A worrying number of Americans plan to go into debt for their vacation

The Fed has raised rates to cool down the economy—hopeful that consumers would spend less. But a substantial number of Americans might not be getting the message.

According to a new Bankrate report, surging housing prices and rampant inflation have had a major impact on how many Americans are going on vacation this year.

Just 53% are planning a summer vacation in some form—and overall, only 12% intend to head to an international destination.

Perhaps most worryingly, 36% of respondents are prepared to go into debt for the experience—with 62% planning to use credit cards for some of their expenses.

This isn't necessarily a bad thing—especially for the 43% who say that the balance will be paid off in full when it is owed. More problematic is that 26% intend to gradually settle the debt over multiple billing cycles.

So, while taking advantage of credit card perks is smart, the high interest rate they charge more than offsets the benefits if the balance is not paid in time.

Bankrate analyst Ted Rossman is pretty blunt when it comes to irresponsible borrowing—warning:

"I don't want to tell people they can’t have any fun, but I do worry about taking on debt for discretionary purchases such as vacations, especially with credit card balances and rates at record highs."

A summer of spending

A smaller number of those polled did say that they plan to borrow for travel using credit products that are less expensive.

8% of respondents intend to use a "buy now, pay later" service, 5% will take out a personal loan to fund their vacation, and another 6% plan to borrow the cash from their family and friends.

The Federal Reserve has raised concerns about the rise of BNPL loans, which remain largely unregulated.

In a recent study, the central bank even warned it has become a gateway drug into debt-financed spending. A Harris Poll survey earlier this year went on to reveal that 43% of consumers using such products are behind on their payments.

There's also a huge generational divide when it comes to going into debt for non-essentials. Only 22% of Boomers would be prepared to take this step, rising to 42% of Gen Z and 47% of millennials.

This could be a sign that younger consumers are vying to catch up for lost time after the Covid pandemic—or keep up with friends on higher salaries for fear of missing out.

Bankrate's advice is to look into 0% APR deals, track down credit cards with generous sign-up bonuses, or make use of any points and Airmiles sitting idle in accounts.

Failing that, Rossman says, "If going somewhere isn’t feasible this year, at least take some time off to relax and recharge close to home."