The following is a guest post by Fred, CEO at finder.com.
Americans know how to holiday, but while they seem to have nailed the whole ‘sitting on the beach, sipping a mojito’ part of kicking back, there’s an equally important aspect that it appears we’re overlooking: how you’re going to pay back that watered-down Bacardi. Welcome to debt lag.
Originally coined by Australian site finder.com.au, debt lag has been widely adopted as the financial burden that’s accumulated from overspending on credit while travelling. For America as a nation, that figure currently sits at $3.1 billion in interest accrued just from holiday credit cards. In fact, there are a few red flags that show we need to plan repayments just as carefully as we book our flights.
The Younger You Are, the More Likely You’ll Give Up Hope
A nation-wide study by finder.com recently revealed the state of America’s debt lag, and as it turns out, younger jet-setters tend to be more resigned to never repay their holiday debts. Nearly one in three (32%) of 18-29 year olds believe they will never repay their debts, while 36% of those in the next age bracket, 30-44, also have the same mindset.
From these findings, a central question arises: what’s the point of a once-off holiday if it means a potential lifetime of repayments?
Repayments: Diminish Your Quality of Life, or Be Smart
As it currently stands, a quarter of holidaying Americans plan on repaying their credit cards through reducing shopping spending and going out, while just 2% plan on utilising a balance transfer credit card. This is a glaring red flag as these types of cards are specifically designed for managing debt and providing a period of relief in which you can gain the upper hand on repayments. Alternatively debt consolidation loans can roll your numerous smaller debts into one low rate – unfortunately the same amount of us are actually considering using them.
This becomes even more alarming that the same amount of people would be willing to put themselves through paid clinical trial in order to get on top of their debt. Why are we being so extreme in our repayment planning? It’s time to review the tools available to you.
There is Some Good News
The three biggest travel ripoffs, as voted by US travellers, are:
- Excess baggage charges: 25%
- Being charged tourist prices by locals: 15%
- ATM withdrawal fees/credit card charges: 15%
And they’re all completely avoidable – that’s more than half of the most common travel gripes out of the way if you’re smart. Here’s a quick cheat sheet on how beat them:
- Find complimentary baggage services: If you compare the many baggage handling options you can find ones with waived or minimal fees, but it’s up to you to do the hard yards here. Worst case scenario, demand a discount/waived fee from your current service provider – you’re already paying them, so why should you be getting charged fees?
- Act local, pay upfront: This one might be a bit trickier, but knowing where the locals shop and always paying for goods and services upfront are two strong points to begin with. If you’re planning an elephant ride, for example, don’t wait until you’re on its back and leaning over the top of a mountain to ask for the bill.
- Find suitable credit cards: There are numerous credit cards in the market designed for travel, that waive atm and foreign conversion fees. Grabbing one of these for your travels could not only save you every time you hit the ATM, it could make carrying funds around a lot safer and hassle-free. It’s also a key consideration if you’re heading off in a group and want one central, fee-free place to house your funds.
Fred Schebesta is the CEO of the newly launched finder.com, a website that helps Americans make better informed financial decisions. Catch him on Twitter @schebesta