The COVID-19 pandemic forced many Americans to rein in their travel plansbut now its making a comeback. And despite todays high-inflation environment, Americans are still willing to spend to go on vacation.
Transunions latest 2023 Spring and Summer Travel Report, 46% of respondents said they planned to travel more this spring and summer than they did last year, with 47% planning to travel the same amount and only 8% saying they planned to travel less.
Americans are making travel a priority again
Not only are Americans traveling again, but many households are planning to travel more and take longer trips than they have in the past. The study found that most households (54%) plan to take one or two trips over the spring and summer travel season, with 45% planning to be away four to seven days and 33% planning to be away more than eight days.
Even households with more family members arent letting higher costs get in the way of their travel plans. In fact, the data showed that nearly half of families with children plan to spend more on travel this year.
After several years of feeling pent up, Americans are hungry for travel and making it a priority despite a challenging economic environment, said Cecilia Seiden, vice president of TransUnions travel and hospitality business, in a statement. While that sentiment seems to be near universal, the particulars of when, why, where and how vary greatly.
The latest Consumer Price Index (CPI) shows that prices are up 4.9% year-over-year. While the latest reading is a far cry from the 9.1% peak last summer, the inflation rate is still well above the Feds desired 2% target.
Even so, many families have gotten creative and opted for more affordable travel plans, including taking road trips instead of flying, staying close to home, and opting to stay with family and friends.
More households are taking on debt to cover travel costs
For families who dont have the funds to cover their travel costs, the study found that taking on new debt and using alternative payment methods like credit cards and buy-now, pay-later platforms have made it easier to fit travel into their budgets.
Of those surveyed, two-thirds of households plan to pay for their spring and summer travel using cash or their debit card, while 57% of households planned to use their credit card, even with a higher cost of borrowing thanks to federal rate hikes.
Buy-now, pay-later platforms can make it easier to afford purchases that are just outside your budget by breaking down the lump sum cost into smaller, easier to manage installments. These installment loans may come with interest and fees that vary from platform to platform. Typically, merchants will partner with a buy-now, pay-later platform and offer this as a payment method at checkout.
The catch: this payment method can often come with steeper interest rates and shorter terms, although many platforms do offer an interest-free period. Credit cards, on the other hand, offer a revolving line of credit and more flexible repayment terms, but APRs are also hitting higher averages. The latest data from the Fed shows that the average credit card APR sits at 20.92%.
Still, experts say that leaning on your credit card to cover costs may not be such a bad thing.
Consumers are increasingly savvy about maximizing financial opportunities with their travel and may be using credit cards to collect reward points, with a plan to pay off balances immediately. Others may be using hotel or airline brand affiliated credit cards to enjoy upgrades on their flights or accommodations. Regardless of the type of credit, families have to take a realistic look at their finances when planning their vacations to ensure theyre able to meet any debt obligations they incur over their trip, says Seiden.
Tips for saving on travel this summer
If youre hoping to venture away from home and travel this summer, there are plenty of ways to save and make the cost more manageable.
- Join rewards programs: If youre loyal to a particular airline or hotel chain, joining their rewards program could help you score a discount or free perks. Make sure to enroll in any travel rewards programs to save money via points redemption, and short-term perks such as free Wi-Fi, bottled water, and free nights for longer stays. If traveling frequently, look into reward credit cards. Features like free checked baggage can pay for the annual fee many times over, 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. Whats moremany credit card companies like American Express, Capital One, Chase, and Bank of America all make booking travel a lot easier through their one-stop travel portals where you can redeem your rewards for a number of travel-related purchases.
- Add a line item to your budget ahead of time: This may be the most obvious, but paying for your travels upfront, rather than taking on extra credit card debt will save you a ton in interest over time. If theres still some time before you expect to book your travel plans, consider adding a line item to your budget for travel expensesthe sooner the better. That way, once its time to book your travel, youre not throwing your monthly budget off track.
- Be flexible about the timing of your trip. Your travel costs can increase significantly if youre hoping to get out of town during a busy season or on a holiday weekend. If you have wiggle room with your vacation dates, compare lodging and/or airfare costs for different dates to score the best deal.
The takeaway
Many travelers are eager to get back to traveling, and many are even resorting to taking on new debt to cover the cost. However, if youre hoping to venture out 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 youre dreaming of without compromising your budget.
