Is It OK To Go Into Debt For a Vacation?

Does your dream trip to Austria warrant paying compounding interest on your credit card? As Canada’s leading credit counselling agency, our answer is always no. Still, we know life has a way of blurring the lines between financial priorities and, well, general happiness.

And it’s true—travel makes us happy. More specifically, it improves our mood and reduces anxiety and depression.

Over 10 million Canadians travelled in 2023’s first quarter—a 7% increase from 2019. But 2023’s second quarter saw an all-time high for Canadian non-mortgage debt, at about $20,000 per person. The biggest culprit? Credit card debt. Yikes. Now, all that’s a combination of inflation, rising grocery costs, and interest rate increases that have hampered Canadian’s disposable income. But don’t be fooled—travel is also something Canadians are going into debt for, according to a recent study from Montreal travel booking agency FlightHub.

We’ll walk through some of the study’s findings, give our thoughts on whether it’s worth going into debt for travel, and suggest financially savvier ways to pay for your trip without relying on credit cards.

Canadians are going into debt to travel

Things are getting expensive, but that doesn’t warrant cutting travel out of the budget for many Canadians. FlightHub surveyed 2,000 Canadians to discover how they look at travel in the realm of necessary expenses. 

Here are some highlights from the study: 

• 48% of Canadians made budget changes to afford travel; 41% of those Canadians cut down on grocery expenses

• 28% of Canadians who couldn’t otherwise afford to travel relied on their credit cards to book trips

• 57% of Millennials reduced entertainment spending and made other compromises to fund travel

• 69% of Generation Z compromised with more working hours and reducing other expenses to afford to travel

Limiting Uber Eats and Amazon hauls to afford travel is one thing. But cutting out groceries and putting everything on your credit card? This behaviour indicates a need for more affordable travel options, according to FlightHub CEO.

But until that happens? Going into more debt isn’t the answer. 

You shouldn’t go into credit card debt to travel

And here’s why:

1. Travel debt is unnecessarily impulsive. The buy now, pay later attitude doesn’t serve your financial health. If you put a trip on your credit card, you’ll have to make monthly payments to repay it. But if you give yourself some time to save up for the trip, those repayments could simply be savings deposits to pay off the trip without debt. The only thing you need to do is wait. 
   
   
2. You sacrifice long-term financial health. More debt means less money for your future. The same goes for aspiring travellers who save up money for vacation yet still have a ton of debt to pay off from before. All this does is delay your financial stability. 
   
   
3. You’ll stress about money on (or after) your vacation: Imagine sipping on a margarita on the beach as financial worries race through your mind. All of a sudden, every second drink, extravagant dinner, or excursion has a negative connotation behind it since you can’t really afford it. Doesn’t sound like that fun of a vacation, does it? Or, maybe you don't feel that stress until you receive your credit card statement after you get home, but that regret can have a real impact on your vacation memories! That’s because going further into debt stresses us out—and for good reason. 

So, what’s the solution? Do you have to sacrifice travel if you’re already struggling to repay debt?

Save up for travel with budgeting and SMART goals instead

SMART financial goals are Specific, Measurable, Attainable, Relevant, and Time-bound—they’re helpful for any financial pursuit, whether it's repaying a hefty debt, saving for university, or even making your dream vacation happen. It puts a vision and timeline behind your budget and gives you a clear path forward.

For example: I will put $200 in a savings account every month for 15 months, to be used for a trip next January.

Start by exploring all the ways you can save money for your vacation. Sign up for price alerts, check out accommodation exchanges, and consider off-season travel. We chatted with digital nomad Chrissy Kapralos about these helpful tips and more in our 10 Tips for Affordable Travel article.

But once you’ve done all that, it’s time to crunch some numbers. Consider your income and debts and how much you need to set aside to repay in a reasonable timeframe. Anything that’s leftover from your other expenses can go toward a travel fund. You might consult our Free Budget Planner + Expense Tracker to stay organized.

Find debt relief with Credit Canada

Bottom line? Unfortunately, travel is still a luxury. While we commend some of the survey participants who limit nights out or take on extra shifts to afford a vacation, going further into debt to travel just isn’t financially healthy. 

Of course, that doesn’t mean you don’t deserve rest. If you find yourself considering debt to travel, start with a staycation and explore those local sights you tend to take for granted instead or visit a closer destination with fewer costs. And if you still can’t scratch that travel itch? Smart goals, budgeting, and a little help from our certified credit counsellors will land you on that plane to Italy debt-free in no time.

We offer completely confidential and expert credit counselling services to walk you through all your debt relief options. Whether you have hundreds or hundreds of thousands of dollars in debt, you can rely on us as your trusted guide and confidante, dedicated to getting you out of debt and back to life. Talk to a credit counsellor today!