Many borrow for the vacation – these are the risks

It's easy for expenses to spiral out of control during the summer holiday. Some people risk getting into debt, warns the Financial Supervisory Authority. The greatest risk is taking out small loans to finance consumption here and now for money that you don't actually have, says consumer protection economist Moa Langemark.

» Updated: August 20 2024

» Published: July 08 2024

Many borrow for the vacation – these are the risks
Photo: Johan Nilsson/TT

It's easy for expenses to get out of hand during the summer vacation. Some people risk getting into debt, warns the Financial Supervisory Authority.

The biggest risk is taking small loans to finance consumption here and now with money you don't actually have, says consumer economist Moa Langemark.

A recent survey, conducted by Yougov on behalf of Nordnet, shows that every eighth Swede between 18 and 29 years old takes out a loan to finance their vacation. Another survey from Länsförsäkringar shows that every twelfth family with children finances their vacation with a blancolån.

We have a very hard time imagining the situation that will arise later in the fall, which makes us tempted to consume here and now, and put off payment until the future, says Moa Langemark at the Financial Supervisory Authority.

The most important thing is not to put yourself in a situation where you can't pay back the money. Instead, choose a vacation that fits your wallet.

"A great disservice"

Even though the economy is slowly brightening and interest rates are on their way down, it's essential to be cautious, she emphasizes.

It's extremely difficult to know what will happen in the future. To then put yourself in a situation where you can't pay back is to do yourself a great disservice.

At the same time, Moa Langemark believes that it's necessary to be sensitive to, for example, the more pressured situation of families with children today compared to earlier.

You shouldn't make your children worried, but you can have a conversation about personal finance and get the children to understand the value of money, and explain that you can't afford that foreign vacation, she says.

Create a vacation budget

Her top tip for avoiding an economic hangover in the fall is to create a vacation budget and to avoid expensive small loans.

A simple way is to look at what expenses you had on your previous vacation, and calculate from that. To plan and create conditions so that it doesn't lead to a difficult debt situation in the fall.

Take no expensive small loans. A blancolån of 15,000 kronor, for example, can end up costing over 40 percent more.

Create a budget for the vacation. Calculate based on how large the expenses were last time.

Avoid unnecessary travel and add-on insurances. Often, cancellation insurance is included in the credit card and, as a rule, there is some travel insurance in the home insurance.

Check card and exchange fees. When paying by card abroad, it may be cheaper to choose to pay in the local currency rather than in Swedish kronor. It's often also cheaper to withdraw cash on the spot than to exchange.

A more general and long-term tip for building up a vacation fund is to have savings in an account with deposit insurance and as high an interest rate as possible.

For funds, it's a good idea to review the fund fees so that not too much of the return disappears that way.

