3 types of debt that can be less expensive than credit card debt

If you’re planning to take on debt to pay for a summer vacation, putting it on your credit card might be an expensive decision. That’s because credit card interest rates are high — currently averaging almost 21%. For every day that you carry a balance, you’ll pay interest on those vacation expenses (and you’ll also pay interest on your interest).

A word of caution that it’s not the best idea to spend beyond your means for a vacation. You could avoid going into debt for a big trip by doing things such as saving, travel hacking with credit card rewards and looking for deals.

If you still want to borrow money, here are three forms of debt that might be less costly than credit card debt:

Personal loan. The best personal loans can come with lower interest rates than credit cards. If you need a large chunk of change to pay for travel expenses up front, you could apply for a personal loan. Having good credit may increase your chances of being approved and getting a lower rate. Just keep in mind that you’ll still be paying interest as you make payments over time.

Buy now, pay later (BNPL) service. You could use a BNPL app like Affirm, Afterpay, PayPal in 4, Perpay or Sezzle to make interest-free payments over time on large purchases such as flights or hotel stays. You’d be joining the 8% of survey respondents planning to use a BNPL service to pay for summer travel.

Zero-percent intro APR credit card. Applying for a 0% APR credit card could buy you time to make purchases that you pay off later, interest free. Just consider whether you can pay off the balance by the time the introductory period ends — usually within 12 to 21 months. After that, the card’s regular APR will kick in and you’ll start racking up interest. Also remember that applying for a new credit card can temporarily ding your credit.

All figures, unless otherwise stated, are from YouGov PLC. Total sample size was 2360 adults, of whom 1,262 are planning a summer vacation and 1,098 are not. Fieldwork was undertaken between March 19-20. The survey was carried out online. The figures have been weighted and are representative of all U.S. adults (ages 18+).