Summer is a time of freedom and sunshine, but for many Americans, it also comes with a heavy financial burden. According to NerdWallet’s 2024 summer travel report, 45% of Americans are planning to take a summer trip that involves a flight or hotel stay. The average expected spending is a whopping $3,594. What’s concerning is that 20% of these travelers will not be able to pay off their credit card balance in full within the first billing statement. A recipe for high-interest debt that could stick around long after the summer is over.
The lead economist at Hopper, Hayley Berg, pointed out that travel expenditure is on the rise. Factors like the summer wedding season also contribute to the accumulation of travel debt. A study by LendingTree revealed that 31% of recent wedding guests went into debt, with travel and accommodations comprising the highest costs. Despite the increase in expenses, three-quarters of Hopper users plan to maintain or even increase their summer travel budget.
While the cost of travel continues to rise, there are strategies travelers can implement to minimize their spending and avoid carrying a balance on their credit cards. Planning and budgeting are key to cutting travel costs, and here are three effective strategies to achieve that:
1. **Book Early**: Booking your summer travel plans early can help lower upfront costs. Prices for domestic flights tend to surge the weekend before popular holidays like the 4th of July, Memorial Day, and Labor Day, so booking in advance is essential.
2. **Flexibility Pays Off**: Being flexible with your travel dates can result in significant savings. Avoiding peak travel times and opting for mid-week flights can lower airfare costs. Additionally, considering travel in September and early October can lead to substantial discounts on both hotels and airfare.
3. **Saving on Food Costs**: While most travelers focus on hotel and flight expenses, food costs can often catch them off guard. By opting for counter-service dining, cooking meals at accommodations, or visiting local markets, travelers can save substantially on food expenses.
Many travelers fall into the trap of believing that carrying a balance on their credit card is beneficial for their credit score. However, this is a common misconception. Not only can carrying a balance adversely affect your credit utilization ratio, but it also adds to the overall cost of your purchase with high-interest rates averaging over 20%. With Americans already owing $1.12 trillion in credit card debt, it’s crucial to prioritize financial responsibility when it comes to funding summer travel.
One way to mitigate the financial strain of summer travel is by leveraging credit card rewards. Some credit cards offer benefits and rewards for travel and dining expenses, such as waived checked bag fees. By utilizing these rewards wisely, travelers can offset some of the costs associated with their trips. However, this strategy requires careful planning as applying for and receiving a new credit card takes time.
While summer travel can be a source of joy and relaxation, it can also lead to financial stress if not managed carefully. By implementing smart planning strategies, being flexible with travel plans, and leveraging credit card rewards, travelers can enjoy their vacations without falling into the high-interest debt trap.