are many compelling reasons why people choose to go into debt to take these vacations,” says clinical psychologist Sabrina Romanoff.
She gives an example: “If your child dreams of going to Disney World and the family has no way to fulfill that dream without going into debt, that could be a memory the family will keep forever.” “.
“And parents can often rationalize spending in these terms for their children, especially when the trip seems like such an important, vital part of childhood,” she adds.
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Financial experts advise that the key to being able to afford a vacation is to plan ahead and budget accordingly.
“The money in travel can feel like Monopoly money,” Romanoff says. “For some reason, we’re more willing to say yes to this experience because we just have this luxury mindset.”
For that reason, Romanoff advises her clients to budget for travel spending categories like food, activities, and transportation.
Romanoff also suggests giving yourself areas where you splurge and areas where you spend sparingly.
“I had a client I work with who decided they were going to stay in an Airbnb and they were going to cook all their own food, so they were going to skimp on food and splurge on this cruise. It was really exciting and it felt like a compromise,” Romanoff says.
The next step after budgeting is creating a savings plan. Romanoff recommends starting small and setting aside a little money from each paycheck.
People can also find other creative ways to save and make the most of their trips. For example, Rossman suggests taking advantage of frequent flyer miles or other credit card rewards.
Travelers can also save money by choosing to visit attractions at different times of the year. Lower demand often results in lower prices.
“Zipper when everyone else zigzags,” says Rossman. “Maybe travel in the off-season or peak season, or drive instead of fly, or travel mid-week instead of on the weekend. If you can let the deal dictate where you go, it can really help. Flexibility is key.”
See videotapes above to learn more about how Americans pay for summer vacation.
