Many Americans plan to rely on their credit cards to finance a significant portion of their holiday travel, even if they can't afford it, a recent survey said.
Roughly 83% plan to pay for a portion of their trip using credit cards, a new Debt.com survey said. More than a quarter (30%) expect to finance at least $5,000 of their travel expenses, and 7% said they may charge $15,000 or more, according to the Debt.com survey. More than half of respondents (56%) will use their credit cards to earn cashback and rewards. However, 19% said they had to rely on credit cards because they couldn't afford to pay cash but still felt the need to get away this summer.
Using credit cards to pay for holiday travel is a common occurrence for many of the respondents. Overall, 59% said they had gone into debt for summer travel in the past.
"Nearly 60% have incurred debt for summer travel before," Debt.com President Don Silvestri said. "That's a big problem because it means Americans are growing accustomed to vacation debt. This country already has a problem with running up debt over the winter holidays. Are we going to go into debt for every holiday? This concerns me."
The current high interest rate environment could make relying on credit cards this summer expensive. If you are struggling to pay off debt, you could consider using a personal loan to consolidate your payments at a lower interest rate, saving you money each month. Visit Credible to find your personalized interest rate without affecting your credit score.
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Americans now owe nearly $1.08 trillion on their credit cards after racking up a collective $48 billion in new spending during the third quarter of 2023, according to a recent report on household debt from the Federal Reserve Bank of New York. While most Americans know that carrying a credit card balance is a bad idea, 45% typically do so anyway, according to a recent Quicken survey. Carrying a balance can lead to expensive interest charges and growing debt. Using more than 30% of their credit could also negatively impact a borrower's credit score.
Most Americans (81%) said paying off credit cards was essential and 64% said carrying a credit card balance was not a good idea. However, 45% typically carry one month-to-month. The survey also showed this is a growing issue, with more than 52% of Gen Z and Millennial Americans saying their credit card balance has been steadily increased over the past three to five years. Of those, almost half (48%) were from the middle class while more than a third (35%) were in the highest income bracket of those making more than $200,000.
"Even with people knowing what they should and shouldn't do with credit cards, they often make the mistakes anyway," Quicken CEO Eric Dunn said. "This suggests that many consumers don't feel they have a choice. But credit card debt is costly, so as that debt rises, it really hurts people's financial health."
If you're worried about the state of the economy, you could consider paying down high-interest debt with a personal loan at a lower interest rate. Visit Credible to speak with a personal loan expert and get your questions answered.
Planning and budgeting can help control summer costs, the Debt.com survey said. Some methods vacationers can use to avoid breaking the bank include:
"By planning carefully and making smart financial decisions, you can enjoy a memorable summer vacation without the burden of debt, but the key is planning," Silvestri said.
Summer travel is a great time to create priceless memories, but avoid getting stuck with debt that lingers far beyond your vacation. If you're interested in paying off high-interest debt with a personal loan, you could visit the Credible marketplace to learn more about your options and speak with a personal loan expert to get your questions answered.
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