Cost-of-living issues are not going to stop Australians from holidaying now – and paying for it later – in increasing numbers with more than 22 per cent relying on credit to fund their travel dreams in 2025 and delaying that holiday debt hangover.
The latest Compare the Market study found that while the majority of Aussies (61.8%) surveyed would prefer to save up and pay for their trip in full at the time of booking, many are willing to put their finances at risk by booking their holiday on credit.
More than one in 10 (11.6%) Aussies would fund their travel dreams with a credit card and 6.1 per cent would use ‘buy now, pay later’ (BNPL) services.
A smaller percentage (2.7%) say they’d rely on their friends, family or travel companion for an IOU, while 1.8 per cent would opt for a personal loan and 1.5 per cent would redeem their airline membership points.
A similar study showed almost three million Aussies admit to booking holidays they can’t afford in 2025.
Younger travellers are more likely to fall into the debt lag trap with Gen Z (26.3%) and Millennials (25.5%) using some type of credit or loan to pay for a holiday.
Compare the Market’s analysis also shows Aussies will budget an average of $6,168 for their next holiday.
While options to pay by credit or BNPL services make those travel dreams a reality now, finance experts warn that credit cards and loans can attract huge interest rates, making that holiday package not so attractive in the long run.
According to Compare the Market, financing a $6,168 getaway on a credit card with a 20 per cent interest rate would take 54 years and six months to pay off with minimum repayments on the credit card,
Travellers would end up spending $33,176 in interest alone – more than five times the amount of the $6,168 holiday.
With agencies offering flexible ways to pay for trips, it pays for travellers to understand the T&Cs before jetting off or setting sail and take out travel insurance for any unforeseen circumstances that occur before your departure date.
