As the summer travel season kicks into high gear, a significant number of Americans are preparing to shoulder hefty bills long after their vacations end. According to a March survey conducted by Bankrate, 36% of Americans are willing to take on debt to fund their summer travels.
The survey revealed diverse methods of payment for these expenses, ranging from personal loans (5%) and buy now, pay later services (8%) to borrowing from friends and family (6%). Alarmingly, a quarter of summer travellers plan to use credit cards and extend their payments over multiple billing cycles—a practice that could prove costly, given average credit card interest rates nearing record highs of over 20%.
Ted Rossman, a senior credit card industry analyst at Bankrate, expressed concern over this trend: "I don’t want to tell people they can’t have any fun, but this represents a lot of people taking on expensive debt, and this is the kind of thing that can linger."
Breaking down the demographics, Millennials (47%) and Gen Zs (42%) are the most likely to finance their vacations through debt, highlighting a generational trend towards prioritising experiences over financial prudence.
Clinical psychologist Sabrina Romanoff acknowledged the allure of creating lasting memories through travel, especially for families with children dreaming of iconic destinations like Disney World. "Parents often rationalise this spending as an investment in their children’s happiness and childhood experiences," she explained.
To mitigate financial strain, experts emphasise the importance of planning and budgeting before embarking on a trip. "Money on trips can feel like Monopoly money," Romanoff noted, advising travellers to set clear spending limits for categories like food, activities, and transportation.
Romanoff also recommends finding a balance between splurging on memorable experiences and economising on other aspects of the trip. "Choosing to stay in an Airbnb and cooking meals can save money, allowing for a splurge on a special activity," she suggested.
Financial planning should start well in advance, with small savings contributions from each paycheck. Additionally, travellers can leverage rewards programs and off-season travel to cut costs. "Flexibility is key," Rossman advised, suggesting strategies like midweek travel and destination choices based on deals rather than preferences.
