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36% of Americans plan to take on debt for summer travel. Here’s why that worries financial experts

Some people could find themselves wrangling with summer travel bills well after Labor Day.

To that point, 36% of Americans said they plan to take on debt in order to travel this summer, according to a March survey from Bankrate. The payment methods for summer travel expenses ranged from personal loans (5%) and buy now, pay later services (8%) to borrowing from family and friends (6%).

Additionally, 26% of summer travelers said they intend to use a credit card and pay over for the vacation over multiple billing cycles.

“The reason that’s worrisome is because the average credit card charges more than 20%, which is close to a record high,” said Ted Rossman, a senior credit card industry analyst at Bankrate.

“I don’t want to tell people they can’t have any fun,” he said. “But this represents a lot of people taking on expensive debt, and this is the kind of thing that can linger.”

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Millennials (47%) and Gen Zs (42%) are the demographic cohort most likely to say they plan to go into debt to pay for vacation, according to Bankrate.

“There are so many compelling reasons why people choose to take on debt to have these vacations,” said Sabrina Romanoff, a clinical psychologist.

“If your kids are dreaming of going to Disney World and there’s no way the family could ever really swing it without going into debt, it could be a memory the family will have forever,” she said by way of example.

“And parents often can rationalize spending in these terms for their children, especially when the trip feels like such an important, seminal part of childhood,” she added.

How to have fun on a budget: ‘Zig when others zag’

Financial experts advise that the key to affording a vacation is to plan ahead and budget accordingly.

“Money on trips can feel like Monopoly money,” Romanoff said. “For some reason, we’re much more willing to just say yes to the experience because we’re just in this, like, luxurious mindset.”

For that reason, Romanoff advises her clients to set a budget for categories of spending while traveling such as food, activities and transportation.

Content Source: www.cnbc.com

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