I have always looked at debt in a very straightforward way.
If you are paying interest, then the money should create some value in return. A business loan can build income. A vehicle loan can add convenience and sometimes even productivity. A home loan builds an asset that lasts for decades.
But a loan for a holiday? That one has never sat right with me.
My ‘Baniya’ Mind Couldn’t Make Sense of It
More than ten years ago, when I was working at a bank, a client walked in and asked for a loan of ₹8.5 lakh to fund his trip to New Zealand. I can still remember the moment. I sat there stunned, thinking, why would anyone do that? My baniya mind just could not make sense of it.
At the time, I thought it was a one-off case. But over the years I have realised it was not.
More and more people now borrow for holidays. They swipe credit cards, take personal loans, even use buy-now-pay-later schemes just to book the trip they want. The holiday feels easy and exciting in the moment, but the real journey starts when the bills follow them back home.
That is the dangerous habit I am trying to make sense of.
A vacation can end in ten days, but the EMIs can stretch for years and that is probably not a comfortable and happy feeling.
Why People Fall Into the Holiday Loan Trap
I often think back to that client in the bank. He was not careless or reckless. He was well dressed, spoke politely, and had clearly planned his dream trip for months. The only thing he had not planned for was how to pay for it.
And that is what I see again and again.
People do not see travel debt as “real debt.” They look at it as a small price for a big memory.
The trap is that everything feels easy at the time of booking. The travel agent says you can convert your package into monthly EMIs. The credit card company pushes a “holiday offer” with a simple swipe. The buy-now-pay-later option flashes at checkout when you are booking flights.
Each of these makes it look like you are just spreading out the cost. But in reality you are creating a loan with interest that eats into your future income.
There is also the pressure of social media.
You scroll through photos of friends in Europe or Bali, and you feel that you deserve the same. Vacations are no longer just breaks; they are status updates. That pressure makes people stretch beyond their savings and depend on borrowed money.
This is why holiday loans are dangerous. They do not feel like loans when you take them. They feel like a ticket to freedom. But once you are back, they quietly sit on your account statement, month after month, long after the excitement is gone.
The Debt That Travels Back With You
Borrowing for a holiday has become easier than ever. Credit cards, personal loans, and buy-now-pay-later offers make it look extremely simple.
But the math tells a different story.
Credit cards in India can charge more than 30% a year. A personal loan may look cheaper at about 15% percent, but even that adds a heavy cost.
A two lakh rupee holiday on a card, if not cleared in time, can quietly turn into two lakh sixty thousand by the end of the year and add late payment fees if any to that too.
On a personal loan, the same holiday stretches into EMIs that add forty to fifty thousand more to the original price. It means you are not just paying for the trip, you are paying for the privilege of taking it earlier than your savings allow.
There is another layer people overlook.
The Silent Thief of Your Future Wealth
Holiday debt does not just take money from your present. It steals from your future.
Every EMI you pay is money that could have been compounded in an investment, money that could have built long-term security. Instead, it is locked into repaying a memory. The cost of that ten-day trip is not only the interest but also the wealth you will never create because you diverted your savings to the past instead of the future.
And then there is the emotional side.
Memories are supposed to be light and joyful, but when they are funded by loans, they become heavy. Each bill turns what was once a happy photo into a reminder of liability. That is the part nobody talks about. The glow of the holiday fades quickly, but the shadow of the debt lasts far longer.
This is why funding travel with loans is one of the most expensive mistakes you can make.
You are not only paying for the trip once, you are paying for it many times over with interest, with lost opportunities, and with the uneasy feeling that your best memories came at the cost of your peace of mind.
A National Habit: The Alarming Data on Travel Loans
Holiday loans are sold as convenience, but they are really a trap that eats into your future.
According to a survey by Paisabazaar, surveys show that nearly 27 percent of Indians who take personal loans now use them to fund vacations. That number is higher than those who borrow for medical expenses or home renovations.
It tells you how normalised the idea of borrowing for a holiday has become.
What looks like a short escape in the present, actually mortgages your future. One swipe at a hotel bar, one instant loan for a flight, one easy “pay later” option at checkout, all of it adds up to months of repayments for something that no longer exists. The memory may remain, but so does the liability, and only one of them shows up on your account statement.
This is what makes holiday loans dangerous. They are not just expensive, they are deceptive. They disguise borrowing as convenience and turn a joyful memory into a financial chain that follows you home.
Before you sign up for one, you must ask yourself the hardest question: am I willing to keep paying for yesterday at the cost of tomorrow?
Disclaimer
Note: This article relies on data from fund reports, index history, and public disclosures. We have used our own assumptions for analysis and illustrations.
The purpose of this article is to share insights, data points, and thought-provoking perspectives on investing. It is not investment advice. If you wish to act on any investment idea, you are strongly advised to consult a qualified advisor. This article is strictly for educational purposes. The views expressed are personal and do not reflect those of my current or past employers.
Parth Parikh has over a decade of experience in finance and research. He currently heads growth and content strategy at Finsire, where he works on investor education initiatives and products like Loan Against Mutual Funds (LAMF) and financial data solutions for banks and fintechs.