Many Americans find themselves struggling with summer travel expenses long after the summer months have passed. According to a recent survey by Bankrate, 36% of Americans plan to take on debt in order to fund their summer vacations. This trend is particularly prevalent among Millennials (47%) and Gen Zs (42%), showing that younger generations are more likely to go into debt for travel. While it may seem tempting to splurge on a lavish vacation, it is important to consider the long-term financial implications of going into debt for travel.
The survey revealed that the most common payment methods for summer travel expenses include personal loans, buy now pay later services, borrowing from family and friends, and using credit cards to pay for vacation expenses over multiple billing cycles. While it may be tempting to use these methods to fund a dream vacation, financial experts warn that this can lead to expensive debt that lingers long after the vacation is over. The average credit card interest rate is currently over 20%, which is close to a record high, making it even more important to avoid going into debt for travel.
Financial experts advise that the key to affording a vacation without going into debt is to plan ahead and budget accordingly. Setting a budget for categories of spending such as food, activities, and transportation can help you track your expenses and avoid overspending. Consider splurging on one or two key experiences while being conservative in other areas of spending to strike a balance. For example, staying in an Airbnb and cooking your meals can help you save on food expenses, allowing you to splurge on a special activity like a boat trip.
Once you have set a budget for your vacation, the next step is to make a plan to save money for your trip. Starting small by setting aside a little bit of money from each paycheck can add up over time and help you fund your vacation without going into debt. Additionally, consider creative ways to save money on travel expenses, such as taking advantage of frequent flier miles or credit card rewards. Choosing to travel during the offseason or shoulder season can also lead to lower prices, allowing you to make the most of your travel budget.
While it may be tempting to go into debt for summer travel, it is important to consider the long-term financial implications of doing so. By planning ahead, setting a budget, and finding creative ways to save money, you can enjoy a memorable vacation without the burden of debt. Remember, the key to a stress-free vacation is to prioritize financial health and make smart decisions when it comes to spending on travel.