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Travelers rely on credit cushion for vacation expenses

Sienna Kossman

Vacations are for making memories, so some people justify indulging in fancy seaside dinners and parasailing tickets — even though the costs will blow their travel budget — by charging the extra expenses to a credit card.

If that line of thinking sounds familiar, join the club. An Experian survey of 1,000 U.S. adults found credit cards are the payment method of choice for most travelers, but that often results in overspending and card debt.

Travelers rely on credit cushion for vacation expenses

Of the individuals surveyed, 68 percent said they typically spend more than they expected to on vacation and 49 percent have accumulated card debt while traveling. Many have even used a credit card to pay for a vacation they couldn’t really afford (46 percent).

Millennials in particular rely heavily on plastic to fund their vacations. They said they plan to charge about 60 percent of their holiday expenses this summer and half of all millennial respondents said they’ve charged vacation expenses when they didn’t have enough saved to cover the cost upfront.

Before you head out on vacation, check out the following travel budgeting tips that can help keep you out of vacation debt — or at least prepared to repay it.

Can you afford to travel?
A vacation may offer a few days of bliss away from life’s responsibilities, but if your getaway puts you in debt, you might end up more stressed than relaxed upon your return. According to Experian’s survey, adults anticipate spending $2,275 on 2015 summer travel overall and charging $1,308 to credit cards. That’s a good chunk of change for most people, especially because 35 percent of soon-to-be vacationers haven’t saved for travel expenses in advance.

If money is tight but you still want to get away, see if there are ways to supplement your trip or adjust your plans to better suit your financial situation. Could you delay your vacation by another month? A couple extra paychecks could give you the money you need to take a guilt-free vacation if you start saving now.

You could also take a “staycation” instead. Exploring your own city will save a lot of money by eliminating the need for pricey summer airfare and lodging expenses.

If it’s too late to change your travel itinerary, look for ways to add money to your spending budget before you leave. Experian found that 33 percent of adults plan on using their tax refund to travel this year, which is a good option since a tax refund can act like a bonus for your budget. However, if you are severely in debt already, that tax refund may be better spent elsewhere.

If you weigh all your options and a summer getaway is still not in the cards, don’t feel bad. More than one-third of adults have canceled vacation plans because of budget issues before, according to Experian’s survey. There’s always next summer.

Plan for incidentals
Experian found that while 55 percent of travelers set a strict budget and plan on sticking to it, 64 percent of budgeting travelers said they still ran into unexpected fees while traveling.

No, not all “incidentals” are bad. Vacations should be a time to take advantage of rare opportunities so you wouldn’t want an ill-equipped budget to keep you from swimming with dolphins. Putting a little extra away can help you check some things off your bucket list.

If you don’t plan ahead, but believe an indulgence is justified (think: “You only live once”), go for it. Just be ready to tackle the debt later.

Address vacation debt immediately
Make a plan to address any excess card debt as soon as you get home to avoid interest charges and a mixed up budget for months to come.

Figure out how much you spent, how much you owe and where you will get the vacation debt repayment money you need. If the debt is spread among several credit cards, tackle the balance on the card with the highest interest rate first. The goal is to pay off the debt as soon as you can so interest charges don’t make the bloated cost of your trip even higher.

However, if your budget can’t support an immediate debt payoff, don’t panic. It’s better to steadily chip away at your debt than lose control of the rest of your finances. Try cutting spending elsewhere so you have more to put toward your card balances.

Finally, once you’ve paid off your debt, review your overall expenses for the trip, take what you learn about your travel spending habits and apply it to your next vacation. It’s never too early to start saving for next summer’s adventure.

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