close
close
Study shows Americans are willing to go into debt for the holidays

Study shows Americans are willing to go into debt for the holidays

Study shows Americans are willing to go into debt for the holidays

COLUMBUS, Ohio — There are several ways to pay for vacations these days, including personal loans, buy-now-pay-later services or credit cards.


What you need to know

  • 36% of Americans said they are willing to go into debt to travel in the summer
  • Millennials and Generation Z are the generations that go into debt the most to travel
  • Consumer experts suggest planning ahead, budgeting/saving, and traveling during the off-season to reduce costs.

According to a Bankrate survey, more than a third of Americans go into debt to travel during the summer. While this spending habit can be applied to all Americans, Generation Z and millennials are the ones who do it the most.

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

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

“When you post on Instagram, every meal looks like the most amazing meal ever,” Goldberg said. “In some ways, these meals are overblown, and social media and how amazing they can make things look is part of this FOMO (fear of missing out) in terms of people maxing out their credit cards and buying tickets to go on vacation.”

The ability to track the price of flights and hotel rooms also plays a big role. People can feel like they are getting a once-in-a-lifetime deal that they can’t pass up.

“Now, the ticket costs $400 instead of $800, but you don’t have $400 in your savings account,” Goldberg said. “Yes, you’re saving $400, but maybe now you need to borrow that money, so all of a sudden that $400 you borrow to go to the Dominican Republic becomes $1,200 once you, you know, borrow it at a high interest rate and it adds up. I don’t think people are thinking about the long-term ramifications.”

Professor Goldberg said that while traveling is fun, going into debt to do so can have many long-term effects. For example, it can affect a consumer’s ability to get approved for large purchases, such as a home or car. To avoid debt, he suggests budgeting and planning ahead so you can save and set aside money from each paycheck for travel.

Planning trips during the off-season can also help reduce costs, as travel and accommodation are often more expensive in the summer.