Heading away? Why experts are warning Aussies about this $50,000 travel mistake
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As the winter chill sets in across Australia, it’s no surprise that many start dreaming of sun-soaked European boulevards or the bright lights of New York City.
Escaping the cold for a grand overseas adventure is a time-honoured tradition for Aussies, especially during the mid-year travel season.
But before you dust off your passport and start planning that dream getaway, there’s a major warning you need to hear—one that could have serious consequences for your financial future.
The $50,000 Holiday Trap: Is It Worth It?
It’s become increasingly common for Australians to fund their holidays with personal loans, sometimes to the tune of $50,000 or more.
While the idea of living it up in Paris or Rome without waiting years to save might sound tempting, experts are urging caution.
Tax expert Kiki recently told Yahoo Finance that taking out a hefty personal loan for a holiday can have long-lasting effects, especially if you’re hoping to buy a home down the track.
‘It’s a bit risky taking out a loan, especially in this environment where the banks are quite strict with borrowing capacity,’ Kiki explained. ‘Taking out a personal loan of $50,000 will definitely impact your borrowing capacity.’
‘If they're going on a holiday just to have a break and take some pictures, and it's not for a family reunion or anything of that sort, then I think it's a bit silly.’
How Are People Affording These Holidays?
The question of how Aussies manage to afford lavish overseas trips every year has sparked plenty of debate online.
One social media user, Brooklyn, was floored to discover that some people are taking out personal loans—sometimes as much as $50,000—to fund their travels.
For context, Brooklyn had budgeted $16,000 for two people to spend 10 weeks in Europe, and even that required diligent saving and sacrifice.
Also read: How to make your 2025 a financial success— by Noel Whittaker
‘I save diligently, I don’t really drink, I don’t really go out and do any of those things, and I can’t afford to go on these massive holidays every year,’ she said.
It turns out she’s not alone. Data from Finder shows that Aussies are increasingly turning to personal loans to pay for holidays.
In January 2020, $35 million in personal loans was approved for travel alone. Fast forward to July 2024, and that figure has jumped to $59 million. And while that’s still dwarfed by the $1.1 billion in car loans for the same period, it’s a worrying trend.
The Pressure to ‘Keep Up with the Joneses’
Why are so many people willing to go into debt for a holiday? According to Kiki, social pressure plays a big role. ‘People are trying to keep up with the Joneses and con themselves into these huge holidays just because others are jet-setting at the same time,’ she said.
Source: @sooklyn / Tiktok.
Finder’s research backs this up: more than 2.14 million Aussies would go into debt to pay for a holiday, and over a million feel pressured to organise travel plans they can’t really afford.
The Real Cost of Holiday Debt
Personal finance expert Sarah Megginson warns that taking out credit for a holiday can be a slippery slope.
‘A growing number of Aussies are drowning in debt to be able to travel,’ she said. ‘While it’s tempting to splurge on a holiday, taking out credit to do so can cause long-term financial consequences and keep you stuck paying off debt for months or even years.’
And it’s not just about the money. Having a large debt hanging over your head can take a toll on your mental health, too. The stress of repayments, especially if your circumstances change, can quickly turn those happy holiday memories into a source of anxiety.
Also read: Emergency crew responds after Qantas pilot falls ill. What happened?
Credit Cards vs. Personal Loans: Is There a Better Option?
Some people argue that using a credit card for travel is no different from taking out a personal loan.
While both can carry high interest rates (sometimes over 20%), there are some key differences.
For one, credit cards often come with perks like frequent flyer points and travel insurance, and if you pay off your balance in full each month, you can avoid interest altogether.
Personal loans, on the other hand, usually have fixed repayments over a set period—often two to five years—and you might end up borrowing more than you actually need.
Plus, when it comes time to apply for a mortgage, banks may look less favourably on a personal loan taken out for a holiday than on credit card spending.
Smart Ways to Save on Your Next Holiday
If you’re itching to travel but don’t want to end up in debt, there are plenty of ways to keep costs down:
Read next: Tiny sign reveals surprising rule at Australia’s top holiday destination
Have you ever taken out a loan or used credit to pay for a holiday? Do you think it’s worth it, or do you prefer to save up before you travel? We’d love to hear your thoughts and tips for affordable travel in the comments below!
Escaping the cold for a grand overseas adventure is a time-honoured tradition for Aussies, especially during the mid-year travel season.
