COLUMBUS, Ohio — Nowadays, there are various ways to pay for vacation, whether it be personal loans, buy now, pay later services or credit cards.

What You Need To Know

  • 36% of Americans said that they are willing to take on debt in order to summer travel

  • Millennials and Gen Z are the top generations to go into debt in order to travel

  • Consumer habit experts suggest planning ahead, budgeting/saving, and traveling and in the off season in order to cut costs

According to a Bankrate survey, over one-third of Americans will take on debt in order to travel during the summer. While this consumer habit can apply to Americans across the board, Gen Z and Millennials are doing it at the highest rate. 

The Bankrate survey shows 47% of Millennials and 42% of Gen Z said that they plan to go into debt in order to pay off a vacation. Michael Goldberg, a consumer habits specialist out of Case Western Reserve University, said there could be a couple of reasons for this behavior. Younger generations want authentic experiences.

While many between the age of 18 and 40 understand the risk of borrowing money at interest rates between 20% and 30%, they want the experience they often see on social media. Popular social media apps like TikTok and Instagram often show the best a city or country has to offer, making young consumers feel as if they are missing out. 

“Every meal, you know, when it’s put on Instagram, looks like the most amazing outstanding meal ever,” said Goldberg. “You know, in some ways, like these are over-styled and, social media and how amazing it can make things look is like playing a role in some of this FOMO (Fear of Missing Out) in terms of folks plunking down their credit cards and buying tickets to go on vacation.”

The ability to track the price of flights and hotel rooms also plays a role. People might feel as if they’re getting a once in a lifetime deal they just can’t miss. 

“That fare is now $400 instead of $800, but you don’t have $400 in your savings account,” said Goldberg. “Yes, you’re saving $400, but maybe now you’re needing to borrow that money, so, all of a sudden that $400 that you borrow to go to the Dominican Republic turns into $1,200 once you, you know, borrowed at a high interest rate and it compounds. I don’t think people are thinking about the long-term ramifications.”

Goldberg said that while traveling is fun, going into debt to do it can have a lot of long-term effects. For example, it can affect the consumer’s ability to get approved for big purchases, like a home or car. In order to avoid debt, he suggests budgeting and planning ahead so you can save and put money aside every paycheck for trips. 

Arranging trips in the off season can also help cut costs, because travel and lodging are usually more expensive in the summer.