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Why debt lag is a big problem after your vacation

Combined interest on vacation credit card spending in the US is almost $2.7 billion. Here’s how much we’re wasting, across states, regions and sexes.

Using your credit card while on vacation seems flexible and convenient, but if you don’t pay it off promptly, you’re likely to suffer from a bad case of “debt lag”. Almost two-thirds (66%) of us use a credit card while on vacation, and a typical American runs up a debt of $1,518 on their card during the trip.

Which regions are the worst offenders?

That figure varies depending on where you live. Here’s the average debt based on region:

US RegionTotal
Pacific$1,813
East North Central$1,538
Middle Atlantic$1,516
South Atlantic$1,505
Mountain$1,451
West South Central$1,448
New England$1,366
West North Central$1,361
East South Central$1,284

Which states have the most debt lag?

The interactive map below shows the average debt per state. (We haven’t included data for states where the number of respondents was too low to calculate a number.)

How do we plan to deal with that debt?

Americans favour a variety of tactics to deal with credit card debt accumulated on their vacation.

Reduce spending on shopping/going out25%
I will pay it off after my next pay19%
Work overtime, take extra shifts or get a second job10%
I will just pay off the minimum each month7%
Agree to do paid clinical  trials2%
Do a balance transfer to a new credit card2%
Take out a loan2%
None of these/Other34%

Age and sex

Debt lag is a bigger problem for men than women, with an average figure of $1,616 for males and $1,431 for females.

Debt levels also rise as we get older, possibly reflecting increasing incomes. 18-29 year olds accumulated $1,130 on average. Those aged 30-44 averaged $1,564, 45-59 year olds averaged $1,585 and those aged over 60 averaged $1,602.

Those over 60 were the most likely to pay off their debt immediately, with 73% doing that. The worst figures were for 30-44 year olds, at 49%. The figure was 57% for 45-59 year olds and 67% for 18-29 year olds.

Tips for avoiding debt lag

So how can you avoid debt lag? Follow these simple tips:

  • Set a travel budget before you go Know how much you plan to spend before you travel. While this might seem like obvious advice, 20% of Americans don’t set a vacation budget.
  • Stick to that budget Having a budget doesn’t help if you ignore it at the first opportunity. A quarter of our survey respondents blew out their budget by up to 20%.
  • Pay off your debt promptly Almost 40% of us don’t pay off our credit cards as soon as we return from holiday, and that’s when the interest payments really start to hurt. Worryingly, 6% of us still haven’t paid off vacation debt a year after incurring it.
  • Examine balance transfers If you do have debt lag after your vacation, a balance transfer to a lower-rate card can help you pay off that debt faster.

Methodology

How we worked this out: Responses from 3,031 Americans to our debtlag survey were used to calculate compound interest paid based on respondents’ stated credit card debt and the time taken to pay the debt off. We used a vacationing population size of 120 million based on 44% of adult American citizens who go on vacation annually, based on data from the US Census Bureau and results of a survey conducted by Allianz Global Assistance.

Picture: Brent Nashville, licensed under Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (image cropped)

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