Can this even be real, that 36% of American’s “plan to take on debt for summer travel” – can someone possibly explain this to me?
More than one-third of summer vacationers say they are willing to take on debt to pay for travel, according to a March 2024 report from Bankrate.
About a quarter (26%,) of summer travelers said they intend to use a credit card and pay for the vacation over multiple billing cycles.
…Millennials (47%) and Gen Zs (42%) are the demographic cohort most likely to say they plan to go into debt to pay for vacation, according to Bankrate.
I’m pretty against getting trapped into overspending. I write about the wisdom in not buying anything on Black Friday unless it’s something you were going to buy anyway that’s simply being sold for less And I write about being careful in accumulating miles that it doesn’t cause you to spend more.
I have a bit of a puritan instinct that people ought to deny themselves a vacation unless they can afford to pay for it, but I actually think it can make sense to borrow money for vacation in some cases:
- Income smoothing. Maybe you’re waiting on a year-end bonus, but it makes sense to book travel during peak periods in advance. You’re going to get the bonus over the holidays and travel over the holidays, but finance the trip until then.
- Asset rich, cash poor. You’ve got the money to cover a vacation, but it’s not convenient to liquidate assets right now to pay for it – maybe funds are locked up in private stock, or you’ve got capital gains you don’t want to recognize immediately.
This doesn’t describe over a third of people, however!
Yet borrowing money for vacations is more common than you might think – I just wouldn’t peg the number as high as the reported survey. Up to 15% of people are financing the vacation packages they buy from airline websites omonth after month. It’s almost enough to make you sympathetic to bad advice from Dave Ramsey. But still less than half the claimed percentage of people overall. (Many of these would be taking on debt for road trips, I imagine.)
At least if you’re going to borrow money to vacation, don’t do it as part of ‘vacation ownership’ (i.e. timeshare). Also, don’t finance paid upgrades on Delta either.
Am I out of touch to think that many people borrowing money for vacation would be better off not taking the trip? What are they thinking, and does it make sense?
Well, speaking from personal experience, the girl and I are about to take (a rather economical, but still vacation to Puerto Rico spending money we don’t actually have.
She has a teacher’s job in a poor school district, and I am pretty sick and unemployed. My only excuse is that I’m awaiting major surgery, after which I won’t be going anywhere for quite a while.
So call it a “last hurrah” trip. But that’s a special circumstance, plus I obviously know how to book great trips for not much money.
The comments here are so elitist it makes me want to throw up. All the haves criticizing the have nots for trying to get a small piece of the pie (or points) here and there that you all brag about. You people are really something. How judgmental can you get? Pretty judgmental based on this.
From my perspective, being in my late 50’s and very middle class I have financed some vacations to Europe in the last 8 years and play the points game as well. I would say I have had about 4k-5k covered by rewards and I am thankful I am in the position to be able to get those rewards. I would not have gone without them. All that said, I have put several of those trips on credit cards and even paid some finance charges (oh my) and you know what; it was worth it 10x over for the experiences and memories I had. I may be too old to enjoy it before I can pay cash for all that. Memories and broadening my horizons count for something. Any interest I am paying before I pay off those trips I consider to be a cost for that trip; an expense like any other. It’s no different.
“What are they thinking?” I think they are thinking they want a vacation. You are obviously a well off man and your tone is a bit condescending but I digress. I think there are some people who fall in the category of “shouldnt be going” but I think the majority are hardworking people who want a break. They might not have $5K to pay upfront in a lump sum, but have steady jobs where they can pay it back. Americans work more than any other nation (and longer) and people do not want to wait till they are too old to really enjoy it. If most had your mindset I would venture to say most would NEVER go on vacation or it would take 20 years to save up. Expenses are more etc and to save every nickel to EVENTUALLY MAYBE take a vacation sounds even more depressing and certainly does nothing for morale. Again there are some people who are already in so much debt that your take should be it but i would gather most who are doing this are not and dont want to wait till retirement to finally take that trip.
Not everybody that pays with a credit card is financing a vacation (even though I’ve done that before). Now, I pay for the trip with my a delta AmEx to get the miles and pay the balance every month (shh don’t tell Dave Ramsey I play the miles/points game) . I’ve taken three overseas Delta One trips for free using miles.
Disclaimer, I travel
for business so the miles are a combination of AmEx expenses and actual travel.
How sad that people cannot save money all year toward a vacation. But sadder that they can’t figure out a nice vacation that they can afford. How hard could this be? Paying CC interest rates is beyond nuts.
So now it’s “elitist” to think financing vacations is a poor use of money? Without using that credit card you’d never be able to take that vacation at all? Simple fact: if you can pay down that credit card, then you could have saved up and paid cash simply by planning ahead and deferring the trip for some months – not your entire lifetime. You wind up paying a LOT more for the same vacation, and taking fewer trips or not as nice trips over the course of your lifetime. You’re paying interest instead of enjoying that money. This is common sense, not elitism.