Credit card travel debt: A traveller's friend or a financial trap?

It's such a classic story that it's almost a cliche: you go on holidays to some exotic place, and pretty soon realise you haven't budgeted for anywhere near enough money. It's running out quickly. So you put something on the credit card. And then you put something else on the credit card. And then something else. And then pretty soon you're all out of real money and everything is going on that little piece of plastic, racking up bill after bill, purchase after purchase, until finally even the bank won't give you any more credit and you have to go home. 

This is how some travellers finance the dream: on credit. In debt. Not many people leave home with the intention of doing it, it's just something that happens. It's a gentle creep that begins with the idea that it will just be a few small things that go on there, and ends with the justification that you might never return to this amazing place and you can always pay off a credit card once you get back home. 

Using credit cards allows you to do things and see things and experience things that you really have no right to be able to.

Loads of people do it. It's almost a badge of honour among some travellers, the fact that they're living far beyond their means but they don't care, that travel now is more important than debt later, that they'll figure it all out once they get home. 

The thing no one ever tells you though, that no one mentions over beers in the hostel dorms or discusses over cocktails by the resort pool, is that all that debt isn't going away in a hurry. You might be paying it off for years. You might be hobbling yourself for a good part of the rest of your life. But hey, you're on holiday – you need to make the best of it, right?

A survey by creditcardfinder.com.au has found that 36 per cent of Australians who use credit cards on holiday won't be able to pay their debts off immediately when they get home. More than 200,000 travellers in 2015 will take more than a year to pay off their holiday expenses. 

There's clearly a part of our psyche that says it's OK to do this, that short-term gain is worth some manageable long-term pain, that travel and enjoyment are so essential that you can justify indulging in them even if you can't really afford it. 

This is not my idea of a good time. I'm not much of a gambler, or even an investor, so I've always preferred to do the saving before I travel rather than do the paying off once I return. Huge piles of debt scare me. Who knows what will happen when you get home?  

There are plenty of people who aren't so bothered though. I have a friend who went crazy on the credit card while she was in Europe once, coming home more than $10,000 in the hole, and then spent a fairly miserable 18 months paying it off. 

I know others who've had to take out personal loans just to wipe all their credit-card bills. Others still might never get back to evens. 

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In some ways I can understand the appeal. Using credit cards allows you to do things and see things and experience things that you really have no right to be able to. That piece of plastic is your chance to make the best of the time you have away. It's the option to accept a year or two of debt slavery in return for a few months of having the best time of your entire freakin' life. 

If you do all this with complete knowledge of the situation you're getting yourself into then it's hard to argue against it. Credit-card debt isn't much fun, but it could be outweighed several times by the great experiences you had while splashing the plastic fantastic at pricey restaurants and beautiful hotels the world over (or even at dodgy restaurants and cheap hostels – just because you can't afford it, doesn't mean it's expensive).

This is a first-world privilege that could be taken advantage of: have fun now, worry later. Travel today, pay tomorrow.

Even so, it's not something I'm going to do. I'd spend my whole holiday worrying about how I was going to pay all of this stuff off when I got home. I'd be too busy freaking out about a lifetime of debt to enjoy all of the things I was spending my non-existent cash on. I can't do the guilt-free spending of money I don't have.

If you can, best of luck to you. Just don't forget what awaits once the fun is over.

b.groundwater@fairfaxmedia.com.au  

See also: Science proves travel is the secret to happiness
See also: Should you use a credit card or a debit card overseas?

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