April 09, 2014

3 Reasons Why Funding Your Travels with Debt is a Bad Idea

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Swiping a credit card is the easiest thing in the world.  No fumbling with cash, no wondering if there's enough in your checking account to cover the purchase, no hunting down a pen to write a check (although I haven't seen an individual pay by check in ages!) - it's quick, effortless, and all too often, done without exerting any thought into the actual cost of the purchase.  After all, it feels like Mr. Visa is paying for it, not you!

I have a healthy apprehension and respect for credit cards, thanks to that time in college where I maxed out my credit card for the sake of a spring break trip and spent four years paying it down to a zero balance.  I think it's good to have credit cards on hand for emergencies, but paying for your travels with debt is never a good idea.  Here are three reasons why:

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1.  You're hurting your future self.  The cost of your trip increases exponentially, thanks to interest.  Instead of that round-trip plane ticket to Europe costing only $1,000, it will cost you anywhere from $1658 to $2,329 - and it would take you 6 to 15 years to pay off!!!  (Calculated based on 16% APR with a monthly payment of $10 to $20.)  This jeopardizes your future financial security and your future travels.

2.  You're bringing stress along for the ride.  If you're like me, it can be hard to shut off your brain and just focus on the present joys - even under the best of circumstances!  Instead of relaxing on your trip, you will be thinking about how much you owe Mr. Visa for the plane tickets, hotel bills, train fare, etc.  Instead of your head being full of the sights and sounds of the day, it will be full of dollar signs and red-inked balances.  And when you return home, instead of being able to start saving up for your next trip, you'll be paying off your past trip.  Do yourself a favor - make sure all your big travel purchases are already paid for before you even leave home.

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3.  Debt is a slave master.  It snowballs out of control before you know it.  Like I said before, it's just too easy to swipe that card!  Just keep in mind, though, that even with money-saving tips and travel hacks, traveling is and always will be a luxury.  Putting yourself in debt for a luxury is foolish.

With that being said, I do think booking your travels with a credit card is a good deal... IF you pay it off immediately!  Many credit card companies offer special traveling perks, such as extra frequent flier miles, possible seat upgrades, etc.  Plus you have the added transaction security with a credit card versus a debit/bank card.  So long as you have the cash savings to back it up, go ahead and let Mr. Visa take the hit for a few minutes until you put the balance back to zero!

What do you think about debt?  Is it a good idea to go into debt for traveling?

~ Just a Thrifty Gypsy


  1. So very true Katrina, We use credit cards as we move around but always pay off the total balance before the due date. Leaving savings in the high interest account as long as possible. You have to make sure you do that or, like you said it will cost you down the line.
    Cheers James

    1. Credit cards are wonderful tools so long as you're sensible with them! Many people use them to live beyond their means, though, which is why they can be dangerous. Sounds like you have a good system going with earning as much interest as possible before paying off the card!


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