Traveling is supposed to be an opportunity for adventure and relaxation. However, for many, it can become a financial burden. With wanderlust driving us to explore the world, it’s all too easy to overspend and rack up significant travel debt.
We have researched various online forums and data sets from surveys to make a list of 12 shocking statistics about how people take up travel debt.
40% Americans Ready For Travel Debt
While vacation is a must for most Americans, a staggering 40% of Americans are willing to bear travel debt for a gratifying vacation. Whether it’s from flights, hotels, or activities, it highlights how common it is for people to borrow money or rack up credit card balances to fund their trips.
Although financial advisors urge us not to take loans for recreational purposes, a good summer vacation is a priority for many Americans. With inflation adversely affecting travel plans, people often incur credit card debts for a good travel experience.
Average Travel Debt Per Person is $1500
According to the survey findings, in 2022, on average, Americans who had travel debt owed around $1,500. This amount may seem modest if this is the total debt. Still, it can significantly burden those struggling with other financial obligations.
Since inflation has become relatively more stable, the rise in the cost of living continues to compromise the spending capacity of many travelers. Several American travel enthusiasts continue to balance their checkbooks precariously.
Accumulating Travel Debt
A common trait among millennials is to value experiences over possessions. A survey by Bankrate suggests millennials are particularly prone to travel debt, with 30% reporting they have gone into debt to finance their trips.
The survey suggests that 25% of GenZ and Gen X respondents are willing to take up a credit card loan for their summer travel plans. Their desire for unique experiences often leads them to take on debt for unique vacations.
Credit Cards to Fund Vacations
Credit cards have become increasingly popular among American travelers, with 83% of them being dependent on credit cards to pay for their trips. This over-reliance on credit cards can lead to substantial debt due to high interest rates and extended repayment periods.
Also, about 56% of Americans take out credit card loans to earn cashback and rewards, while one in five Americans believe their cash inadequacy leads to them bearing travel debt.
Average Credit Card Interest Rate
Americans who use credit to finance their vacations accumulate a hefty travel-related debt per trip. This debt can take months or even years to pay off, especially if only minimum payments are made, compounding the overall cost due to interest.
The average interest rate for credit cards is around 20%, with travel-specific cards sometimes having even higher rates. For those finding it difficult to pay off their balances quickly, the interest can significantly inflate the overall cost of their trips.
Carrying Debt Over Billing Cycles
A recent survey shows that credit cards are the preferred payment method for summer travelers. Among these travelers, 43% intend to pay their credit card balance fully. In comparison, 26% will carry a balance over multiple billing cycles.
The survey also revealed that among the 44% of credit cardholders who carry debt month-to-month, two-thirds aim to maximize rewards, increasing the total debt amount.
Incurring Travel Debt Repeatedly
A survey database reveals that nearly 60% of Americans have previously incurred debt for summer travel and are doing so again this year.
This is alarming because it suggests a growing normalization of vacation-related debt. Since the country already faces significant debt accumulation during the winter holidays, incurring debt for summer vacations raises concerns.
Different Forms of Credit
According to a March survey by Bankrate, Americans plan to take on different kinds of debt to finance their summer travel. Payment methods for these expenses include personal loans (5%), buy now, pay later services (8%), and borrowing from family and friends (6%).
This trend is increasing as credit card interest rates are at a record high of 20%. The notable increase in unsecured personal loans is primarily driven by consumers’ need to manage higher credit card rates and other financial pressures​.
Increased Personal Loans
With the rising cost of living and a yearning to live a better life, a 9.2% increase in personal loans has been recorded in 2023 compared to the previous year. These loans typically come with high interest rates, adding to the financial burden of travel.
This reflects a broader trend of Americans increasingly relying on personal loans to finance significant expenses, such as travel, due to ongoing economic challenges and high interest rates on other forms of credit.
Summer Vacation Spend
A summer travel survey conducted by The Harris Poll reveals that 45% of Americans are planning summer vacations involving hotel stays or flights.
This surge in travel is expected to drive a substantial economic impact, with an estimated $424 billion projected to be spent on summer vacations.
Dipping into Savings
When it comes to savings, you need to have a fair amount of money saved if you wish to take a trip. Nearly 44% of Americans who have traveled or plan to take a leisure trip this year will spend at least $1,000 on their vacation.
What’s striking is that about 52% of Americans have less than three months’ expenses saved for emergencies, with 22% having no emergency savings. This disparity highlights a significant gap between vacation spending and emergency financial preparedness.
Anxiety Over Travel Debt
Data from a survey reveals that one in three individuals still carry credit card debt from their last vacation, and 65% are preoccupied with thoughts of their post-travel credit card bills while on vacation.
The stress of financial concerns can significantly diminish the relaxation and enjoyment of a vacation. Constant anxiety about expenses or the looming burden upon returning home can overshadow the experience.
