A recent U.S. News & World Report survey shows that nearly three-fourths of Americans, ready to travel again but facing a shaky economy and high prices, have changed either their behavior or their travel budgets to make summer vacation a reality.
About 22% have decreased their vacation budgets, and almost 21% of survey respondents say they’re decreasing the number of vacations they take this year.
And another 16.9% say they’re cutting back in other areas to fund their summer vacation plans. Only 28.8% say they’ve made no changes to their behavior or to their budgets to accommodate travel plans.
How Much Are Americans Spending on Summer Vacations?
The survey shows that nearly three-quarters plan to take one or even two vacations this year. Asked how much they anticipate spending per person for their summer travel, respondents say:
— $500 or less: 26.9%.
— $501 to $1,000: 27.3%.
— $1,001 to $2,000: 22%.
— $2,001 to $3,000: 11.5%.
— $3,001 to $4,000: 6%.
— $4,001 or more: 6.3%.
While some Americans are planning an expensive getaway, more than 54% have a $1,000 limit per person.
[Read: Best 0% APR Credit Cards.]
How Americans Are Paying for Summer Vacation
The majority of respondents say they have the funds for their vacations. But others have made some risky payment choices.
And almost 7% say they don’t know how they’re paying for vacation. If you don’t know how you’ll pay for a trip to the beach, then you probably shouldn’t go. Wait until you’re sure you have the funds to cover the expense.
Among survey respondents who know how they’re paying for vacation, these are the payment methods they identify:
— Dipping into savings/cash: 65.7%.
— Using a credit card, then carrying a balance: 13.9%.
— Redeeming credit card rewards: 11.3%.
— Using a buy now, pay later plan: 6%.
— Taking out a personal loan: 3.1%.
It’s a bit alarming that almost one in four intends to borrow money for vacation, such as using a credit card and carrying a balance. Carrying a credit card balance is never a good idea. You’ll pay compound interest on your balance, and your debt will grow quickly.
Buy now, pay later plans are popular. The name alone makes it appealing. Most of these plans include a “Pay in 4” option, which means you make four equal payments on the balance to pay it off, usually over a six-week period.
BNPL plans are considered installment loans, and many don’t charge interest. But others do apply interest as well as late fees. If your account becomes delinquent, it could end up on your credit report, and that will lower your credit score. It might not feel like it, but when you agree to a BNPL plan, you’re taking on debt.
How to Plan a Debt-Free Vacation
I know it’s been stressful to deal with inflation and the volatile stock market, but you really don’t want to take a trip if it makes your financial situation worse. Here are some strategies you can use to get some relaxation time without getting into debt.
Plan to Travel During Off-Peak Times
This could mean taking your trip in the offseason or flying on days when tickets cost less. The best times to travel depend on your destination, so do some research and look at the difference in prices for different seasons.
If you can be flexible and fly during the week, you can get lower prices on airfare. Increased gas prices have affected the price of an airline ticket, and prices are high. Do everything you can to bring down the costs of flying. An excellent way to do that is to use rewards credit cards.
Use Rewards Credit Cards Strategically
The survey shows that almost 14% are planning to use a credit card and carry a balance. That’s a bad idea!
It’s fine to use rewards credit cards to pay for vacation as long as you follow my rule: Don’t carry a balance. Pay the bill in full and by the due date.
If you do that, you can use cards strategically to maximize the rewards you earn. By strategically, I mean use the credit card that offers the best rewards in a specific situation.
The survey shows that almost 64% plan to take to the highways this summer. Using a credit card that gives you points or cash back on gas purchases can pay off. Seriously, gas is so expensive, every little bit of help counts right now.
Over 30% of respondents plan to fly to their destination. This is an opportunity to use travel rewards you’ve earned to pay for the ticket. Some issuers offer ways to increase the value of your points, such as using a travel portal. If this is the case, take advantage of it and book your itinerary via the portal.
Among respondents who use travel rewards credit cards, 56% made $700 or less. More than 10% don’t even know how much they’ve earned in rewards. It’s possible to earn thousands of dollars a year. I use a combination of travel rewards cards and cash back credit cards. Last year, I earned over $4,300 in rewards using my cards strategically with only a little effort. You can do that, too.
And don’t forget that rewards credit cards often have benefits that help you save more on travel. When asked which benefit is most important to them, almost 41% of survey respondents choose free checked bags. That alone can save you hundreds of dollars, depending on the specific card and the weight or number of bags you need to check.
Create a Vacation Budget (and Stick to It)
You probably have an idea of how much your trip will cost. But have you thought about stopping on the way to the mountains and buying snacks for the whole family? Prevent this expensive scenario by packing vacation goodie bags.
You can also save money by renting a condo that has a kitchen. Do treat yourself a few times, but also have family nights at home with dinner and a movie (also brought from home).
Think about all the expenses you will encounter, and then decide where you’ll go and how long you can stay before spending more money than you can pay back.
Try a Group Vacation
If you’re friends with another family and your kids get along, this is an opportunity to share costs. I just explained why you need a budget. On a group vacation, it’s critical that you have a budget.
Meet with the other parents to determine your joint budget. If there is an activity that the other family wants to pursue, but you can’t afford it, plan to do separate activities that day. Don’t try to negotiate this in front of the kids. It will not end well. Know what you’re paying and what they’re paying before you head to your joint destination.
[Read: Best Gas Credit Cards.]
Start Saving Now for Next Summer
I know it’s not what you want to hear. But if you’re part of the nearly 7% who don’t know how they’re going to pay for vacation this summer, take a step back and give this some thought.
Do you really want to still be paying for vacation when the holidays arrive? No, you don’t. Postpone the major trip, but plan on a few short weekend trips this summer to get away from the grind.
Between now and next summer, start a savings account exclusively for family vacations, such as a high-interest savings account with low minimum deposits. Contribute to this account as much as you can every week.
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Survey: 71% Say Rising Costs Have Affected Summer Vacation Plans originally appeared on usnews.com