Perhaps your summers hold fond memories of walks along the beach, hiking in the mountains, and trying new foods at destinations hundreds of miles from home. If so, are you planning to continue traveling this year? Will you be going into debt to do so?
According to the latest Bankrate survey, only about half (53 percent) of Americans are planning a summer vacation in 2024. Of those planning to travel this summer, more than one in three (36 per cent) would be willing to take on debt to pay for the costs. that.
Meanwhile, the other half of Americans (47%) plan to skip summer vacation this year, citing affordability as the main issue (65%).
There are many ways to enjoy this summer without breaking the bank. For example, there’s still time to set aside money from every paycheck to save up for your summer vacation. — Ted Rothman | Bankrate Senior Industry Analyst
Bankrate’s key insights for summer 2024 travel
Insights on bank rates
Just over half of U.S. adults are planning a summer vacation this year. This 53 percent includes 36 percent planning domestic travel, 15 percent planning international travel, and 12 percent planning a staycation. Some people planning to travel this summer are willing to go into debt to do so. 36% plan to borrow money to pay for their summer vacation. Debt options include carrying a balance on a credit card. Buy now, pay later services. Sometimes they borrow from family and friends, and sometimes they borrow privately. Affordability is the number one reason American adults aren’t taking a vacation this summer. 65% of those who have not made any summer vacation plans say they cannot afford to take a summer vacation. Not surprisingly, higher income earners are more likely to plan their summer vacations. 74% of respondents with annual household incomes of $100,000 or more are planning a summer vacation, more than those with lower incomes.
Some people who travel during the summer vacation plan to borrow money for their vacation.
The survey found that more than a third (36%) of would-be summer travelers say they plan to pay for their trip with debt.
This comes as no surprise when compared to the March 2024 Bank Rate Survey, which asked Americans whether they would take on debt to pay for fun this year. The survey found that not only for the summer, but for this year as a whole, 27% said they were willing to take out debt to travel, 14% to eat out, and 13% to attend a live entertainment event.
Ted Rothman, senior industry analyst at Bankrate, warns against accumulating high credit card debt.
“I don’t want to say you can’t have fun, but I’m concerned about taking on debt for discretionary purchases like vacations, especially with credit card balances and interest rates at record highs,” he says. .
The majority of summer travelers pay by credit card
Credit cards are the preferred payment method for summer travelers, with 62% expecting to use a credit card for at least some of their travel expenses. 43% of summer travelers plan to use a credit card that is paid in full, and 26% plan to use the card to carry a balance across multiple billing cycles. Some people do both.
Interestingly, a January 2024 Bankrate study found that of the 44 percent of credit cardholders who carry monthly debt, two in three cardholders are trying to maximize their benefits. got it. If you can pay off your balance in full, you can use a travel credit card to save money and apply rewards towards future trips.
With a travel credit card, you can also enjoy additional travel benefits like no foreign transaction fees and trip cancellation insurance. But even with these perks, it’s worth considering the cost of carrying a balance for your trip.
“Although the travel industry has recovered from the disruption immediately following the pandemic, we are confident there will still be many delays and cancellations this summer,” Rothman said.
“We recommend paying with a credit card that offers travel insurance benefits, such as trip cancellation and interruption insurance, and protection against flight delays and lost luggage. Many cards also include rental car insurance. It’s a convenient perk.
Domestic travel in summer is the most popular
Whether it’s an all-inclusive resort or a national park, vacations are an important part of many people’s lives. According to the survey, 53% of American adults are planning a summer vacation this year.
36% of Americans are planning a domestic trip, 15% are planning an international trip, and 12% are planning a staycation (respondents can select multiple options). Another 18% don’t know their plan or aren’t sure yet.
More than 4 in 10 staycationers (43%) also plan to travel domestically or internationally, and approximately 7% of U.S. adults will make a staycation their only summer vacation. If cost is a concern, it may be easier on your wallet to make the most of your local experience.
Young Americans are more likely to flee and pay for it with debt
When school is out for the summer, students, young parents, and other young adults may be more likely than older generations to jet into the city.
