With the nice weather, agreeable economy and vacation season underway, the urge to travel is beckoning Americans like never before. Memorial Day weekend this year kickstarted summer getaways for a record number of people, according to AAA.
But what to do if a beach holiday isn’t in the budget right now? Turns out, many people are taking out loans to pay for travel, according to Marketwatch.com.
Vacation loans: Should you go into debt for a getaway?
There’s a whole cottage industry set up to hand over hundreds or thousands of dollars to would-be travelers so that they can spend a weekend on the shore and take advantage of the amenities in posh hotels. In addition to travel companies, players in other industries are starting ancillary businesses and forming partnerships with lenders to get in on the market.
Lightstream, a division of SunTrust Bank, offers borrowers interest rates to the tune of 3.09% to 14.24%. Airlines like JetBlue offer monthly payments on airfare with APRs starting at about 9%. And services like CheapAir.com (which partners with financial company Affirm) also allow you to finance your plane tickets.
But before you sign the dotted line, here are a couple questions to think about: Do vacation loans make financial sense? If you’re a cash-strapped traveler, should you be taking out a loan to go somewhere far away?
What Clark says about vacation loans
Here’s what money expert Clark Howard says about vacation loans: “As much as I love a bargain, never go into debt to get a travel deal.”
Clark says that if you’re thinking about financing a trip, its true costs may not be worth it: “Travel is a lifestyle, not a necessity.”