Taking a vacation without increasing your credit card balances has always been a challenge, but it’s even harder this year. As vaccines roll out and travel opens up, the opportunity to get away can certainly be tempting. But with ongoing economic uncertainty and the potential for a fresh round of shutdowns thanks to the Delta variant, it’s crucial to take the right steps to protect your finances as you plan a trip. It starts with being smart about your budget.
A recent study by ValuePenguin shows that 53 percent of Americans have summer travel plans that they plan to spend over two thousand dollars on…
The troubling fact? Nearly half of those people are willing and ready to go into debt to make their trips happen.
“Americans are addicted to debt, it’s almost a national past-time”
Of the over two thousand people surveyed, fifty-two percent say they’ll rely on credit cards to pay for the trip, something chairman of debt dot com, Howard Dvorkin says is a big mistake.
“And when the credit card bills come in at the end of the month. A good majority of those bills will go unfulfilled or unpaid, and the balances will start to incur interest.”
Dvorkin says these six tips for summer travel ValuePenguin shares can help you save time and money by staying on track with your planned itinerary.
First, research the rules,
Be mindful of capacity limits,
Have backup plans,
Use a travel agent,
Get travel insurance,
And, examine change and cancellation policies.
“People when traveling, they need to go through and do the research that’s necessary to make sure they’re getting the best deals, and there still are some great deals”
Travel debt can be a long-lasting souvenir, but, can be avoided by traveling within your means and making modifications to your trip,
“Basically go through, do some research on the internet. Plan out your trip by day. Make sure the price you’re receiving is a good price, compare prices. And don’t be afraid to go through and try to get discounts when applicable.”
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We talked to 11 travel experts to get their tips to help you set a realistic vacation budget. If you follow their advice, you can get away without going into credit card debt.
Table of Contents:
Assess your household budget and be realistic
After more than a year of being cooped up and unable to travel, people are understandably ready to break out and explore the world again. But is traveling a good idea if you’re carrying debt?
Travel blogging experts Jennifer and Mark Campbell of Just Chasing Rabbits admit, “It’s a tricky question and it really depends on each person’s individual situation. For someone in extreme debt, any extra expense is probably not a good idea. For those with minimal debt, just stick to a budget and make reasonable choices, and going on vacation should be fine.”
Colleen Lanin, the Travel Mama and founder of TravelMamas.com agrees, advising that there are easy ways to tailor a trip around your budget.
“A vacation is a very appealing way to celebrate newfound freedom following the successful rollout of a widespread vaccination program in the U.S.,” Lanin says. “Therefore, I would suggest sticking to a budget-friendly vacation to appease that desire if you’re in debt. Road trips, camping, and staying with vaccinated friends and family instead of booking a hotel may be the way to go!”
Kristin Addis, founder of Be My Travel Muse also encourages travelers to consider the type of debt that they have and how much control they have of their debt before they decide to book a trip.
“Credit card debt is very expensive,” Addis explains. “It might be better to pay that off first. But for those with student or home loans, I think as long as those are adequately getting paid on time it’s still important to travel and enjoy your life.”
Pay off credit cards faster so you can get back to enjoying life to the fullest.
Take these steps as you consider a trip…
- Take stock of your debts to see how much you’re currently paying per month and the status of all your debts.
- If you’re spending more than 10% of your monthly income just to cover your minimum credit card payments, it may be best to wait.
- If you have debts that are behind but not charged off, it may be better to delay your trip and devote your funds to catching up first.
- Review your budget to see how much you can afford to save for your trip.
- Find expenses that you can cut back or cut entirely at least temporarily so you have more money to save for your trip.
- Assess your total monthly savings or savings per paycheck and then set a date for your trip accordingly.
Caz Makepeace, co-founder of Y Travel Blog encourages travelers that #2 can make all the difference when it comes to affording a trip this year.
“While getting into debt is not wise, and caution is needed so you don’t restrict yourself further, I still believe bringing joy into your life and creating meaningful memories is the point to it,” Makepeace says. “I recommend making cuts in other areas of your life that don’t provide as much joy and purpose instead. Be conscious of your financial situation and make smart choices that help you balance paying down the debt with also enjoying your life.”
