Fear of missing out on holidays during the cost of living crisis could be leaving Aussie travellers with ‘debt lag’, with new research from Compare the Market revealing that as many as one in five people don’t pay for their vacation upfront.
Recent research from the travel insurance comparison site has found 19.1% of Aussies travellers will use a credit card, personal loan or Buy Now Pay Later scheme to pay for their holiday.* While these services allow people to book their holidays upfront, many are unaware of the impact it can have on their finances when they return home.
Speaking on the impact that putting a holiday on a credit card, Compare the Market’s Economic Director, David Koch, said that people should consider their options before taking a plunge in debt to make their holiday dreams come true, as people may get caught up in debt lag.
“I’m a firm believer that you should enjoy your life and take that well-earned holiday, as you never know what’s going to happen tomorrow,” Mr Koch said. “But that doesn’t mean you should be financially irresponsible when booking in that next trip. Always look at holidays that make sense for your budget.
“The Compare the Market team have done some calculations and found that financing a $5,000 holiday on a credit card with a 20% interest rate will take someone 49 years to pay back, if you only make the minimum repayments. In the end, that one holiday will cost them more than $20,000 in interest alone.
“Call me old-fashioned, but sometimes going for simpler vacations, ones that don’t cost and arm and a leg, like a family camping trip or discovering Australia’s hidden gems, will lead to happier memories than a trip to Disneyland or Universal Studios.
“Speaking from personal experience, some of our most cherished family holidays were the simpler ones we had here in Australia. Although they may have not been as glamourous as the South of France, they were stress-free.”
Despite Gen Zers being dubbed as the generation of instant gratification, they were the least likely generation to use credit cards, personal loans or BNPL schemes to pay for their holiday, and the most likely to pay for it all from their savings. In fact, it was Gen X that was most likely to reach for these devices to pay for their vacation.
| Payment method for next holiday | % of Gen Z holidaymakers | % of Millennial holidaymakers | % of Gen X holidaymakers | % of Baby Boomer holidaymakers |
| Save all the money in advance and pay in full at the time of booking | 70.7% | 64.4% | 58.4% | 57.3% |
| Use a credit card, personal loan or Buy Now Pay Later scheme to pay for it | 11.4% | 19.7% | 21.3% | 21.1% |
Compare the Market’s data also revealed that just over 14% of people surveyed don’t have their next holiday planned. While that might sound a bit soul-crushing, David Koch said that it may be good sense.
“We’re in a cost of lifestyle crisis now. It’s no longer just quick adjustments to our household budget that need shifting to make ends meet, but how we live overall,” Mr Koch said.“While we may have taken an international holiday annually with the family in the past, that’s no longer a reality for many Australians.
“However, if you ask your parents or grandparents if they were planning a big international getaway every year, they’ll more than likely say no; it’s a new phenomenon. So in that regard, we may just be going back to the status quo.
“At the end of day, a good holiday doesn’t mean you have to put yourself thousands of dollars in debt. It means that you’ve had a chance to relax, regroup and spend some quality times with your loved ones.”
Mr Koch’s top budget holiday tips
- Stay local. Consider taking a break domestically and ditch the jet-lag and the potential debt-lag after forking out thousands of dollars for a plane ticket to Europe. There are amazing destinations right across the country for you to discover, plus you won’t have deal with coming back a few days earlier, just so you can beat the jet-lag!
- Use the internet to your advantage in search of cheap fares. While old habits die hard, comparing your options for cheap flights and accommodation has never been easier. There are plenty of sites out there like Skyscanner, Webjet and Google Flights, which may show discounted flights or even routes, that you may have not been aware off prior. As for accommodation, the world (wide web) is your oyster, with plenty of option like Booking.com, Trivago and AirBnB all showcasing some cheap places to stay.
- Compare (and get) travel insurance before you go. You should always pack travel insurance wherever you decide to head off. Covering you from financial loss if your flight gets cancelled, luggage gets stolen or you have a medical emergency, travel insurance can be the backup you need in case anything goes wrong, and you’re not out by thousands of dollars.
*Compare the Market surveyed 1,010 Australians aged 18 and over in March 2024
-ENDS-
For interviews and more information, please contact:
Noémi Hadnagy | m: 0433 377 252 | e: [email protected]
Compare the Market is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.
