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Are Vacations Worth the Debt?

Updated on March 13, 2020
Amanda Bliss profile image

Amanda is a graduate student focusing on global economic trends.

Some days you just want to destroy everything on your work desk and escape into a hammock at the beach and listen into the ocean for five weeks, but we all know you can’t do that without any money.

You’d check how much you’ve saved from that exhausting job and finally confirm the fact that you really don’t have enough money for a trip or to repair the work equipment if you destroy it.

Still, you need to take a break somewhere far, possibly somewhere expensive. Stress is driving you crazy – you need to find a way to get money for a weekend getaway you’ll never forget.

If you’re asking for a magic solution for a free vacation, here’s a sign: if people tell you that you can take a vacation for free, they most likely want to kidnap you.

Don’t worry. For the sake of your sanity, you should know that there are ways to get money without savings.

Vacation Loans

This sounds like the perfect option: it’s cheaper than credit cards, but offers almost the same money. It’s an unsecured personal loan, which means you don’t need to give up your car or house if you don’t pay for it on time. Instead, you’ll repay in fixed monthly installments over a period of time you and your borrower already agreed on.

But remember that this option is not the best – you should always prioritize creating and sticking to a budget while taking your time to earn for a vacation with your own money. That way, your getaway can feel more well-earned.

How much did you get from a vacation loan depends on your past loans and your ability to pay it back.
How much did you get from a vacation loan depends on your past loans and your ability to pay it back.

What do you get from it?

How much did you get from a vacation loan depends on your past loans and your ability to pay it back.

Interest rates on personal loans are often lower than those in credit cards, but they also by lender and borrower. The better you qualify, the lower you have to pay your loaners back.

Well-qualified borrowers with the highest FICO scores (credit scores, which determine how well you handle the money you borrow) can qualify for loans with:

Origination fees are those charged by a lender on entering into a loan agreement to cover the cost of processing the loan,

  • Origination fees, which are required upon entering a loan agreement, are only charged under 2% of your loan
  • APR rates, charged for borrowing or earned through investment, are under 10% to 12%.
  • You can pay back for as long as seven years, though five years is most often the maximum

Meanwhile, less qualified borrowers with average FICO scores can loan for:

  • Origination fees charged under 4% instead of 2%
  • Rates are under 15% in addition to the origination fee
  • Three to five years of payments

Basically, the less qualified you are, the more you need to pay within a shorter amount of time.

APRs can go up to 17% of your loan every month, depending on which loaner you work with.

Interest rates on personal loans are often lower than those in credit cards, but they also by lender and borrower.
Interest rates on personal loans are often lower than those in credit cards, but they also by lender and borrower.

Remember this:

Shorter terms = lower total interest

Longer terms = higher total interest

While loaners can let you pay less in a month, depending on your monthly income, this will also give way to higher interest rates. Once you finish paying your debt, the amount you’ll pay back can reach almost twice as much as you loaned in the first place.

Make sure to compare multiple lenders, consider their fees, and budget your capacity to pay every month.

If your preferred loan takes more than what you can earn, it might not be worth taking the trip.

Then again, you might not have enough time regardless. Vacation loans are the cheapest, but they’re not the only option.

Line of Credit

Essentially, money is in demand. Typically offered by banks or credit unions, you can use it to rise to a maximum amount for a period of time that the borrowers and lenders agreed on.

Unsecured vs Secured Line of Credit

Lines are usually unsecured, but you can also opt to choose a home equity line of credit, or HELOC. This allows you to borrow money by the value of your home, or any asset that you personally own, like a savings account.

Secured loans that require a collateral like that usually offer lower payments, but higher interest. Inevitably, you’re going to have to pay for much more than a personal loan can allow.

Plus, if you don’t manage to pay back all those interests, your borrowers will technically own your home. You wouldn’t want to lose a house in exchange for a vacation, would you?

Similar to a personal loan, these also depend on your credit scores and monthly income.

What do you get from it?

More importantly, what do you get from lines of credit that you couldn’t get from personal loans? Well, a line of credit revolves.

Revolving credit offers more flexibility than a loan. It allows you to borrow with a maximum amount and pay interest only on what you used in a period of time set by you and your borrower.

As soon as you paid for everything you borrowed, plus a predetermined interest, you can use the maximum amount you initially borrowed again.


Line of credit is usually for issuers who aren’t sure when they want to use what they borrowed. If you’ve already decided when you want to leave, it might be best to plan for a personal loan, instead.

If you do use credit and you didn’t manage to pay it back on time, your assets or your future savings might suffer. If you’re already struggling financially, having access to that much money might bury you deep into debt.

A credit card also can finance your vacation, but...
A credit card also can finance your vacation, but...

Credit Cards

Then there are credit cards, the most obvious of options. It’s easy to say you can just swipe your problems away – it’s how people do it in shopping malls.

These cards allow you to borrow money with the promise that you’ll pay it later. If you don’t pay it in full, you’ll begin paying interest on top of what you borrowed initially.

What do you get from it?

Credit cards are the best option only when you almost have enough savings for the trip, but still need a little more support for your expenses.

For less hassle, you should also use this when you have upcoming funds to pay it back almost as soon as you get home from your trip.

Travel rewards cards also exist – the more often you use these, the more points or miles you can earn for airfare, hotels, car rentals, or possibly even cruises.

You can also earn airline companion tickets, which allow you to bring someone with you on your flight for only taxes and fees outside the cost of an actual ticket.


The perks have a massive drawback – credit cards often have the shortest payback time among all debt options. If you bought something with it that you couldn’t afford beforehand, it could lead you to much more debt than what you initially borrowed.

If you don’t know how to use a credit card, you’re bound to miss a deadline. If you do, there’s no turning back from there.

Whatever debt you may choose, make sure to:

  1. Negotiate with different lenders and banks to get the least interest fees for the least amount of time.
  2. Keep your credit score up! This allows you to gain the best deals from most lenders.
  3. Meet your deadlines – otherwise, you’ll end up in worse debt.

Remember that above all else, its best to budget. You’ll have much more peace of mind with much less guilt if you save up for it.

But if your schedule gets too tight to do it, the other options are always available.

P.S. You always can find cheaper destinations for your vacation. E. g. Batumi Georgia
P.S. You always can find cheaper destinations for your vacation. E. g. Batumi Georgia

have you already planned your vacation?

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