Would you go into debt for summer travel?
Ted Rossman, senior industry analyst at Bankrate, doesn't suggest putting your summer vacation on a credit card, but he does understand the appeal of getting away.
"A little over half of Americans are planning summer vacations," Rossman noted. "That seemed a little low to me. But among those travelers, 36% are willing to go into debt."
Rossman describes the phenomenon as "problematic," considering the average credit card rate is at a steep 20.71%.
The appeal of travel seems especially strong among younger adults, with Gen Zers and millennials being the most willing to stretch their budgets.
"They're willing to go beyond their budget a little bit," Rossman said.
On average, six in 10 Gen Zers and millennials are planning to go on vacation this summer. 42% of Gen Z and 47% of millennials are willing to go into debt to get it done.
The potential impact on one's financial health from vacation-related credit card debt is a serious concern for Rossman.
"If you only make minimum payments at that average balance (of $6,000) at the average rate, you're already going to be in debt for more than 18 years and pay about $10,000 in interest." Rossman explained.
He advocates for pursuing alternative strategies like 0% balance transfer cards as a means to manage and eventually eliminate credit card debt.
Rossman also provided practical suggestions on how to approach vacation planning without going into debt. By advocating for setting aside money systematically from each paycheck and making intelligent use of rewards points, Rossman believes travelers can still enjoy memorable experiences without the financial hangover.
"You actually may have enough for a free trip already. Wouldn't that be a nice surprise?" he mused.
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