60% of Gen Z (ages 18-27) and 61% of Millennials (ages 28-43) are planning a summer vacation, compared to 50% of Gen 44% of respondents (up to 78 years old) are planning a summer vacation. .
Young people are also willing to borrow money to pay for their summer holidays in 2024.
Gen Z: 42% Millennials: 47% Gen X: 31% Baby Boomers: 22%
High income earners and city dwellers are most likely to jet this summer
As you scroll through social media this summer, you might notice two types of friends embedding travel photos in their feeds: those who make more money and those who live in cities.
Almost three in four (74%) survey respondents with annual household incomes of $100,000 or more are planning a summer vacation. This is significantly higher than 68% of those earning between $80,000 and $99,999 planning a summer vacation, 61% of those earning between $50,000 and $79,999, and just 39% of those earning less than $50,000. many.
Where are these summer travelers living?
61% of people living in cities are planning a summer vacation 50% of people living in suburbs 48% of people living in towns 44% of people living in rural areas
Nearly 3 in 10 U.S. adults (28%) skip summer vacation due to affordability.
By a wide margin, the top reason for those not planning a summer vacation was “I can’t afford it” (65%).
Inflation appears to be subsiding, but the Fed still hasn’t cut interest rates. As a result, credit card interest rates remain high and Americans continue to feel the pain of rising prices in their daily spending.
A new credit card may help combat inflation. But many Americans seem wary of whether they can afford luxuries like summer travel.
Among those who have not made any summer vacation plans, Gen Generation Z (53%).
In 2023, 58% of Americans also said they won’t be able to afford it. Other reasons for not planning a summer vacation include:
24% are not interested in taking a vacation now (vs. 23% in 2023) 13% cited health or age (vs. 15% in 2023) 11% said it would be a hassle 10% are unable to take time off from work (10% say they have too many family obligations (13% in 2023) 4% are planning a vacation elsewhere (11% in 2023) 1% say it is their desired purpose (23% in 2023) 9% said it was for another reason (7% in 2023)
Rothman advises, “Take advantage of the credit card rewards, airline miles, and hotel points you’ve accumulated.”
“Maybe you could sign up for a new credit card with a generous sign-up bonus to use toward your vacation,” he says. “Finally, if you can’t go anywhere this year, at least take a vacation to relax and recharge closer to home.”
3 types of debt that are cheaper than credit card debt
If you plan on taking on debt to pay for your summer vacation, registering the debt on your credit card may be an expensive decision. That’s because credit card interest rates are high, currently averaging around 21%. You’ll pay interest on your vacation expenses (and you’ll also pay interest on the interest) for each day you have a balance.
Keep in mind that spending more than your means on vacation is not the best idea. You can avoid going into debt for a big trip by saving money, hacking your trip with credit card rewards, and looking for great deals.
If you still want to borrow money, here are three forms of debt that may cost less than credit card debt.
1. Personal loan
The best personal loans come with lower interest rates than credit cards. If you need a lot of spare change to prepay your travel expenses, you can apply for a personal loan. Having good credit increases your chances of getting approved and getting a lower interest rate. Please note that the longer the repayment period, the more interest will be charged.
2. Buy Now Pay Later (BNPL) Service
You can use BNPL apps like Affirm, Afterpay, PayPal in 4, Perpay, and Sezzle to make long-term, interest-free payments for big-ticket purchases like flights and hotel stays. You will join the 8% of survey respondents who plan to use BPNL services to pay for their summer travel.
3. 0% Initial APR Credit Card
Applying for a credit card with a 0 percent APR gives you time to shop and pay it off later interest-free. Consider whether you can pay off the balance by the end of the introductory period. Usually within 12-21 months. The card’s normal APR then kicks in and you start accruing interest. Also, keep in mind that applying for a new credit card may temporarily lower your credit score.
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All figures are from YouGov Plc unless otherwise stated. The total sample size was 2,360 adults, of whom 1,262 were planning a summer vacation and 1,098 were not. Fieldwork was conducted from March 18 to 20, 2024. The survey was conducted online. This number is weighted and representative of all U.S. adults (18 and older).
