At the onset of 2024, data from the Federal Reserve Bank of New York showed that U.S. household debt had reached a record high of $17.3 trillion, primarily due to an increase in credit card debt. At the time the data was collected, it was revealed that — despite the fact that a quarter still had outstanding debt from the 2022 holiday season — a third of Americans said that they anticipated going into debt over the course of the 2023 holiday shopping season.
It’s no surprise, then, that — per NerdWallet’s summer travel survey conducted by The Harris Poll, which surveyed 2,000 American adults — of the nearly half of Americans (45%) who said they plan to take a trip that requires a flight or hotel stay this summer, 83% said that they plan to put at least some of their upcoming travel on a credit card. Nor that, of those travelers, 20% (or one in five) say they’ll use a credit card to pay for travel expenses, but won’t pay off the balance within the first billing statement, carrying over the balance and risking costly interest charges instead.
To really put that in perspective, those same travelers say they’re likely to spend somewhere in the ballpark of $3,594, on average, on a trip. That equates to more than 118 million Americans spending a total of more than $424 billion on airfare and hotel stays this summer. I’m no mathematician, but…that’s a lot of travel-centric credit card debt.
It’s Going to Be Another Banner Year for Luxury Travel
It’s all gas, no brakes where spending is involvedNow, using credit cards for travel is hardly novel and definitely not all bad. On the contrary, there are actually loads of benefits to be gleaned from using select cards for travel (i.e. miles), which has to be taken into account when analyzing data like this.
That said, the survey is indicative of a few things, for sure — the first of which being that Americans, primarily because household expenses continue to grow faster than income, are comfortable with being in debt. (Although, it’s worth noting, that’s presumably mostly out of necessity.)
The second is that certain factors, like inflation, have made travel exponentially more expensive in recent years. Last spring, another NerdWallet analysis — which compiled data from the consumer price index by the U.S. Bureau of Labor Statistics — showed that travel costs had increased 9% over the past year and 20% versus 2019. It’s an undisputed fact that, whether at home or abroad, if you’ve got plans to travel in the year 2024, it’s going to cost you.
Lastly, and arguably most pertinent, is this: Americans are prioritizing travel more than ever before and at whatever personal cost. Call it a side effect of the pandemic, but people are taking longer trips (read: taking more time off of work), and spending more on them, at an unprecedented rate. And who could blame them? Quarantine is long over, but the ever-present possibility of being locked down at home lives on. Credit card debt isn’t ideal but, evidently for many, it outweighs the risk of never getting to take the trip at all.
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