The COVID-19 pandemic has forced many Americans to rein in their travel plans — but now it’s making a comeback. And despite today’s high inflation environment, Americans are still willing to spend to go on vacation.
In TransUnion’s most recent spring-summer 2023 travel report, 46% of respondents said they plan to travel more this spring and summer than they did last year, with 47% planning to travel as much and only 8% saying they plan to travel less.
Americans are making travel a priority again
Not only are Americans traveling again, but many families plan to travel more and take longer trips than in the past. The study found that most households (54%) plan to take one or two trips during the spring and summer travel season, with 45% planning to stay away for four to seven days and 33% planning to go more than eight days.
Even families with more family members don’t let higher costs get in the way of their travel plans. In fact, data has shown that nearly half of families with children plan to spend more on travel this year.
“After several years of feeling malaise, Americans are hungry for travel and making it a priority despite the challenging economic environment,” Cecilia Seiden, TransUnion vice president of travel and hospitality business, said in a statement. “While this feeling seems almost universal, the specifics of when, why, where and how vary greatly.”
The latest Consumer Price Index (CPI) shows that prices rose 4.9% year-on-year. While the latest reading is a far cry from last summer’s peak of 9.1%, the inflation rate is still well above the Fed’s target of 2%.
However, many families have become creative and opted for more affordable travel plans, including taking road trips instead of flying, staying close to home, and choosing to stay with family and friends.
More families are taking on debt to cover travel costs
For families who do not have the funds to cover their travel costs, the study found that collecting new debt and using alternative payment methods such as credit cards and buy now, pay later platforms made it easier to fit travel into their budgets. .
Among those surveyed, two-thirds of households plan to pay for their travel in the spring and summer using cash or their debit card, while 57% of households plan to use their credit cards, even as the cost of borrowing is rising thanks to higher federal interest rates.
Buy now, pay later platforms can make it easier for you to afford purchases that are just above your budget by breaking down the total total cost into smaller, easier to manage installments. These installment loans may come with interest and fees that vary from platform to platform. Merchants usually partner with a buy-now-pay-later platform and offer that as a payment method at checkout.
The problem: This payment method often comes with steeper interest rates and shorter terms, even though many platforms offer an interest-free period. On the other hand, credit cards offer a revolving line of credit and more flexible payment terms, but annual interest rates also reach higher averages. The latest data from the Federal Reserve shows that the average annual interest rate for a credit card is 20.92%.
However, experts say that relying on your credit card to cover costs may not be such a bad thing.
Consumers are becoming smarter about maximizing financial opportunities through their travel and may use credit cards to collect rewards points, with a plan to pay off the balances immediately. Others may use hotel or airline credit cards to enjoy upgrades on their flights or accommodations. “Families need to take a realistic look at their finances when planning their vacations to ensure they can meet any debt obligations they take on during their trip,” says Seiden.
Tips for saving on travel this summer
If you’re hoping to get out of the house and travel this summer, there are plenty of ways to save and make the cost more affordable.
- Join the rewards programs: If you are loyal to a particular airline or hotel chain, joining a rewards program may help you get discount or free perks. Be sure to sign up for any travel rewards programs to save money by redeeming points, and short-term perks like free Wi-Fi, bottled water and free nights for longer stays. If you travel a lot, look into rewards credit cards. Features like free checked baggage can pay Several times the annual fee,” says Seiden.
- Cash in your credit card rewards: Depending on the type of credit card you have, you may have points and miles that you can redeem for hotel stays, airline tickets, cabin upgrades, and more. Moreover, many credit card companies such as American Express, Capital One, Chase, and Bank of America make booking travel a lot easier with comprehensive travel portals where you can redeem your rewards for a number of travel-related purchases.
- Add an item to your budget beforehand: This may be the most obvious, but paying for your trips upfront, rather than taking on additional credit card debt, will net you a lot of benefits over time. If it’s still some time before you can expect to book your travel plans, consider adding a line item to your budget for travel expenses – the sooner the better. That way, once it’s time to book your travel, your monthly budget won’t derail.
- Be flexible about the timing of your trip. Travel costs can add up significantly if you want to get out of town during a busy season or on a weekend. If you have some wiggle room with your vacation dates, compare accommodation costs and/or airfare on different dates to get the best deal.
Many travelers are eager to get back to travel, and many even resort to taking on new debt to cover the cost. However, if you’re hoping to head out to a new destination this summer, there are ways to do so without making a mess of your personal finances. With some strategic planning, cost-cutting measures, and smart saving strategies, you can have the vacation of your dreams without compromising your budget.