But before you dust off your passport and start planning that dream getaway, there’s a major warning you need to hear—one that could have serious consequences for your financial future.
The $50,000 Holiday Trap: Is It Worth It?
It’s become increasingly common for Australians to fund their holidays with personal loans, sometimes to the tune of $50,000 or more.
While the idea of living it up in Paris or Rome without waiting years to save might sound tempting, experts are urging caution.
Tax expert Kiki recently told Yahoo Finance that taking out a hefty personal loan for a holiday can have long-lasting effects, especially if you’re hoping to buy a home down the track.
‘It’s a bit risky taking out a loan, especially in this environment where the banks are quite strict with borrowing capacity,’ Kiki explained. ‘Taking out a personal loan of $50,000 will definitely impact your borrowing capacity.’
Aussies are increasingly taking out large personal loans, sometimes up to $50,000, to fund overseas holidays, but experts warn this can seriously affect their ability to get a home loan in future. Image source: Ben Mater / Unsplash.
‘If they're going on a holiday just to have a break and take some pictures, and it's not for a family reunion or anything of that sort, then I think it's a bit silly.’
How Are People Affording These Holidays?
The question of how Aussies manage to afford lavish overseas trips every year has sparked plenty of debate online.
One social media user, Brooklyn, was floored to discover that some people are taking out personal loans—sometimes as much as $50,000—to fund their travels.
For context, Brooklyn had budgeted $16,000 for two people to spend 10 weeks in Europe, and even that required diligent saving and sacrifice.
Also read: How to make your 2025 a financial success— by Noel Whittaker
‘I save diligently, I don’t really drink, I don’t really go out and do any of those things, and I can’t afford to go on these massive holidays every year,’ she said.
It turns out she’s not alone. Data from Finder shows that Aussies are increasingly turning to personal loans to pay for holidays.
In January 2020, $35 million in personal loans was approved for travel alone. Fast forward to July 2024, and that figure has jumped to $59 million. And while that’s still dwarfed by the $1.1 billion in car loans for the same period, it’s a worrying trend.
The Pressure to ‘Keep Up with the Joneses’
Why are so many people willing to go into debt for a holiday? According to Kiki, social pressure plays a big role. ‘People are trying to keep up with the Joneses and con themselves into these huge holidays just because others are jet-setting at the same time,’ she said.
Source: @sooklyn / Tiktok.
Finder’s research backs this up: more than 2.14 million Aussies would go into debt to pay for a holiday, and over a million feel pressured to organise travel plans they can’t really afford.
The Real Cost of Holiday Debt
Personal finance expert Sarah Megginson warns that taking out credit for a holiday can be a slippery slope.
‘A growing number of Aussies are drowning in debt to be able to travel,’ she said. ‘While it’s tempting to splurge on a holiday, taking out credit to do so can cause long-term financial consequences and keep you stuck paying off debt for months or even years.’
And it’s not just about the money. Having a large debt hanging over your head can take a toll on your mental health, too. The stress of repayments, especially if your circumstances change, can quickly turn those happy holiday memories into a source of anxiety.
Also read: Emergency crew responds after Qantas pilot falls ill. What happened?
Credit Cards vs. Personal Loans: Is There a Better Option?
Some people argue that using a credit card for travel is no different from taking out a personal loan.
While both can carry high interest rates (sometimes over 20%), there are some key differences.
For one, credit cards often come with perks like frequent flyer points and travel insurance, and if you pay off your balance in full each month, you can avoid interest altogether.
Personal loans, on the other hand, usually have fixed repayments over a set period—often two to five years—and you might end up borrowing more than you actually need.
Plus, when it comes time to apply for a mortgage, banks may look less favourably on a personal loan taken out for a holiday than on credit card spending.
Smart Ways to Save on Your Next Holiday
If you’re itching to travel but don’t want to end up in debt, there are plenty of ways to keep costs down:
- Book flights well in advance to snag the best deals.
- Compare accommodation prices across multiple sites.
- Travel just before or after peak season for lower prices and fewer crowds.
- Look for free walking tours and other budget-friendly activities.
- Put your savings in a high-interest account to maximise your holiday fund.
Read next: Tiny sign reveals surprising rule at Australia’s top holiday destination
Have you ever taken out a loan or used credit to pay for a holiday? Do you think it’s worth it, or do you prefer to save up before you travel? We’d love to hear your thoughts and tips for affordable travel in the comments below!