Research restrictions and requirements
Once you decide you can afford a trip, it’s important to investigate travel restrictions and testing requirements you may encounter. This is especially crucial for international travel destinations. Depending on where you plan to travel, these requirements can lead to significantly higher costs.
“Many countries might require proof of a negative test in a short window before you travel, and these tests can become costly especially if you are traveling as a family with a number of members,” explains Laurence Norah, co-founder of Finding the Universe travel blog.
Bonnie Montgomery, CEO of Elite Travel Concierge encountered this personally on her recent trip to the Bahamas.
“People presume that running off to the Islands from Florida should be more of an economical experience like it has been pre-COVID. However, the cost of Visas, COVID tests coming into the country (for those not vaccinated, or traveling with unvaccinated children) add a significant expense,” Montgomery explains. “In addition, if you stay more than 5 days everyone needs a negative test to come back into the USA. These additions cost us approximately $250.00 per child and $200 per adult just recently—not to mention, it was difficult, time-consuming, and unpleasant. Don’t get me wrong, I love the Bahamas, I sell it, I’ve lived there and for some, it is worth it and for others, it isn’t at the moment.”
Assess costs before you book
Once you understand restrictions and added costs for things like testing and healthcare visas, you can start the fun part of vacation budgeting—planning your trip.
Michelle Halpern, founder of Live Like It’s the Weekend encourages people to take as much time as possible on this step. “As a traveler, the best thing you can do right now is to plan ahead as much as possible and research your itinerary before you book to make sure you know the true costs associated with your trip.”
Our travel experts warn that costs this year can be very different from what you may be accustomed to. So, don’t rely on past wisdom and estimates. Look for actual prices available now and keep these tips in mind:
Expect capacity restrictions to drive up costs
“The limitation that the CDC and local governments have mandated, i.e. 50% occupancy on hotels, is definitely driving up the price,” Elite Travel Concierge CEO Bonnie Montgomery says. “This is also the same with local transportation and tour operators.”
Interestingly, while businesses are limited to 50% capacity, Montgomery notes that airlines are currently able to operate at 100%. However, while capacity restrictions aren’t driving up ticket prices, a flight shortage may be driving it instead.
“I don’t see the availability of flights like we are used to,” she explains, noting for trips to the Bahamas, Jet Blue only offers about two flights per day whereas there would be four pre-COVID. “I believe the shortage in flights is driving up the price, even though airlines have no restrictions and are operating at 100% capacity. They keep saying they will add flights upon demand, but I am not seeing that yet. That seems to hold true globally at the moment.”
Demand for destination will play into the price
“In some places hotel rates have dropped through the floor due to a lack of demand—sometimes up to 90%,” says Josh Bender, founder of Travel with Bender. “This is the ideal opportunity to live the 5-star life at a 3-star budget. I think that some of these bargains may not be seen again in our lifetime.”
However, UK travel blogger Vicky Philpott of Vicky Flip Flop Travels warns that you may need to factor in extra safety costs for places with lax travel restrictions.
“Right now, you can get some super cheap summer flights to destinations not on the green list, as people don’t want to go, or can’t,” Philpott explains, referring to the UK’s approved list of countries for travel. “If you’re tempted by these flights, remember that you might have to pay more in different ways. For example, on more expensive hotels, taxis over public transport, and tests.”
Costs for international travel may be cheaper, while domestic is more expensive
“There have been tons of incredible international flight deals this year to try to encourage people to start traveling again. Expensive flight change fees have decreased, too, with airlines like United, American, and Delta getting rid of these extra fees permanently,” Colleen Lanin of TravelMamas.com explains. “With lots of Americans traveling domestically, however, it’s harder to find deals on hotels and vacation rentals.”
Booking sites may not provide a full picture on costs
Elite travel concierge CEO Bonnie Montogomery also warns that while travel booking websites may be convenient for booking your trip yourself, they don’t do a good enough job of covering all the extra costs that can come with COVID restrictions.
“I’ve had friends call me panicking last minute that booked trips on cheap booking engines and had no idea they needed all of this [testing and visas],” Montgomery explains. “The added cost and paperwork was disappointing when they thought they were getting a bargain. One more reason I encourage people to use reputable Travel Agents.”
Working with a travel agent will give you peace of mind that you know all the restrictions you may encounter and can plan ahead for any added costs.