Source: Moa Langemark, Financial Supervisory Authority

Tags

TTT
By TT - Translated and adapted by Sweden Herald

More news

Porsche's Tunnel Plan Sparks Protests
2 MIN READ

Porsche's Tunnel Plan Sparks Protests in Salzburg

Dubai Chocolate Craze Drives Pistachio
1 MIN READ

Dubai Chocolate Craze Drives Pistachio Prices to New Heights

Volvo to Cut Up to
1 MIN READ

Volvo to Cut Up to 800 Jobs in US Facilities

Easter Eggs Evolve: More Companies
1 MIN READ

Easter Eggs Evolve: More Companies Join the Festive Trend

Economics Students' Math Skills Lagging,
1 MIN READ

Economics Students' Math Skills Lagging, Warn Swedish Educators

Survey Reveals Workplace Silence Affects
1 MIN READ

Survey Reveals Workplace Silence Affects One in Seven Employees

Trump's EU Talks: Agriculture, Security,
2 MIN READ

Trump's EU Talks: Agriculture, Security, and Currency on the Agenda

Volkswagen Considers Shifting Audi Production
1 MIN READ

Volkswagen Considers Shifting Audi Production to U.S. to Avoid Tariffs

Skistar Relocates Guests Due to
1 MIN READ

Skistar Relocates Guests Due to Snow Shortage in Swedish Mountains

Swedes to Spend Nearly a
3 MIN READ

Swedes to Spend Nearly a Billion Kronor on Easter Candy

Indonesia to Boost Oil and
1 MIN READ

Indonesia to Boost Oil and Gas Imports from USA to Ease Trade Tariffs

European Stocks Gain Popularity as
3 MIN READ

European Stocks Gain Popularity as Investors Shift Focus from US

Asian Markets Show Mixed Movements
1 MIN READ

Asian Markets Show Mixed Movements as Investors Eye US Tariff Talks

Netflix Surpasses Market Forecasts with
1 MIN READ

Netflix Surpasses Market Forecasts with Strong Quarterly Earnings

United Health's Sharp Decline Weighs
1 MIN READ

United Health's Sharp Decline Weighs on Wall Street Indices

Civil Servant Strike Averted as
2 MIN READ

Civil Servant Strike Averted as New Agreements Reached

IMF Predicts Global Economy to
1 MIN READ

IMF Predicts Global Economy to Sidestep Recession Despite Trade Strains

Judge Rules Google Maintains Illegal
1 MIN READ

Judge Rules Google Maintains Illegal Monopoly in Digital Advertising

Electricians Secure New Deal with
1 MIN READ

Electricians Secure New Deal with Pay Raises and Shorter Hours

US Economy Shows New Signs
2 MIN READ

US Economy Shows New Signs of Weakness with Housing and Manufacturing Slumps

Jonathan Anderson Named Dior Menswear
1 MIN READ

Jonathan Anderson Named Dior Menswear Creative Director

Eli Lilly Shares Surge After
1 MIN READ

Eli Lilly Shares Surge After Promising Weight Loss Pill Results

ECB Lowers Rates Again, More
3 MIN READ

ECB Lowers Rates Again, More Cuts Expected This Year

Study Reveals Long-Term Economic Strain
1 MIN READ

Study Reveals Long-Term Economic Strain for Russia in Ukraine Conflict

Trump Claims He Can Oust
2 MIN READ

Trump Claims He Can Oust Fed Chair Powell Despite Lacking Authority

Hermes Increases U.S. Prices to
1 MIN READ

Hermes Increases U.S. Prices to Offset Tariff Impact

Trump Administration Halts New York
1 MIN READ

Trump Administration Halts New York Offshore Wind Farm Construction

Genre image
1 MIN READ

Pernod Ricard Sales Dip Due to Cognac Challenges in China

TSMC Reports Strong Q1 Results
1 MIN READ

TSMC Reports Strong Q1 Results with 42% Sales Increase

ABB Gains Despite Downturn in
1 MIN READ

ABB Gains Despite Downturn in Stockholm Stock Exchange

ABB Boosts Profit, Plans Robotics
2 MIN READ

ABB Boosts Profit, Plans Robotics Division Spin-Off

Asian Markets Rise on Positive
1 MIN READ

Asian Markets Rise on Positive US-Japan Trade Talks

SBAB Predicts Decline in Mortgage
1 MIN READ

SBAB Predicts Decline in Mortgage Rates as Repo Rate Expected to Drop

Trump Reports 'Great Progress' in
2 MIN READ

Trump Reports 'Great Progress' in Trade Talks with Japan

Nvidia's Warning Sends Wall Street
1 MIN READ

Nvidia's Warning Sends Wall Street Indices Tumbling

EU Launches Safety Sweep to
1 MIN READ

EU Launches Safety Sweep to Tackle Dangerous Products Online

WTO Report: Trump's Tariffs Could
1 MIN READ

WTO Report: Trump's Tariffs Could Cut Global Trade by 1.5% by 2025

Record Restaurant Bankruptcies in March
1 MIN READ

Record Restaurant Bankruptcies in March Highlight Industry Struggles