Everybody wants to take a vacation. Unfortunately, in times like these, not everyone can afford one. Going on a holiday can be expensive, and the final price tag may be more than you have in savings.
A vacation cash advance can help you cover these expenses, but should you borrow money to finance your flights of fancy? While these cash advances give your budget a considerable boost, they come with rates and fees that mean you’re paying more for something you can’t afford in the first place.
Why Are Vacation Cash Advances a Bad Idea?
While these cash advances offer a shortcut to a much-needed getaway, this kind of borrowing goes against popular advice. The line of credit experts at MoneyKey join countless other financial professionals who only recommend cash advances for financial emergencies.
They’re an option if a flat tire prevents you from getting to work, and you can’t stretch your budget to fix it in time for you next shift — not a way to go on a holiday.
What’s the difference between these two scenarios? Your car may be an essential if you need it to earn your paycheck and pay bills. Unlike a vacation, this unexpected repair must be completed if you expect to earn a living.
The only possible exception to this borrowing rule is if you must travel for a funeral and can’t afford to make it on your own. You’ll have to weigh your options about putting this on credit.
You also have to think about the cost of borrowing. Any cash advance, credit card, or line of credit comes with interest and finance charges that apply to the principal you borrowed. This means you’ll be paying more than the upfront cost of your vacation over the lifetime of your cash advance.
Each scheduled payment will tie up your budget until you close the account. Having less cash on hand can leave you in the lurch if you run into an unexpected emergency before you pay off what you owe.
Why Do People Take Out These Loans?
Vacations have always been a symbol of financial freedom, but it’s unattainable for people more than ever before. Record-high inflation has pushed up the prices of most consumer goods and services, including flights, hotel accommodations, and tourist sites.
According to CBS News, flights have increased by 30 percent compared to May 2019. Hotel prices aren’t far behind at 29 percent, and resort prices exceeded both by climbing to 33 percent.
As travel expenses rise, the number of people who can genuinely afford a trip will lower. As a result, vacation cash advances may seem more tempting than ever.
What Can You Do Instead?
Rather than borrowing money, consider these budget-friendly alternatives instead:
- Delay your trip so that you have more time to save up what you need
- Adjust your expectations and visit a less expensive destination at off-peak times
- Plan a staycation instead, learning to find relaxation or excitement in your own neighborhood
- Put credit card rewards to good use, trading them in for airfare, accommodations, or rental cars — just don’t spend more than you can afford to earn points
While cash advance loans and lines of credit have a purpose in your finances, they aren’t meant to finance a vacation. It’s better to save your money and organize a holiday on your own dime.