Only about half (53%) of Americans are planning a summer vacation in 2024, according to a new Bankrate survey. Of those who plan to travel this summer, more than 1 in 3 (36%) are willing to go into debt to pay for it. On the other hand, another half (47%) of Americans plan to skip their summer vacation this year, citing affordability as the main issue (65%).
Ted Rossman, Bankrate Senior Industry Analyst, cautions against racking up expensive credit card debt. “I don’t want to tell people they can’t have any fun, but I do worry about taking on debt for discretionary purchases such as vacations, especially with credit card balances and rates at record highs,” he says.
Credit cards are summer travelers’ preferred payment method — 62% will use a credit card for at least some of their trip expenses. Forty-three percent of summer travelers plan to use a credit card that they pay in full, and 26% plan to use a card and carry the balance over multiple billing cycles. Some people are doing both.
If you’re facing cost concerns, making the most of local experiences may be easier on your wallet. When school’s out for summer, students, young parents and other young people might be more likely to jet out of town than older generations. Sixty percent of Gen Zers (ages 18-27) and 61% of millennials (ages 28-43) are planning summer vacations, versus 50% of Gen Xers (ages 44-59) and 44% of boomers (ages 60-78).
Young people are also more willing to take on debt to pay for their 2024 summer vacation:
-Gen Z: 42%
-Millennials: 47%
-Gen X: 31%
-Boomers: 22%
Nearly 3 in 4 (74%) of survey respondents with annual household incomes of $100,000 or more are planning a summer vacation. That’s considerably more than the 68% earning between $80,000 and $99,999, 61% earning between $50,000 and $79,999 and just 39% earning under $50,000 who are planning a summer vacation.
The top explanation among those who are not planning summer vacations, by a wide margin, is that they can’t afford it (65%). Even though inflation seems to be cooling off, the Fed still hasn’t lowered rates. Thus, credit card rates are still high, and Americans continue to feel the pain of higher prices on everyday spending.
A new credit card might help you fight inflation. But many Americans appear to be feeling wary of whether they can afford luxuries like a summer trip.
Rossman advises “taking advantage of any credit card rewards, airline miles and hotel points you’ve socked away.” “Maybe even sign up for a new credit card with a generous sign-up bonus that you can put toward your getaway,” he says. “Finally, if going somewhere isn’t feasible this year, at least take some time off to relax and recharge close to home.”
If you’re planning to take on debt to pay for a summer vacation, putting it on your credit card might be an expensive decision. That’s because credit card interest rates are high — currently averaging almost 21%. For every day that you carry a balance, you’ll pay interest on those vacation expenses (and you’ll also pay interest on your interest). A word of caution that it’s not the best idea to spend beyond your means for a vacation.
You could avoid going into debt for a big trip by doing things like saving, travel hacking with credit card rewards and looking for deals. If you still want to borrow money, here are three forms of debt that might be less costly than credit card debt:
-Personal loan. The best personal loans can come with lower interest rates than credit cards. If you need a large chunk of change to pay for travel expenses up front, you could apply for a personal loan. Having good credit may increase your chances of being approved and getting a lower rate. Just keep in mind that you’ll still be paying interest as you make payments over time.
-Buy now, pay later (BNPL) service. You could use a BNPL app like Affirm, Afterpay, PayPal in 4, Perpay or Sezzle to make interest-free payments over time on large purchases like flights or hotel stays. You’d be joining the 8% of survey respondents planning to use a BPNL service to pay for summer travel.
-Zero-percent intro APR credit card Applying for a 0% APR credit card could buy you time to make purchases that you pay off later, interest free. Just consider whether you can pay off the balance by the time the introductory period ends — usually within 12 to 21 months. After that, the card’s regular APR will kick in and you’ll start racking up interest. Also remember that applying for a new credit card can temporarily ding your credit.
