A wish for destination debt: 1 in 8 Australians pay for their holidays on credit

Vacationers are going into debt trying to pay for their next trip, according to new research from Finder.

A nationally representative survey of 1,086 respondents found that one in eight Australians (12%) were considering borrowing money to pay for their next getaway.

It is 2.3 million holidaymakers who will return in debt.

The research found that 7% planned to use a credit card to pay for their next trip, while 3% would rely on buy-it-now, pay-later services to fund their travel plans.

A further 2% of Australians will take out a personal loan or borrow money from friends and family to make their travel dreams come true.

Amy Bradney-George, credit card expert at Finder, said Australians had holidays on their minds as border restrictions eased.

“A lot of Australians can’t wait to get back on vacation, but unfortunately their bank balances aren’t as ready.

“Not everyone waits until they have the money up front to break their travel break.”

According to the ABS, there were 227,230 overseas departures in December 2021 – the highest number since international border restrictions were imposed in March 2020.

More than half of Australians (56%) dip into their savings when booking holidays.

Bradney-George said some travelers prefer to book their vacations with a credit card because of the free travel insurance offered on some cards which can provide additional financial protection.

“While this may seem like an attractive benefit, it’s not the best fit for everyone as it can lead to high annual fees.”

Bradney-George said there are plenty of ways Australians can save money on their trips through smart planning.

“Travel sales are back, so be sure to shop around to see what’s available. Don’t rule out international airline sales either – they sometimes offer very competitive deals from Australia.

“If you take a credit card with you, set up automatic repayments to reduce or avoid interest charges while you’re away.

“Right now, there are frequent flyer credit cards that offer enough bonus points for a flight abroad. Plus, you’ll earn points on all your daily spend with the card, which could be used for future trips,” Bradney-George said.

Men (15%) are more likely than women (10%) to use credit to finance their holidays.

How do you mainly intend to finance your next vacation?
Savings 56%
I don’t plan to travel 22%
I do not know ten%
Credit card 7%
Buy now pay later 3%
Personal loan 1%
Borrow from friends/family 1%
Source: Finder survey of 1,086 respondents, February 2022

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John A. Bogar