Should You Use a Personal Loan to Fund a Vacation or Charge It on a Credit Card?

The answer might surprise you.

Going on vacation can be a fun thing to do. It can also be a very necessary thing. After all, taking a break from the grind could improve your mental health and help you avoid burnout.

A late 2022 survey by IPX1031 found that 91% of Americans plan to travel in 2023. And 51% of Americans plan to travel more in 2023 than they did in 2022.

But taking a vacation isn't necessarily an inexpensive prospect. And if money has been tight, you may be wondering whether you should finance a vacation with a personal loan or a credit card. You may not really like the answer, however.

Personal loan versus credit card: Which is the better choice?

In the context of paying for a vacation, the answer to this question is actually "neither."

It's one thing to borrow money to pay for an essential expense that can't be put off, like a home or car repair. And you can also argue that it's reasonable to borrow money to finance something like furniture for your home, which is essential to your ability to function daily.

A vacation might seem like a necessary thing. But it actually isn't.

Not being able to go to Miami for a long weekend or Paris for a week won't negatively affect your quality of life the same way not having a kitchen table and being forced to eat on the floor will. Similarly, fixing a non-working heating system in your home is something you can't put off. Going on a trip is something that can wait until you've saved up the money for it.

If you're thinking of borrowing money in some capacity to travel, you should know that technically, a personal loan might be a more affordable option than racking up a credit card balance. But that doesn't mean you should take out a personal loan to finance a trip.

While you might pay less interest on a personal loan than a credit card, at the end of the day, you're still racking up debt. And you should really only do so for unavoidable expenses that can't wait.

You can get a break without getting away

It's definitely important to take time off from work, clear your head, and recharge. But you don't need to leave the state or country to do that. And if you can't afford to travel right now, opt for a staycation instead.

Spend a week exploring your city, reading books, binge-watching Netflix, and reconnecting with friends. Volunteer at the local animal shelter for a day (because nothing reduces work-related stress like cute puppies). Or go visit your grandmother across town and let her shower you with cookies and tea while you watch daytime talk shows together.

There's nothing wrong with wanting to take a vacation, and once you've saved up the money, you should absolutely go ahead and book your flight. But until then, don't borrow money to travel. Having debt hanging over your head can be a very stressful thing. And it might negate the mental health benefits of having taken that vacation in the first place.