Should you book a holiday even if it means getting into debt?

It depends on the individual’s financial situation and priorities. If they can afford to pay off the debt and the holiday will bring them joy and relaxation, then it may be worth it. However, if they are already in a difficult financial situation and the debt will cause further strain, it may be better to wait until they have saved enough to pay for the holiday in cash. It’s important to weigh the benefits and drawbacks and make a decision that aligns with one’s financial goals and values.

UK consumers fear getting into debt

 

With a looming recession, rising interest rates, and fewer people able to save money for a rainy day, many households have expressed concerns about falling into problem debt.  The report by the personal finance experts at NerdWallet UK reveals that almost three quarters (74%) of consumers currently in debt fear becoming trapped by debt in the future.

Women were more likely to fear falling into problem debt than men. The report shows 60% of women admitted to debt concerns compared with just 41% of men,.

 

Brean Horne, personal finance expert at NerdWallet UK, said: 

“Borrowing allows us to pay for goods and services without having to cover the up front cost ourselves. It’s very common for consumers to have some form of debt – but it’s important to ensure that you can afford repayments before taking out any credit agreement. Borrowers who manage their repayments and pay off their debt on time are unlikely to run into any issues. However, shoppers purchasing more than they can reasonably afford may be putting themselves at risk, especially as the cost of living continues to rise.

“If you feel like your debt is piling up and becoming unmanageable, it’s important to seek help and take action immediately. There are many tried and tested ways to get your finances back on track, including prioritising or consolidating any outstanding debts, as well as speaking to your lenders to discuss your specific finances and realistic repayment options.

“Customers tempted to use different forms of borrowing should take note of all terms and conditions and make sure they understand how much they’ll be repaying and when.

“Calculating your overall debt can seem daunting, especially if you have fallen behind on your repayments. But understanding how much you need to repay can help you make a plan and take action to clear your debt.

“Once you know how much you currently owe, the next step is to make a budget to work out your monthly income and spending.

“You don’t have to struggle with debt alone. There are lots of resources and services to help you pay off what you owe. Contacting a free, independent debt charity or service will help you find the support and guidance you need to get your finances back on track. A debt adviser will be able to talk through your financial circumstances and help find the best way to deal with your debt.”

Holiday bookings surged at the start of January which saw holidaymakers spend roughly 5% more than last year despite finances being squeezed by the cost of living

With the cost of bills and everyday essentials increasing, Brits have turned to booking a summer holiday as a way to escape the cost of living blues and have something to look forward to. However, it’s apparent that despite the recent surge in holiday bookings, for many a holiday is not an option due to higher costs.

Although this doesn’t seem to be holding some people back as a recent report by the personal finance experts at NerdWallet found that 18% of Brits currently in debt admit to relying on borrowed money in order to fund a getaway.

The report also revealed that the average time it takes for Brits to pay off their debt is 1.1 years which indicates that many holidaymakers will still be financing their trip long after their tan has faded.

It’s apparent that older adults are more likely to get into debt to fund a holiday with 24% of adults aged 34-45 and 21% of 45-54 year olds admit to using borrowed money in this way, in comparison to just 13% of 18-24 year olds and 16% of 25-34 year olds. 

 

Further information on the Household Debt Report can be found here, and a press release on the report can be found below.