More than Half of Americans will Take Vacation this Summer; 23% Plan to Use Credit Cards

Agawam, MA ? 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.

“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.

These findings are the result of monthly nationwide telephone polls of more than 800 adults, conducted by ICR/International Communications Research The most recent survey was made last week, and was sponsored by the Debt Relief Clearinghouse.

The overall Cambridge Consumer Credit Index fell by 2 points from June to 63. The Index fell on two questions: use of debt in the next month and plans for taking on debt in the next six months. 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 273 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 (4.0%)
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 Cambridge Consumer Credit Index number is a composite of these three questions:

1. In the past month, have you taken on more debt or paid off debt?

The Index reads 76 on this question, up by 14 points from June.

In July, 38% of Americans say they have taken on more debt, with 23% taking on a little and 14% taking on a lot more debt. Conversely, 62% of Americans have paid off debt, with 43% paying off a little and 20% paying off a lot.

2. In the next month, do you anticipate taking on more debt or paying off debt?

The Index reads 40, down by 8 points from June.

In July, 20% plan to take on more debt, with 5% planning to take on a lot and 15% planning to take on a little debt. Conversely, 80% plan to pay off debt, with 62% paying off a little and 18% paying off a lot. In June, 24% planned to take on debt and 76% planned to pay off debt.

3. In the next six months, do you expect to take on debt because you are thinking of making a major purchase such as a car, education, appliance, medical procedure, furniture or carpeting?

The Index reads 72 on this question, down by 12 points from July.

In July, 36% of Americans plan to take on more debt to make such purchases, with 10% taking on a lot of debt and 27% taking on a little more debt. In contrast, 64% of Americans plan to pay off debt in the next six months, with 42% expecting to pay off a little and 21% expecting to pay off a lot. In July, 42% of Americans planned to take on more debt, while 58% planned to pay off debt.

“The results of the Cambridge Consumer Credit Index show that consumers are becoming increasingly cautious in taking on new debt. While the amount of debt they took on last month shot up, their intentions for taking on more debt in the short term and long term fell significantly. Rising gasoline prices and short-term interest rates seem to be making consumers more cautious about adding to their existing debt loads,” says Jordan Goodman, spokesperson and financial analyst for the index.

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.

For more information about the Cambridge Consumer Credit Index, contact Paramjit Mahli at pmahli@cambridgeconsumerindex.com or 631-786-6450 or the Index website at http://www.cambridgeconsumerindex.com/.