How to pay for summer travel with airfare costs on the rise
Prices for domestic plane tickets are expected to increase 16% this summer, so it's more important than ever to be mindful when financing your next vacation. (iStock)
Post-pandemic wanderlust will come with a higher price tag after a tumultuous 2020, which dealt a significant blow to the travel industry. Roundtrip domestic plane ticket costs are expected to increase 16% heading into the summer, according to an analysis by airfare price-tracking app Hopper.
A faster-than-expected coronavirus vaccine rollout has restored traveler optimism and has many Americans looking to the skies. Rising airfare prices shouldn’t stop you from traveling altogether, so take a look at these tips to help you finance your next getaway.
Having the right financial products can help you make the most of your vacation fund. Shop around to compare for vacation loans, high-yield savings accounts, travel credit cards and more on Credible’s online marketplace.
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Lean on money saved during the pandemic
Americans have more cash in their pockets since the pandemic began. Personal savings have seen a double-digit increase, according to the U.S. Bureau of Economic Analysis. In March 2021 alone, such savings increased by 27.7%.
It’s always advisable to pay for travel expenses in cash, so this should be your first financing route. Plus, you can take it one step further by putting your travel fund into a high-yield savings account. This can help you earn interest on money that’s sitting in your savings account anyway.
To see how high-yield savings accounts can save you money, check out these options via the Credible marketplace to save extra cash.
Shop around for a low-interest rate vacation loan
Americans are increasingly taking out personal loans to finance their vacations. While it’s not typically advised to take out debt to finance unnecessary expenses like travel, a vacation loan can pose a better alternative to revolving credit card debt.
Personal loans generally have lower interest rates than credit cards. The average interest rate on a 24-month personal loan was 9.46% in February 2021, compared with 15.91% for credit card accounts assessed interest, according to the Federal Reserve.
If you do choose to take out a personal loan to pay for your summer vacation, compare interest rates and fees by filling out a single form on Credible’s personal loan marketplace. You can save a lot of money over the life of the loan by shopping around for the lowest interest rate you can find, and it won't affect your credit score.
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Take advantage of a 0% APR introductory rate credit card
Travel loans aren’t your only option if you want to spread out the cost of your vacation over time. You can pay off your travel expenses over a number of months without paying interest at all by opening a credit card with a 0% APR introductory period.
Credit card issuers offer zero-interest promotions to entice new customers, and you can use them to your benefit. These offers typically last up to 18 months, and they’re reserved for consumers with good credit. Keep in mind that you’ll be charged interest on any remaining balance at the end of the promotion, and credit card interest rates tend to be high.
Check out card details on Credible's website and see what kind of credit cards you qualify for today.
Redeem credit card travel miles to cut costs
Credit-savvy consumers use travel rewards cards to rack up travel miles to earn free or discounted airfare. They allow you to earn rewards on everyday spending at grocery stores and gas stations, for instance.
If you want to start earning credit card rewards toward your upcoming vacation, keep a few things in mind:
- Don’t overspend just to earn miles
- Pay off your statement balance monthly to avoid interest charges
- Be aware of any annual fees
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Keep travel close to home to save on costs
Very few circumstances merit taking out debt for vacation expenses, so it's better to rethink your travel plans if you can't afford a trip. Explore your own backyard by visiting a national or state park, or even plan a trip to see family so you can save on hotel costs. In fact, 34% of Americans will prioritize post-pandemic travel to see family above all else, according to a January 2021 report from Airbnb.
It's OK if a lavish vacation isn't in the cards for summer 2021. But to make sure you can afford a getaway in the future, get your finances in order by creating a budget, monitoring your credit or consolidating high-interest debt. You can shop around for all the financial products you need to prepare for the future on Credible.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.