Vacationers will likely use credit cards to cover some of the costs of their summer trips. (iStock)
A recent survey found that most Americans plan to pay for a significant portion of their vacation travel on their credit cards, even if they can’t afford it.
About 83% of people plan to pay for some of their travel expenses with a credit card, according to a new survey by Debt.com. investigation According to Debt.com’s survey, more than a quarter (30%) plan to finance at least $5,000 of the trip, while 7% said they may end up charging more than $15,000. More than half of respondents (56%) plan to use a credit card to earn cash back or points. However, 19% said they can’t afford to pay cash but feel the need to travel this summer, so they will have to turn to a credit card.
For many respondents, using a credit card to pay for vacation travel is common: 59% overall said they have gone into debt for a summer trip in the past.
“Nearly 60 percent have gone into debt for a summer trip,” said Don Silvestri, president of Debt.com. “This is a big problem because Americans are becoming accustomed to vacation debt. The country already has a problem with people getting into debt during winter vacations. Are we going to get in debt every time we go on vacation? That’s concerning.”
With the current high interest rates, relying on credit cards this summer can be costly. If you’re struggling to pay off your debt, consider taking out a personal loan to consolidate your payments at a lower interest rate and save money every month. To check out personal interest rates without impacting your credit score, visit Credible.
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The dangers of carrying a credit card balance
According to the research firm, Americans will rack up a total of $48 billion in new spending in the third quarter of 2023, with credit card debt now standing at nearly $1.8 trillion. Recent reports on household debt From the Federal Reserve Bank of New York: Most Americans know that carrying a balance on their credit cards is bad for them, but a recent Quicken survey found that 45% of people still do it. investigationCarrying a balance can result in high interest charges and increased debt, and using more than 30% of credit can negatively impact a borrower’s credit score.
The majority of Americans (81%) say paying off credit cards is a necessity, and 64% say carrying a balance on a credit card is not a good idea. However, 45% typically carry a balance from month to month. The survey also shows this is a growing problem, with more than 52% of Gen Z and millennial Americans saying their credit card balances have steadily increased over the past three to five years. Of those, nearly half (48%) are in the middle class, and more than a third (35%) are in the top income bracket, making more than $200,000 a year.
“Even when people know what to do and what not to do with credit cards, they often end up making mistakes,” Quicken CEO Eric Dunn said. “This shows that many consumers feel they have no choice. But credit card debt is expensive, and increasing debt actually worsens people’s financial situation.”
If you’re worried about your financial situation, you could consider taking out a low-interest personal loan to pay off high-interest debt. Visit Credible to speak with a personal loan expert and get your questions answered.
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How to save money this summer
According to a study by Debt.com, keeping summer costs down requires planning and budgeting. Here are some strategies travelers can use to avoid bankruptcy:
- Set a realistic budget for how much you can spend without going into debt. Include all potential expenses, such as transportation, accommodation, food, activities, souvenirs, etc.
- If you plan to use a credit card, take advantage of any cash back policies or reward points, but make sure you can pay the balance in full when the bill arrives to avoid interest.
- If a long-term trip to Europe is beyond your budget, explore nearby destinations.
- Flexibility is key to finding the best travel deals. It helps you find great deals on flights and accommodation. Use our fare comparison tools and alerts to find the best prices.
“With careful planning and 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 make irreplaceable memories, but you don’t want to end up with debt that lasts well beyond your vacation. If you’re interested in paying off high-interest debt with a personal loan, you can visit the Credible marketplace to learn more about your options and speak to a personal loan expert to get your questions answered.
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