repost­ed from: USA Today
by: Ani­ta Balakrishnan
June 29, 2015

Sum­mer is time for a well-earned vaca­tion — except some have earned it more than oth­ers. Almost half of peo­ple are jet­ting off with­out sav­ing enough in advance, accord­ing to a new study.

renewal pictureForty-six per­cent of peo­ple said they paid for a vaca­tion by cred­it card when they did­n’t have enough saved, accord­ing to a sur­vey by cred­it data mon­i­tor­ing com­pa­ny Exper­ian Con­sumer Services.

The study found that trav­el­ers, espe­cial­ly young peo­ple, tend to blow their bud­get and rack up debt on vaca­tion. And for the more than 80% of peo­ple who vaca­tion reg­u­lar­ly, accord­ing to Fat­Wal­let, there are steps you can take so tem­po­rary free­dom does­n’t add to your wor­ries when you return.

“You don’t want to come back with two weeks’ worth of mem­o­ries and two years’ worth of debt,” said Becky Frost, edu­ca­tion man­ag­er for Exper­ian Con­sumer Services.

The study, which sur­veyed 1,000 adults online in the sec­ond week of May, found that 49% of vaca­tion­ers accu­mu­lat­ed cred­it card debt when trav­el­ing, and 68% go over bud­get. For younger trav­el­ers, the behav­ior was even more risky. Fifty-two per­cent of Mil­len­ni­als came home with cred­it card debt, and 72% report­ed going over budget.

A sep­a­rate study by BMO Har­ris Bank last year found a sim­i­lar pat­tern. In that study, 32% of 18- to 34-year-olds said they were plan­ning to put a vaca­tion on cred­it, com­pared with 16% of 34- to 54-year-olds and 25% of those 55 and older.

The most com­mon sources of cred­it card debt in the Exper­ian study: hotels and air­fare, fol­lowed by enter­tain­ment and din­ing. Frost, who is plan­ning her own vaca­tion, said know­ing the com­mon sources of splurg­ing can help trav­el­ers plan better.

“The major­i­ty of peo­ple face unex­pect­ed costs whether you bud­get or not,” Frost said. “That helped me add more to what I’m sav­ing. It also makes me think twice. If I face an unex­pect­ed cost, is that me going into ‘vaca­tion mode’ with my mon­ey, or tru­ly a cost I can’t avoid?”

The most impor­tant thing, said Frost, is to make a pay­ment plan in advance. Oth­er­wise, you risk low­er­ing your cred­it score by going over your rec­om­mend­ed cred­it uti­liza­tion (30% of your lim­it) or miss­ing a payment.

“Cred­it usage does­n’t equal debt,” Frost said. “But if you do incur debt, make sure it’s for some­thing you’ll still enjoy while you’re pay­ing it off at home.”

Mack­ey McNeill, author and per­son­al finan­cial ser­vices provider, encour­ages her clients to think of the big pic­ture when planning.

“Ask your­self, ‘What’s the pur­pose of this vaca­tion?’ Free­dom, con­nect­ing with fam­i­ly, escape?” said the author of The Inter­sec­tion of Joy and Mon­ey. “If you put it on your cred­it card, that’s going to add wor­ry to your every­day life.”

The Nation­al Endow­ment for Finan­cial Edu­ca­tion, a non-prof­it for finan­cial lit­er­a­cy, offers some addi­tion­al tips for avoid­ing unex­pect­ed trav­el costs in their blog, Smart About Mon­ey: Set up auto­mat­ic bill pay when you are gone to avoid late fees, pack a cool­er of snacks and meals for the road and beware of extra hotel fees.


  • If you’ve already saved up for your vaca­tion, con­sid­er using a trav­el rewards cred­it card for your trip. That’s what Mack­ey McNeill, author of “The Inter­sec­tion of Joy and Mon­ey,” does. But pay off the whole bal­ance as soon as you return.
  • If you’re not sav­ing, get start­ed. But rather than pledg­ing to save hun­dreds per month and set­ting your­self up for fail­ure, McNeill sug­gests set­ting an auto­mat­ic trans­fer into a sav­ings account. Start as small as $5 a week. Skip a lat­te or two and work your way up.
  • If you’re in debt: Set a goal to be debt-free before wor­ry­ing about vaca­tions, said McNeill.

To read the arti­cle on USA Today please click here.