More Than Half of Americans (53%) Plan to Take Summer Vacations This Year, With Nearly a Quarter of Them Planning to Charge It on Their Credit Cards

According to the Cambridge Consumer Credit Index

AGAWAM, Mass., July 8 /PRNewswire/ — More than half of Americans (53%) plan to take vacations this summer that involve traveling at least 75 miles from their homes, up by 3 percentage points from 2004. Almost a quarter of them (23%) will be charging the vacations to their credit cards, up by 4 percentage points from a year ago, according to the Cambridge Consumer Credit Index. This year 60% will be paying for their vacations from their savings or checking accounts, down 14 percentage points from 2004, while 10% will be paying with cash, up by 9 percentage points from a year ago.

For a detailed year-to year comparison see table below:

Are you planning or have you already taken a vacation this summer that involves traveling at least 75 miles from your home?

2005 2004 2003 2002
– Yes 53% 50% 46% 51%
– No 47% 50% 54% 49%

Which of the following will be the primary method of payment you will use to cover the majority of expenses incurred for this vacation?

2005 2004 2003 2002

– Pay from checking or savings account 60% 74% 68% 65%
– Charge it to one of your credit cards 23% 19% 23% 23%
– Withdraw from an investment account 2% 2% 4% 1%
– Borrow money from relative or friend 4% 2% 2% 1%
– Loan from other bank or financial inst. – 1% 1% -
– Cash and other 10% 1% 2% 10%

Source: Cambridge Consumer Credit Index

“The results of the Cambridge Consumer Index wildcard question show that Americans are feeling increasingly confident enough about their finances to take vacations in record numbers. High and rising gasoline prices do not seem to have restrained vacation plans at all. It is also interesting to note that the percentage of Americans using credit cards to pay for their vacations rose from 19% last year to 23%, which is back to the level of the previous two years. While more Americans are using credit cards, the biggest increase was in those paying in cash, as that indicator jumped from just 1% in 2004 to 10% this year,” says Jordan Goodman, spokesperson and financial analyst for the Cambridge Consumer Credit Index.

The overall Cambridge Consumer Credit Index fell by 2 points from June to 63. The “Reality Gap,” which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, rose by 4 percentage points to 14 points. A month ago, 76% of Americans planned to pay off debt, while a month later only 62% actually did so.

The Cambridge Consumer Credit Index is a forward-looking economic indicator gauging consumer spending and debt. It is released on the fifth business day of every month to coincide with the Federal Reserve Board’s G19 release of consumer credit outstanding data.

According to Chris Viale, President and C.E.O. of Cambridge Credit Counseling Corp, “The increase in the number of Americans using credit cards to pay for their vacations in the face of increasing interest rates and minimum payment requirements concerns us, but we are encouraged by the big jump in the number of consumers using cash. This could be an indication that people are doing a better job of saving their money and sticking to a budget, which would be very good news.”

In conjunction with the Index, Cambridge Credit Counseling Corp. is releasing its monthly survey of people who have called in for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason they found it necessary to get help with their debts. From the 252 people who answered, this was the order of their responses:

1. My income has been reduced from a lower salary, less overtime or
layoff (31.0%)
2. I am frustrated with high bank rates and fees (26.1%)
3. I want to improve my ability to achieve future financial goals like
buying a house or saving for retirement (15.5%)
4. Other (12.0%)
5. I got into too much debt by overspending (6.6%)
6. Large medical expenses forced me to take on huge debts (5.8%)
7. My lack of financial education caused me to take on too much debt
(3.5%)
8. Recently divorced or widowed (1.3%)

For more information on the survey see
http://www.cambridgeconsumerindex.com/index.asp?content=client_survey

The Index survey is conducted by ICR (International Communications Research) of Media, Pennsylvania over five days in the week before the Index is released. Over 800 households are polled based on random-digit dialing, with all demographic and regional groups in America fairly represented. The Index has a margin of error of plus or minus three and one-half percentage points.

Related Articles