Be aware your airline miles may not get you as far
Kristin Addis, founder of Be My Travel Muse also warns travel rewards credit card users that their miles may not be worth what they used to be.
“Unfortunately, I think we will see airline miles becoming less valuable. With so much on spent mileage, it will probably drive up plane ticket and reward ticket prices,” Addis says. “Hopefully the right balance can be found without too much headache!”
Look for low-cost alternatives, but beware of hidden costs
Traditionally, one smart way to cut the cost of a vacation would be to take a different type of trip, such as a home swap or a volunteer vacation.
Jessie Festa, travel blogger and founder of Jessie on a Journey, encourages that those low-cost alternatives are still available. “There are also platforms that make it possible to travel on an extreme budget,” she says, “for instance, housesitting platforms where you get free accommodation in exchange for watching someone’s home and possibly their pets.”
At the same time, be aware that these low-cost alternatives may have new added costs.
Caz Makepeace of Y Travel Blog warns, “Many spend too much due to a lack of research and many hidden costs, such as high cleaning fees on Airbnb. Sometimes it’s more cost-effective to stay in a hotel because of this. Do the research.”
Realize that cheaper isn’t always best when traveling now
While low-cost alternatives can help you take a trip cheaply, you also need to keep the safety of you and your fellow travelers in mind. Even our travel experts admit they’re adjusting their own travel strategies in this new landscape.
“Now I’d much prefer to rent a car and drive myself rather than taking public transportation. I’ll happily upgrade or pay for a seat assignment on a plane to avoid the dreaded middle seat,” Claire Summers of Claire’s Itchy Feet travel blog explains. “There is also no way I’m staying in a 10-bed dorm right now, so my budget for accommodation has also increased. Before, I would look for the cheapest way to travel. Now I’m looking for the safest way to travel, which often costs a bit more.”
Jessie Festa of Jessie on a Journey agrees that people may need to save up and save longer before their trip to ensure they can be safe.
“I think we’ll see more people spending extra money on private (vs group) tours and experiences, as more and more travelers want to escape the crowds,” she explains. “Even with people getting the COVID-19 vaccine, I believe it’ll be a while until people are completely comfortable in a crowd.”
Bonnie Montgomery of Elite Travel Concierge also encourages travelers to consider cruising as a safe and more cost-effective alternative to an island getaway in the Caribbean.
“A great alternative is cruising at the moment,” Montgomery says. “Everything is a one-stop-shop. The cruise lines have gone above and beyond with sanitation and safety procedures. They have created curated tours to remain in the ‘bubble concept’ and also take care of your return testing for cruises longer than four days.”
Montgomery also says that while cruise lines are under the same 50% capacity restrictions that hotels and attractions are under, that so far that has not increased prices.
“I believe for the moment they are happy to have guests,” she continues. “Most cruise lines are still in testing phases.”
Expect car rental costs to be higher
One cost that’s almost certain to be higher is transportation. According to MarketWatch, the price of rental cars increased 12.1% from April to May alone.
“Travelers need to be aware of the increase in the cost of car rentals,” explains Corritta Lewis, family travel blogger and co-founder of Itz a Family Thing. “To stockpile cash, rental car companies sold a significant amount of inventory, so now that the travel industry is starting to rebound, there is a shortage of rental cars. A lack of rental cars means increased prices. Many families are canceling vacation plans because car rentals in some areas are over $100 per day.”
To minimize these costs as much as possible, you should book your rental car well in advance and opt for the most economic rental option possible.
Make sure to check cancellation policies
Another aspect of travel that’s changed because of the pandemic is cancellation policies. Companies are becoming more flexible when it comes to cancellations. However, that flexibility could translate into higher costs for reservations.
“A great many travel providers, including most accommodation providers, now offer very generous free cancellation policies,” says Laurence Norah of Finding the Universe. “However, this has meant that in many cases prices have had to go up to mitigate the potential loss from last-minute cancellations. So, whilst consumers benefit from the peace of mind, there is a cost associated with this convenience that is going to come out of travelers’ pockets.”
Make sure to opt-in for insurance when booking
As you’re assessing prices and starting to book your trip, there’s one feature that you may have ignored in the past that our experts say is now essential.
