The COVID-19 pandemic 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.
TransUnion’s latest 2023 spring and summer travel report, 46% of respondents said they plan to travel more this spring and summer than last year, 47% plan to travel the same amount and only 8 % said they planned to travel less.
Americans are making travel a priority again
Not only are Americans traveling again, but many families are planning to travel more and take longer trips than ever before. The study found that the majority of households (54%) planned to make one or two trips during the spring and summer travel season, with 45% planning to be away for four to seven days and 33% for eight days. Planning to stay longer.
Even families with more family members aren’t letting high costs come in the way of their travel plans. In fact, data has shown that almost half of families with children plan to spend more on travel this year.
“After years of low spirits, Americans are hungry for travel and making it a priority despite a challenging economic climate,” Cecilia Seiden, TransUnion’s vice president of travel and hospitality business, said in a statement. “While this sentiment appears to be nearly universal, the details of when, why, where and how vary greatly.”
The latest Consumer Price Index (CPI) shows that prices are up 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 desired 2% target.
Still, many families have gotten creative and opted for more affordable travel plans, including taking road trips instead of air travel, staying close to home, and staying with family and friends.
More families are taking out loans to cover travel costs
For families who do not have the funds to cover the cost of their travel, the study found that taking out new debt and using alternative payment methods such as credit cards and buy now, pay later platforms can squeeze travel into their budget. Fitting in just got easier. ,
Of those surveyed, two-thirds of households plan to use cash or their debit cards for their spring and summer travel, while 57% of households plan to use their credit cards, even Even with the higher cost of borrowing for the federal rate hike.
Buy now, pay later platforms can make it easier to afford purchases that are outside your budget by breaking down lump sum costs into smaller, easier installments. These installment loans may come with interest and fees which differ from platform to platform. Typically, merchants will partner with a buy now, pay later platform and offer it as a payment method at checkout.
The catch: This payment method can often come with faster interest rates and shorter terms, although many platforms offer interest-free periods. Credit cards, on the other hand, offer revolving lines of credit and more flexible repayment terms, but also hit higher average APRs. The latest data from the Fed shows that the average credit card APR sits at 20.92%.
Still, experts say that relying on your credit card to cover costs may not be such a bad thing after all.
“Consumers are increasingly savvy about maximizing financial opportunities with their travel and can use credit cards to collect reward points, with plans to pay off the balance immediately. Others may use a credit card affiliated with a hotel or airline brand to enjoy upgrades on their flights or accommodations. Seiden says, “Regardless of the type of credit, families need to realistically consider their finances when planning their vacation to ensure they are able to meet any loan obligations during their trip ”
Tips for saving on travel this summer
If you’re hoping to venture out and travel away from home this summer, there are plenty of ways to save and make the cost more manageable.
- Join Rewards Programs: If you’re loyal to a particular airline or hotel chain, joining their rewards program can help you get discounts or free perks. “Be sure to enroll in any travel rewards program to save money through points redemption, and short-term perks like free Wi-Fi, bottled water, and free nights for longer stays. If you’re a frequent traveler, look into rewards credit cards. “Perks like free checked baggage can make up for the annual fee many times over,” Seiden says.
- Cash in on 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. What’s more—many credit card companies like American Express, Capital One, Chase and Bank of America make booking travel super easy through their one-stop travel portals where you can redeem your rewards for a host of travel-related purchases. Can
- Add a line item to your budget ahead of time: This may sound obvious to most, but paying for your travel in advance instead of taking on additional credit card debt will save you a lot in interest over time. If there’s still some time before you 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 trip, you’re not derailing your monthly budget.
- Be flexible about the timing of your travel. If you’re hoping to be out of town during a busy season or on a holiday weekend, your travel costs can increase significantly. If you have places to visit with your vacation dates, compare accommodation and/or airfare costs for different dates to get the best deal.
takeaway
Many passengers are eager to travel back, and many are even resorting to taking fresh loans to cover the cost. However, if you’re looking forward to moving to a new destination this summer, there are ways to do so without wreaking havoc on your personal finances. Through some strategic planning, cost-cutting measures, and smart saving strategies, you can take the vacation you’ve been dreaming of without compromising on your budget.
