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If you’re planning on spending money to travel when the days are longer and the sun is shining and warmer, be careful: It could leave you with high-interest debt that you’ll still need to pay off throughout the fall and winter.
Nearly half (45%) of Americans plan to take a summer trip that requires a flight or hotel stay, and they expect to spend an average of $3,594, according to 2024 data from NerdWallet summer travel report.
The majority of travelers (83%) will use a credit card to pay for part of their vacation. But NerdWallet found that 20% doesn’t pay off the balance in full on the first bill. The report surveyed 2,092 U.S. adults from January 30 to February 1, 2024.
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“Travel spending is not slowing down,” said Haley Berg, chief economist at Hopper.
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“Excellent value for money”
Hopper’s 2024 Travel Outlook found that three-quarters of Hopper users said they plan to spend the same or more on travel this summer.
“But they are trying to get more bang for their buck,” she said, by getting more trips out of a larger or the same size budget.
About 86.6% of Hopper users expect to travel this summer, but this proportion is 72.5% No booking yet Their schedule has not yet been determined by Outlook.
“I’m not surprised by how many people wait until the last minute to book their vacation,” Berg said.
Fortunately for travelers, airfares are down 5.8% from a year ago, according to the agency consumer price index.
Hopper said the average domestic ticket price in June, July and August was about $305, down 6% from the same period last year. Prices are expected to peak at $315 per ticket in late May and early June, according to Hopper.
“This is a huge improvement compared to the price increases we see every year,” Berg said.
But other costs associated with air travel have risen. For example, many major airlines, including United, American Airlines and JetBlue, have increased their checked bag fees this year.
“Most airlines are increasing their fees by $5,” said NerdWallet travel rewards expert Sally French. “That typically means $35 is now $40…an additional $40 round trip.”
French said some cardholders may think it’s a good thing to hold on to a balance when paying for a vacation or other big purchase because it helps show they’re using the card.
This is a common misconception. In 2022, about 46% of Americans believe that leave balance According to NerdWallet, paying with a credit card can improve your score more than paying it off entirely.
“There are a lot of misconceptions about credit cards,” French said. “Carrying a balance on your credit card isn’t necessarily good for your credit score.”
The reality is that carrying a balance can increase your credit utilization ratio, which can potentially lower your score. Plus, you’ll be adding to the cost of your purchases, with average credit card interest rates as high as 20%.
A new report from the Federal Reserve Bank of New York shows that cardholders already owe $1.12 trillion in credit card debt, with the average balance per consumer sitting at $6,218.
“If you haven’t booked yet, book now”
Smart planning and budgeting can help you cut travel costs and make it easier to avoid carrying a balance. Here are three strategies to try:
1. Book your summer travel plans as soon as possible: The earlier you book your travel plans, the lower the upfront costs tend to be. According to Hopper, prices for domestic U.S. flights tend to increase during the weekend before July 4, Memorial Day weekend and Labor Day weekend.
“If you haven’t made a reservation yet, please make a reservation now,” Berg said.
The “best time” to travel internationally is three to five months in advance; if you’re planning a trip in August, now is the time. For domestic flights, summer travel is best done about two to three months in advance. You may still have time to book a trip for late summer or early fall, she explains.
2. Be as flexible as possible: If you can, avoid departing on a Thursday or Friday night; try booking a flight on a Tuesday or Wednesday. Berg said flights during the week can save about $50 per ticket on domestic flights, and “much more” on international flights.
If your travel dates are flexible, booking a vacation in September or even early October can save you 30% on hotel and flight prices. “The weather is also generally great, and many destinations have smaller crowds,” Berg said. “An easy way to save money and reduce the travel experience.”
2. Save food expenses: When budgeting for a vacation, travelers focus on hotel and flight costs because they typically book and pay for them in advance, French said. She said restaurant prices often come as a surprise when travelers look back on their spending and are “shocked at how high the prices are.”
Look for options to save on food costs through counter service instead of table service. Or go to your local farmers market or supermarket and cook a meal or two.
“Eating out is an important part of travel for many people, so you may not want to skip it entirely,” French says.
3. Take advantage of credit card rewards: Some credit cards offer offers and rewards on dining and travel expenses, such as checked bag fees. French says they may also extend these benefits to others traveling with you.
But this isn’t a last-minute move: Applying for and receiving a new card takes time. “A lot of people get tripped up because you have to apply for this credit card in advance,” she said.
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