Going on a summer vacation is supposed to be a stress reducer. But the average American family is likely to spend $2,936 on vacation this summer — including taking on roughly $600 in extra debt, according to a MagnifyMoney survey.
Plenty of us will pull out the credit cards and the excuses to tell ourselves that we’re worth it. But there are some savvy ways to avoid a budget buster this vacation season.
–– Can you reconsider when you travel — and see if you can cash in on those rewards points? I talked with a friend the other weekend who told me she simply won’t book a trip in northern Michigan around the Fourth of July because her favorite hotel’s rate during the holiday would destroy her family’s budget. Instead, she picks another weekend.
Such flexibility can be necessary if you’d like to tap into rewards points when booking a hotel room or airline flight.
Some points to consider with those rewards programs: Can you use a combination of points — and some cash — to reduce your out-of-pocket costs for a hotel or plane ticket?
Also, pay attention to any resort fees, cancellation charges or other fees that you might be charged, even if you use rewards points.
––Will an extra fee boost travel costs outside the U.S.? If you plan to use your credit card in Toronto this summer or even take a trip overseas, take time to find out whether your card has any transaction fees for spending outside the U.S.
“Foreign transaction fees usually range between 2 percent to 3 percent, so they can really add up,” said Bill Hardekopf, CEO of LowCards.com.
Both credit cards and debit cards can charge foreign transaction fees on each transaction in U.S. dollars. Some issuers — including Capital One and Discover — do not have foreign transaction fees on their credit cards.
The BankAmericard Travel Rewards card, the Chase Sapphire Preferred card and the Barclaycard JetBlue card — and some other Barclaycards — also do not charge foreign transaction fees.
–– Do you have any kind travel insurance on your credit cards? Believe it or not, about 36 percent of the credit cards analyzed offer protection to cardholders if their luggage is lost, according to research by WalletHub.
The average policy offers coverage of $1,750 for lost luggage, according to Jill Gonzalez, an analyst for WalletHub. Some even offer insurance if your luggage is delayed. Terms vary by issuer.
For lost and delayed luggage, some of the better cards include Chase Sapphire Preferred, Chase JP Morgan Reserve and Citi Prestige Card, according to WalletHub.
Some cards also offer reimbursement in the event of canceled trips and travel-related accidents. Again, check with your issuer for the specific terms.
–– Can you tap into a credit card deal before you go on vacation?
Maybe. Some hefty, five-digit bonus offers exist on cards such as the Chase Sapphire Preferred Card, the Barclaycard Arrival Plus World Elite MasterCard and Capital One Venture Rewards, according to WalletHub.com.
But you’re going to need to spend $3,000 to $4,000 on purchases in the first three months of opening the account to qualify for many of these deals that can trigger 40,000 or 50,000 in bonus rewards or miles.
The Chase Sapphire Preferred card has no annual fee the first year, but a $95 annual fee after that. The Barclaycard Arrival Plus World Elite has an $89 annual fee that is waived the first year. The Capital One Venture Rewards card has no annual fee the first year but a $59 annual fee after that.
To get the best deal, try to opt for travel rewards that you realistically will be able to redeem in 12 to-18 months, so there’s no risk of seeing a devaluation of your points, according to Gonzalez at WalletHub.com.
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ABOUT THE WRITER
Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stompor@freepress.com.
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