The way to use bank cards effectively for summer travel

If you intend to spend money on travel as the times get longer, sunnier, and warmer, watch out: You could find yourself with high-interest debt that you simply'll still should repay come fall and winter.

Nearly half (45%) of Americans are planning a summer trip that requires a flight or hotel stay, they usually expect to spend a median of $3,594, in accordance with NerdWallet's 2024 study Summer travel report.

The majority of travelers, 83%, pay a few of their vacation costs with a bank card. However, NerdWallet noted that 20% is not going to repay the balance in full throughout the first bill statement. The report surveyed 2,092 U.S. adults from January 30 to February 1, 2024.

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“Travel spending is not going down,” said Hayley Berg, senior economist at Hopper.

Summer wedding season can contribute to travel debt. About 31% of recent weddings Guests took on debts, in accordance with latest research from LendingTree. LendingTree found that amongst those that paid with credit, travel (32%) and accommodation (27%) had the very best bills.

Three-quarters of Hopper users said they plan to spend the identical or more on their trips this summer, Hopper's 2024 Travel Outlook found.

“But they're trying to get more bang for their buck,” she said, by squeezing more trips out of the larger or equal budget.

About 86.6% of Hopper users expect to travel this summer, but 72.5% haven't booked their travels are still happening, that's the outlook.

“It never surprises me how many people wait until the last minute to book their vacation,” Berg said.

Luckily for travelers, airfares are down 5.8% in comparison with last yr Consumer Price Index.

Hopper said domestic flights averaged about $305 in June, July and August, 6% lower than this time last yr. Prices are expected to peak at $315 per ticket in late May and early June, in accordance with Hopper data.

“This is a huge improvement over the price increases we see every year,” Berg said.

But other costs related to air travel have also increased. For example, many major airlines comparable to United Airlines, American Airlines and JetBlue Airways have increased their checked baggage fees this yr.

“Most airlines have increased their fees by five dollars,” said Sally French, travel rewards expert at NerdWallet. “That usually means that what was about $35 now becomes $40… That's an additional $40 for a round-trip flight.”

Some cardholders might imagine it's good to hold a balance while paying off a vacation or other large purchase since it helps show they're using the cardboard, French said.

This is a standard misunderstanding. In 2022, about 46% of Americans believed this leave a balance According to NerdWallet's data, it's higher to your rating to charge your bank card than to pay it off in full.

“There are a lot of myths about credit cards,” French said. “Having a remaining balance on your credit card is not necessarily good for your credit score.”

The reality is that carrying a balance can increase your credit utilization, which might potentially negatively impact your rating. You also increase the fee of this purchase since average bank card rates of interest are over 20%.

According to a brand new report from the Federal Reserve Bank of New York, cardholders have already got $1.12 trillion in bank card debt, which translates to a median balance of $6,218 per consumer.

Smart planning and budgeting can provide help to reduce travel costs and make it easier to avoid expenses. Here are three strategies to try:

1. Book summer travel plans soon: Typically, the sooner you book your travel plans, the lower the upfront costs might be. According to Hopper data, domestic flight prices within the U.S. are inclined to rise the weekend before the week of the Fourth of July, Memorial Day weekend, and Labor Day weekend.

“If you haven’t booked yet, book now,” Berg said.

The “sweet spot” for international travel is three to 5 months prematurely; If you're planning to make a journey in August, now’s the time to do it. For domestic flights, it’s advisable to book about two to 3 months prematurely in summer. “You may still have time to book trips for late summer and early fall,” she explained.

2. Be as flexible as possible: If possible, avoid leaving on Thursday or Friday evening; Try to book flights on Tuesdays or Wednesdays. If you fly in the midst of the week, you may save about $50 per ticket on domestic flights and “a lot more” on international flights, Berg said.

If you're flexible along with your travel dates, you may save 30% on hotel and airfare by booking trips for September and even early October. And “the weather is usually just as good, with fewer crowds in many destinations,” Berg said. “An easy way to save money while having a slightly less touristy experience.”

2. Save on food costs: When budgeting for a vacation, travelers deal with hotel and airfare costs because they typically book and pay for them prematurely, French said. Restaurant prices often come as a surprise when travelers check their spending and are “shocked at how high they are,” she said.

Look for methods to avoid wasting on food costs by switching to counter service reasonably than table service. Or go to an area farmers market or supermarket and cook something yourself for a meal or two.

“Eating out is a big part of many people's travels, so you may not want to avoid it entirely,” French said.

3. Take Advantage of Credit Card Rewards: Some bank cards offer advantages and rewards for meal and travel expenses, comparable to: B. Checked Baggage Fees. You could also extend these perks to other people you travel with, French said.

However, this is just not a last-minute step: it takes time to use for after which receive the brand new card. “A lot of people get confused because you have to apply for this credit card in advance,” she said.