Inflation isn’t stopping households from traveling this summer, says a new report

The COVID-19 pandemic forced many Americans to put their travel plans on hold—but now it’s making a comeback. And despite today’s high inflation environment, Americans are still willing to spend to take a vacation.

The latest Transunion 2023 Spring and Summer Travel Report46% of respondents said they plan 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 plan to travel a bit.

Americans are once again making travel a priority

Not only are Americans traveling again, but many households plan to travel more and travel longer than ever before. The study found that most households (54%) plan to take one or two trips during the spring and summer travel season, with 45% planning to be away four to seven days and 33 % plan to be away for more than eight days.

Even households with large family members don’t let higher costs get in the way of their travel plans. In fact, data shows that nearly half of families with children plan to spend more on travel this year.

“After years of feeling jaded, Americans are hungry for travel and are making it a priority despite a challenging economic climate,” said Cecilia Seiden, vice president of TransUnion’s travel and hospitality business. in a statement. “While that sentiment seems almost universal, the details of when, why, where and how vary.”

The latest Consumer Price Index (CPI) shows that prices increased by 4.9% year-on-year. While the latest reading is a far cry from last summer’s 9.1% peak, the inflation rate is still higher than the Fed’s desired 2% target.

However, many families are getting creative and opting for cheaper travel plans, including traveling by road instead of flying, staying close to home, and choosing to stay with family and friends.

Many households take out loans to pay for travel expenses

For families who do not have the funds to cover their travel expenses, the study found that taking out a new loan and using alternative payment methods such as credit cards and buy-now, pay-later platforms making it easier to fit travel into their budgets.

Of those surveyed, two-thirds of households plan to pay for their spring and summer travel with cash or their debit card, while 57% of households plan to use their credit card, despite a higher borrowing costs thanks to the federal rate hikes.

Buy-now, pay-later platforms make it easier to pay for purchases that are outside of your budget by breaking the lump sum cost into smaller, more manageable installments. These installment loans may have interest and fees that vary from platform to platform. Often, merchants will partner with a buy now, pay later platform and offer it as a payment method at checkout.

The catch: this payment method always has a higher interest rate and shorter terms, although many platforms offer an interest-free period. Credit cards, on the other hand, offer a revolving line of credit and more flexible payment terms, but APRs also hit higher averages. the latest data from the Fed shows that the average credit card APR sits at 20.92%.

However, experts say that relying on your credit card to cover expenses may not be such a bad thing.

“Consumers are increasingly savvy about maximizing financial opportunities while they travel and may use credit cards to collect rewards points, with plans to pay off balances quickly. Others may use the hotel or airline brand affiliated credit cards to enjoy upgrades on their flights or accommodations. Regardless of the type of credit, families should take a realistic look at their finances when planning their vacations to ensure they are able to meet any debt obligations they may incur during their travels,” Seiden said.

Tips to save money on travel this summer

If you’re hoping to get away from home and travel this summer, there are plenty of ways to save and keep costs manageable.

  • Join the rewards program: If you’re loyal to a particular airline or hotel chain, joining their rewards program can help you earn discounts or free perks. “Be sure to sign up for any travel rewards programs to save money by redeeming points, and low-cost perks like free Wi-Fi, bottled water, and free nights for longer stays. stay. If you’re a frequent traveler, look into rewards credit cards. Features like free checked baggage can pay for the annual fee many times over,” says Seiden.
  • Cash in on your credit card rewards: Depending on the type of credit card you have, you can points and miles which you can redeem for hotel stays, airline tickets, cabin upgrades, and more. What’s more—many credit card companies like American Express, Capital One, Chase, and Bank of America all make booking travel easier through their one-stop travel portals where you can redeem your rewards for more travel-related purchases.
  • Add a line item to your budget early: This might be the most obvious, but paying for your trips up front, rather than taking on more credit card debt will save you a ton of interest over time. If there is still time before you expect to book your travel plans, consider adding a line item to your budget for travel expenses—the sooner the better. That way, once it’s time to book your trip, you won’t throw your monthly budget off track.
  • Be flexible about the timing of your trip. Your travel costs can add up significantly if you’re 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 get the best deal.

The takeaway

Many travelers are eager to get back on the road, and many have even resorted to taking out new loans to cover the cost. However, if you’re hoping to jet off to a new destination this summer, there are ways to do so without hurting your personal finances. Through some strategic planning, cost-cutting measures, and smart savings strategies, you can get the vacation of your dreams without compromising your budget.

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