“More people will be spending money on travel insurance,” explains Craig Makepeace of the Y Travel Blog, “which is something we’ve always recommended you do despite the pandemic. So, while for some it won’t be a new travel cost, for many it will now become one.”
Even experts say that while they may have opted out of insurance in the past, it’s a necessity in our current travel environment.
“There were times I might have skipped travel insurance pre-2020,” admits Claire Summers of Claire’s Itchy Feet. “But those times are over. If you can’t afford insurance, then you probably can’t afford to travel!”
Bonnie Montgomery of Elite Travel Concierge agrees.
“I have never taken out insurance for a flight but I do now because who knows what could happen. That added $35 per flight,” she adds. “I recommend everyone also takes out a personal policy now while traveling. I personally will not book travel without it.”
Be strategic about spending on your trip
With your budget set and bookings made with insurance, the only thing left to do is enjoy your trip. Still, once you arrive at your destination, it’s still important to pay attention to your spending. You want to take steps to avoid added expenses and extra fees, which can stack up quickly if you’re not careful.
Consider your debit and credit cards carefully
Claire Summers says one cost that can catch consumers by surprise when they travel internationally is with bank fees.
“Make sure that whoever you bank with isn’t going to charge you for using your card or withdrawing cash while traveling,” she says. “I love that my bank actually refunds all of these charges to me, so I’m free to spend my money while abroad without getting crazy charges.”
Jessie Festa of Jessie on a Journey advises that travelers can also get a bank card or credit card that caters to a globetrotting lifestyle.
“If you’re not sure where to start, Charles Schwab is one great bank option that is popular with travelers, as they offer unlimited ATM fee rebates worldwide and no foreign transaction fees,” Festa explains. “I also love my Chase Sapphire Reserve credit card as there are no foreign transaction fees as well as other traveler perks.”
Never pay for Wi-Fi
Jennifer and Mark Campbell of Just Chasing Rabbits also advise travelers to avoid paying for extras at your accommodations that you can get for free elsewhere.
“One thing that we will not pay for unless we absolutely HAVE to is Wi-fi,” Campbell says. “So many Wi-fi hotspots are available that we can usually make do, plus many apps allow users to download data and information for offline use. When booking a hotel, we always look for free Wi-fi included.”
Ignore the mini-bar
Travel Mama Colleen Lanin also says to avoid costly up-charges in your room.
“Don’t ever pay the high prices for minibar snacks and drinks!” she advises. “Instead, stop by a local grocery or convenience store to stock up on a few goodies to have on hand. Sometimes hotels even offer a little shop in the lobby where you can buy bottled waters, wine, chips, and more for a fraction of the price you’d pay for raiding that high-priced in-room mini-fridge.”
Skip the souvenirs
Corritta Lewis of Itz a Family Thing says there is one final place where many travelers make the mistake of overspending—the gift shop.
“You should never purchase souvenirs on vacation. They are overpriced and quite honestly useless,” Lewis explains. “Vacation souvenirs end up in the junk drawer in a box in the base, garage, or attic. Spend that money on a new experience or trying a new dish. Be honest with yourself, how often are you going to wear that I heart Vegas t-shirt outside of the house?”
Don’t wait to pay off your balances
When you get home from your trip, there is one final thing you can do to ensure you aren’t paying for your vacation for the rest year: set a plan to pay off any credit card debt.
“Credit cards can be convenient for booking flights, hotels, and car rentals, and they can give you some great rewards,” explains Howard Dvorkin, CPA and chairman of Debt.com. “So there’s nothing wrong with using a credit card to pay for all or part of your trip. But you better have a plan to pay it off quickly. Otherwise, any rewards you earn will be completely offset by those high interest charges that credit cards carry.”
Dvorkin advises that you should review your balances and charges as soon as possible after your trip. Then review your household budget and see how much you can afford to pay each month to pay those balances down quickly. Ideally, you want to start with the balance that has the highest interest rate first, since it accrues more interest charges, leading to higher costs.
“And if you see that you overspent and you won’t be able to pay off your balances quickly, don’t wait to get help,” Dvorkin continues. “Start researching options that can help you pay off your debt faster, like debt consolidation or credit counseling. Or call Debt.com and we can help you find the best solution for your needs and budget.”
Find solutions to pay off vacation credit card debt faster.
Article last modified on July 28, 2021. Published by Debt.com, LLC