Carrying credit card debt from your last vacation? You’re not alone

When life gets overwhelming and you just want to get away, it can be extremely tempting to book a plane ticket or stay at an all-inclusive beachfront resort on a credit card. 

A new survey by financial platform WalletHub shows that more than a quarter of American adults would rather skip a credit card payment than skip a vacation while 40% believe it is okay to go into debt if the vacation is good enough.

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The survey, which polled 230 adults in different pockets of the country, asked respondents about their travel spending habits.

Many are still carrying credit card debt from last year’s holiday, survey finds

Fifty-five percent said that, due to inflation and other factors that have worsened their finances, they plan to spend less on their summer travel in 2024 than they did last year. A whopping 65% said they still carry some credit card debt from last year’s holidays.

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While 55% said they plan to use credit card rewards and other types of points to bring down the cost of their vacation, 68% said that inflation was affecting their travel plans while 28% think it’s a good idea to apply for a new credit card before going on vacation to get the loan necessary to cover it on top of any sign-up points bonuses.

Just over a third said they never think of credit card bills when on vacation while 65% said it weighs on them occasionally even when traveling. 

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‘Americans want a vacation even if they can’t really afford it’

“Americans want a vacation, even if they can’t really afford it,” WalletHub John Kiernan said in a statement. “[…] Fortunately, you don’t need to jeopardize your long-term financial health or sacrifice much-needed rest and relaxation. Many Americans plan to cash in credit card rewards they’ve already earned in order to make ends meet, for example.”

Some of the most common credit-card travel benefits that respondents said they use are the rental car, travel accident and price protection insurances that are included if one books these things through the card. But as the benefits only come in if something goes wrong, these perks do not feel like “saving money” and many travelers are still going into serious debt to travel both personally and with their families.

In answer to the more light-hearted question on the subject, 35% of respondents said they would stop drinking coffee for a year in exchange for a free summer vacation while 37% said they would stop dining out. If one is disciplined about this, putting the money saved into a vacation fund and then spending it on travel is in fact a better financial strategy than spending money one does not have.

But if one is applying for a new credit card, choosing one issued by an airline and taking advantage of the $300-$400 bonus they often offer after spending a certain amount are another good way to bring down the total cost so long as one is disciplined about not overusing the available credit and going into debt.

“If you have a good credit score, you could also save around $1,000 on travel this summer by applying for one of the best travel credit cards now and spending enough to earn the initial rewards bonus,” Kiernan says.

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Union Capital Financial Group Ltd, registered in the British Virgin Islands, does not provide investment services inside the United States. The company only provides consulting, advisory and educational services.