More Than One-Third Of Americans Are Borrowing Money For Summer Vacations, Make It Make Sense

More Than One-Third Of Americans Are Borrowing Money For Summer Vacations, Make It Make Sense

by Gary Leff on June 30, 2024

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?

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