More than a third of Americans are borrowing money for their summer vacation, and it makes sense
can this Is it true that 36% of Americans “will go into debt for summer travel”? Can someone explain this to me?
More than a third of people planning to travel for summer vacations would be willing to go into debt to pay for their trip, according to a March 2024 report from Bankrate.
Nearly a quarter (26%) of summer travelers said they intend to use a credit card to pay for their vacation over multiple billing cycles.
… 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.
I’m quite against overspending, and on Black Friday I wrote about the wisdom of not buying anything except what you really want. I’m going to buy it anyway It’s simply being sold for less, and I’ve written about how to be careful not to overspend when collecting miles.
I have a bit of an ascetic view that you shouldn’t take a holiday unless you can afford it, but I actually think that borrowing money for a holiday can make sense in some cases.
- Income equalization. While you may be waiting for your end-of-year bonus, it makes sense to book your peak season travel in advance — you’ll get your bonus during the holidays and travel during the holidays, but you’ll have your travel funds ready by then.
- Asset rich but cash poor. You have money for a vacation, but it’s not convenient to liquidate assets right now to pay for it. Maybe you have money locked up in private equity or have capital gains that you don’t want to realize right away.
However, this is not the case for more than a third of people.
But borrowing money for vacations is more common than you might think, although the numbers probably won’t be as high as the reported surveys. Up to 15% of people take out monthly loans to buy vacation packages from airline websites. It’s tempting to sympathize with Dave Ramsey’s ill-advised advice, but that’s still less than half of the total percentage claimed. (I’d bet a lot of these people are borrowing money for road trips.)
At the very least, if you are borrowing money for a vacation, don’t borrow as part of a “vacation ownership” (i.e. timeshare) and don’t borrow to fund paid upgrades on Delta Airlines.
Is it unrealistic to think that many of the people who are borrowing money for vacations would be better off not going on vacation? What are they thinking, and does it make sense?