How to Pay for Vacation Over Time

Nearly 8-in-10 adults plan to take a vacation this year. If you’re one of them, you’ve probably already considered possible dream destinations. Building out your vacation itinerary can be easy, but paying for it can be trickier with rising costs. Travelers are expected to spend more than $5,138 on vacations in the next 12 months. 

The traditional way to pay for a vacation involves determining your travel budget and saving until you have enough money to book your destination. But that may not work for your timeline. If so, how will you get around the steep price tag on your dream getaway? Do you pull out the plastic, make it happen, and worry about paying your credit card bills after you return home? Do you live off peanut butter and jelly in the weeks leading up to your vacation and use the money saved to cover the cost of your trip?

You don’t have to take extreme or irresponsible measures to fund the perfect vacation. As a member of The Focus Federal Credit Union, you have access to various convenient products that can help you pay for vacation over time with minimal effort.

Understanding How to Pay for Vacation Over Time

Sometimes, the price tag for a vacation can be as breathtaking as the destination. Though it’s best to pay in cash for travel, there are other options available, including credit cards, “buy now, pay later” plans, and loans. Consider options that won’t take the wind out of your sails.

Flex Pay  

If you like the idea of buying now and paying later for purchases, that’s an option for your vacation. Vacation Flex Pay allows you to book a vacation and pay for it in installments rather than paying the full amount upfront.

Flex Pay partners with multiple airlines, cruise lines, resorts, travel agencies, and vacation package providers. They allow you to book your entire vacation using a buy-now option. Flex Pay pays the travel company, and you pay Flex Pay back over a period of weeks or months. Plus, you can even travel before your installment payments are complete.

Certain companies, airlines, and vacation destinations offer Flex Pay, making it easy to book a trip regardless of the type of vacation you plan.

Credit Card

You can pay for your vacation by credit card without incurring interest if you pay it in full by the end of the billing cycle. But when you don’t have the savings to do that, spending money you don’t have isn’t a solid financial decision. Using a credit card for vacation expenses can hurt you financially.

For example, let’s say your vacation costs you $4,000 and you pay for it with a credit card with a 22% APR. If you manage to pay it off in a year, you will still have paid around $492 in interest. Not only will it cost you more, but adding vacation costs could make already high balances bump up against your limit. Over time, your credit score could decrease.

On the other hand, if you already have the money set aside to cover the trip, use a credit card to pay the bill and immediately pay off the balance. Here’s why:

• Travel Rewards. You could earn points, miles, or cash back. If you spent $4,000 on a trip using a 2% cash-back card, you’d earn $80 back. Earning cash while vacationing is a no-brainer.
• Trip Insurance. Depending on your credit card, you may gain a layer of protection while traveling. Certain credit cards reimburse for lost luggage, provide travel accident insurance, and can cover travel emergency assistance services.
• Convenience. Using a credit card to book your hotel, car rental, and flights is easy and convenient. You don’t have to track down an ATM, and using a credit card that doesn’t charge a foreign exchange fee if you’re vacationing abroad can save you a little. 
• Safety and Protection. Carrying cash can expose you to theft, and losing your wallet while on vacation is no fun. A credit card can be replaced easily with a quick call to the credit card company.

Personal Loan

Another way to pay for vacation over time is to take out a personal loan. A vacation loan is an unsecured personal loan for travel expenses like flights, accommodation, meals, or anything else trip related.

A personal loan can:

• Help You Budget. Let’s say you borrow $3,000 for your vacation. That’s exactly the amount you will have available. Unlike a credit card, you’re not tempted to go over your budget. With a personal loan, you already have a lump sum in hand.
• Lower Interest Rates. Because of lower interest rates, personal loans are known for being a more affordable alternative to credit cards. A personal loan can have lower annual percentage rates (APRs) than credit cards if you have a strong income and a good credit score.
• Provide a Predictable Monthly Payment. Personal loans have fixed interest rates and terms, which means you’ll have a fixed monthly payment for the entire loan term, and you know when your loan is paid off. With fixed-rate personal loans, there are no fluctuating payments, just a single monthly payment you can count on until the loan is paid in full. Working toward a set debt payoff date can also help you stay focused on making payments.
• Increase Your Credit Score. Yep, you read that correctly. Going on vacation could increase your credit score. Your credit mix refers to your different types of credit accounts, including credit cards, loans, and mortgage. It makes up 10% of your credit score. When you have a personal loan, it impacts your credit mix, and if you pay it back on time, it will raise your credit score.

Before you apply for a loan, make sure you have a repayment plan. Consider a personal loan with a skip-a-pay option, which allows qualified members to skip eligible loan payment(s) twice in 12 months, providing a little cushion in your budget if you need it. 

Vacation Club Account

Instead of paying for all your travel expenses when it’s vacation time, why pay a little bit throughout the year? One way to do this is through a vacation club account. With a vacation club account, you can save a little bit toward your overall travel budget each month.

Create a budget to ensure you’re saving enough money for your getaway. Determine how much money you will need to pay for your trip. Divide your total vacation budget by the number of weeks left before your trip. Start stashing that amount away weekly.

Consider scheduling automatic recurring transfers to let you “set it and forget it” instead of manually making deposits. This way, a portion of your monthly pay is automatically deposited into vacation savings, helping you bank for your next getaway. And when vacation time rolls around, you’ll have the money you need without taking a bite out of your budget or going into debt. If you have already started saving up in your regular savings account, move that money into your vacation club account so all your funds are in one easy location.

Earn a little more toward your travel plans by enrolling in TFFCU’s Savings Assist Program. Every time you use your Visa check card, we’ll round up each purchase by the amount you designate from 25 cents to $2 more than your purchase. At the end of the day, TFFCU will transfer the difference into your savings account. You get to watch your savings account balance grow without any direct action from you.

Stay Safe on Vacation

While planning for a vacation is exciting, taking safety precautions can help you avoid your travel plans from being sidetracked.

Vacation safety measures to consider:

• Use Prepaid Cards. A Visa travel card is a prepaid card you can use anywhere Visa debit cards are accepted, including in person, online, or over the phone. You can withdraw cash from your account at ATMs and add additional funds to the card from your bank’s account online, over the phone, or at selected Visa offices. If the card is lost or stolen, Visa will replace it.
• Avoid Scammers. As travelers, it’s easy to think we’re savvy enough to avoid getting ripped off by travel scams. Unfortunately, sketchy people love to take advantage of tourists. From getting overcharged on cab rides to unknowingly revealing credit card information, scams like these exist everywhere. Before booking, check out online reviews for hotels, rentals, and travel agents. Doing your research can help you avoid scammers.
• Travel Safely. Vacations are meant to be a time to recharge. Traveling safely can help you make sure that happens. Nothing can sideline a trip like getting sick. Prioritize rest, hydration, and nourishing foods before and during your trip. Stock up on essentials, like hand sanitizers and alcohol wipes, to help ward off germs before you hit the road. Carry basic over-the-counter medications and a first-aid kit with you.

Pay for Vacation Over Time With TFFCU

While booking a flight, setting up an itinerary, and packing are tasks you may be eager to jump on, setting up your finances before heading off requires work. Be realistic about what you enjoy and can afford, and be true to your budget. Get your vacation plans off the ground by stopping by Focus Federal Credit Union today. We have a broad range of offerings to help pay for vacation over time and make your dream trip a reality.

Abigail Cabello

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