Summer vacation mistakes that can cost you
If you've been
daydreaming about a lazy day on the beach, you're in good company. Summer travel plans are up 17 percent, with more than two-thirds of Americans planning to take a summer vacation in 2013, according to American Express' Spending & Saving Tracker. But while a little rest and relaxation may do
your body good, one vacation planning mistake could set your finances back for months
A lot of travelers
unintentionally spend more money than they have to, says Jessica Galbraith, author of "50
Things to Know to Travel on a Budget: Tips from Experienced Travelers." No
matter how much fun you have while you're away, here are some common vacation-planning
money mistakes that can add to your stress level once you get back home.
Taking a buy-now, pay-later
easy to get caught up in everyday life and forget to save in advance for a
vacation. Next thing you know, all your friends are talking about a trip to the
Caribbean and you feel tempted to reach for your credit card and join them. But
before you do that, consider the long-term consequences. If you take a $2,000
vacation and throw it on the credit card at 18 percent interest and make the minimum monthly payments, it will take you more than 10 years to pay for that trip, says
Mike LeClear, director of financial counselors for FinancialHope Counseling and
Education of Northeastern Indiana. No
vacation is worth that much. Consider planning a staycation near your home
Saying 'no' to free money. Nearly three-quarters of
Americans who have frequent flier miles don't know how many they have and more
than half don't know how their frequent flier programs work, according to a survey
conducted by The Points Guy blog and The Princeton Group. Miles and travel
rewards points are worth money. Not only may you have enough miles to get a
free plane ticket or one-night hotel stay, but if you understand how the
program works, you may be able to increase your vacation savings throughout the
year by making certain types of purchases on your travel reward credit cards.
For example, users of the U.S. Bank FlexPerks Travel Rewards Visa Signature
Card get double the points when they use the card on the category, such as gas
or groceries, that they spend the most money on each month.
Failing to plan for the
can ruin your travel plans. You can get appendicitis in a foreign country, have
to cut your trip short because of a family crisis or lose your luggage at the airport.
Travel insurance will cover many of these expenses, which can be quite hefty. A $100 travel insurance policy could save you the $20,000 it would cost to airlift you home in an
emergency, Galbraith says. Check to see what your travel insurance policy
explicitly covers. For example, if you plan to engage in extreme sports on your
vacation, such as bungee jumping or surfing, you may need to buy additional
coverage for injuries incurred during those activities, Galbraith adds.
Paying for something you already have. Before you buy insurance coverage for your trip, make sure you
aren't buying something you already have. Some credit card issuers offer
supplemental travel insurance that pays for such things as trip cancellation
and lost luggage, so check with your card issuer to see whether you're covered by useful credit card insurance perks. Also check with your health insurance provider to see if your
policy covers medical emergencies while you're away. Insurance coverage for a
rental car is another expense you may be able to avoid. Your auto insurance
policy may already provide insurance coverage for your rental car. Many credit
cards also will provide some rental car insurance coverage. However, you must rent the car with the card that offers the benefit and decline the coverage offered by the rental car company, says Sarah Pew, a spokeswoman
Using the wrong credit card overseas. Many credit card issuers charge foreign transaction fees for purchases
made in a foreign currency or that involve a foreign bank. These fees, which
are typically around 3 percent, can add up, particularly if you're making a lot
of purchases. However, not all credit cards charge
them. Neither Capital One nor Discover charge
foreign transaction fees, and some other issuers waive the fees on certain
cards geared toward travelers. Make sure you're not racking up foreign
transaction fees while you have one of these no-fee cards gathering dust in your wallet.
Forgetting that little things add up. The flight and hotel room may be your most substantial costs,
but other expenses can break your budget if you fail to consider them. U.S.
airlines made more than $3.5 billion in baggage fees in 2012, and if you're planning
to come back with a lot of heavy souvenirs, you may pay more than the average $25
to $35 per bag on the return trip, Galbraith points out. Also consider
costs of food, transportation and activities such as theme parks once you get
to your destination, says Cristy Cash, director of counseling and education at
Consumer Credit Counseling Service of Central Oklahoma. You might even be able
to cut down on those costs by looking for a hotel that has a microwave or stove
so you can do some of the cooking yourself, Cash adds.
Vacations can be times
for fun, relaxation and warm memories -- particularly when you take the money
worries out of the equation.
See related: 6 credit card problems that can ruin your summer vacation, Booking via travel websites may affect reward miles, perks, 9 tips for traveling with credit cards, Travel perk: credit card emergency travel assistance
Published: July 31, 2013
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