Should You Ever Go Into Debt To Pay for a Vacation? Experts Weigh In
Written by
Josephine Nesbit
Edited by
Amen Oyiboke
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Vacations are a great way to relax and recharge, but most financial experts advise against taking out debt to pay for them.
In a 2024 survey by insurance and travel assistance company Allianz Partners, 47% of respondents said they couldn’t afford a vacation, yet 49% stated they were likely to travel anyway. This new travel trend, dubbed “justi-vacation” or justified vacation, involves taking a vacation despite not being able to afford the expenses.
If you’re tempted to swipe your credit card for a getaway, it’s worth understanding the risks, alternatives and expert advice before booking the trip.
Why It May Be a Good Idea
“For the most part, it is not a good idea to go into debt for a vacation. It certainly should never become a habit and something you do every year or even every few years,” said Melanie Musson, finance expert with Quote.com. However, she noted that there are a few instances where it may make sense.
“Taking a vacation is important for your mental health and even your physical well-being,” she explained. But she believes the benefits are not directly tied to the amount of money you spend on your vacation. You can still take a budget vacation, make memories, rest and recuperate away from work.
“If you have an opportunity to take a once-in-a-lifetime trip, you should at least entertain the idea of going into debt for your trip with a plan to pay it off,” said Musson. “The fact is that sometimes you have to take an opportunity when it arises and figure out the logistics later. This should be considered only with great care and a plan to pay for the trip.”
Another exception is if you can pay for the trip with a 0% APR or ultra-low cost financing that you can repay before interest kicks in, explained DeeDee Baze, financial planner, enrolled agent and managing partner at DeMar Consulting Group.
“Even then, borrowers should stay current on every other obligation, keep credit utilization as low as they can, and have an automated payoff plan in place,” said Baze.
Why It May Be a Bad Idea
Baze also has personal experience with using a credit card to pay for a vacation. When asked if it ever makes sense to borrow for a vacation, she said, “Ninety-nine times out of 100, no. High-interest credit-card debt turns a discretionary trip into a long-term liability.”
According to Baze, typical APRs hover near 20%, and credit card interest is not tax-deductible. “The stress often erases the very relaxation travelers seek. At least I did for me,” she added.
Alternative Ways To Pay for Vacation
Musson recommends planning ahead and saving for a trip to avoid going into debt. “Planning early is the best way to give yourself time to save adequately. If you plan your trip a year in advance, you can create a rough budget so you know how much to save each month,” she said.
When Baze and her husband both worked as teachers, they still managed to take a vacation every summer with their children. “To this day, our now-30-something daughters remember spending time with their parents, doing fun things,” said Baze. “It’s our proof that million-dollar memories don’t require a million-dollar budget.”
According to Baze, here are five things they did to make extra room in their budget:
- Start planning 6 to 12 months out: “We would make reservations and pay a deposit months out, then set up a ‘vacation fund’ with an automatic deposit from every paycheck going into it up until the day we left,” said Baze. They would also start talking to friends, family and neighbors about taking care of their pets when they’re gone, as boarding can be expensive. “We’d pay our little neighbor girl to come over each day to feed and play with our pups.”
- Try camping: Campgrounds often cost much less than staying at a hotel or Airbnb and offer kids more entertainment options. “We mostly stayed at KOA campgrounds since they offered game rooms, playgrounds, swimming pools, hot tubs and mini golf, among other things for the kids to do,” said Baze.
- Grocery stores: Instead of eating out for every meal, Baze and her family would plan trips to local supermarkets and eat sandwiches at a picnic table at a nearby park. “Dinners were planned out as well, with maybe only one night eating at a restaurant,” she added.
- Free or reduced admission: You can often find free or reduced price admission to museums, zoos, animal sanctuaries and national parks.
- Limit souvenir purchases: “We always valued an experience over something that could be lost or forgotten weeks after we got home,” said Baze.
More From GOBankingRates
