Learn to balance your holiday gift giving and travel costs. Use experts’ advice to help you find the sweet spot.
Since 2016, the number of Americans traveling during the holiday season has increased, according to a survey by Experian. And a quarter of Americans – yes, that’s one in four – will be hitting the road this 2018 season.
Experian’s survey also revealed 13 percent of participants claimed unexpected travel costs were one of their most aggravating holiday expenses. In fact, half of the survey respondents said they spent more on holiday travel than on gifts.
Don’t let your holiday credit card spending ruin your new year; instead, learn how to balance your outlay for travel and gift giving. You’ll be a happier, financially healthier camper when the dust settles in January.
If you travel by plane
J.R. Duren, senior editor and personal finance analyst at HighYa.com – a reviews site dedicated to revolutionizing how consumers research products – said that before you start swiping, you should review all your credit card rewards.
Figure out if you have points or miles you can transfer to airlines to get free rewards seats, Duren suggested. In many cases, these seats will cost fewer points that what you’d spend if you used the points or miles to book a flight through a third-party site, such as Expedia or Orbitz, he said.
This is especially important for those who have the Chase Sapphire Preferred Card or the Chase Sapphire Reserve cards, both of which allow you to transfer your Chase Ultimate Rewards points to 13 different travel partners – including domestic carriers United, Southwest and JetBlue. You also have the option of transferring those points to the rewards programs at Hyatt, IHG, Marriott and Ritz-Carlton, Duren noted.
“Before you transfer your points, take a minute to see how many it would cost to book the flight through the Chase travel portal, as well as through the frequent flyer programs of the airlines you want to fly,” Duren said. “In terms of value, I’d say that those who can use World of Hyatt points should look for Hyatt Place properties where they’re traveling. You can, in some cases, find rooms for as little as 5,000 points,” he said.
Kay Rodriguez is a personal finance blogger at HappyToHustle.com and a former management consultant who saved more than $30,000 in two years to take a yearlong career break.
“You can balance travel spending with gift spending by using points from a travel credit card to pay for your travels. Many credit cards enable users to pay for flights and hotels with points, or transfer points to a variety of airline and hotel loyalty programs,” Rodriguez said.
This strategy can significantly reduce the out-of-pocket cost of travel during the holidays, leaving more disposable income for gifts, she said.
Rodriguez added that you can also avoid airline fees by using an airline-branded credit card, such as the United Explorer Card, to book your flight. Or, she said, you can fly on Southwest Airlines, which does not charge for the first two checked bags.
More likely than not, travel is going to be your biggest expense during the holidays, said Simon Zhen, research analyst at MyBankTracker.com. And, of the two main expenses – traveling and gift giving – you have less wiggle room with travel costs because airlines are setting the prices for your trip, he added.
“Americans should place emphasis on reducing the cost of holiday travel. Book flights as early as possible. Use your airline miles and credit card rewards. Then, turn your travel savings into a larger budget for gifts,” Zhen said.
What if you don’t have rewards?
If you don’t have any awards points available, Duren said you might be able to defray the cost of flying by departing early on Christmas day or by being flexible on your departure and arrival dates, as you’re more likely to find lower fares this way.
Also, consider flying Southwest Airlines, which as Rodriquez mentioned, allows you to check two bags for free. Not only will you avoid baggage fees, you can use one of the bags to fill with Christmas gifts that you give and will receive.
See related: How to save on a holiday trip to New York City
If you travel by car
It’s those who plan to travel by car over the holidays that can get in trouble if they’re not careful, said Martin Lynch, compliance manager and director of education at Cambridge Credit Counseling.
Those traveling by car are obviously saving on airline tickets – and they can fill up their trunks with whatever they like without worrying about a baggage fee – but there are other costs they shouldn’t overlook, Lynch said.
They will need to budget for gas for the trip, and if they are driving a long distance, there will be meal stops and tolls. Lynch suggests the long-distance driving group take food along on the trip to avoid stopping for expensive meals along the way.
Whether you’re driving across town or across the country, a complete holiday budget is a must, and the sooner you create one the better, Lynch advised. Think about starting to plan your budget around Labor Day – that leaves a lot of time to shop for deals on your gift-shopping list, he said.
“If you’re going to be paying out a significant amount for travel, you must put a ceiling on your gift expenditures. Divide up those dollars any way you want, but researching and planning each purchase can help you avoid overspending on impulse buys,” Lynch said.
Finally, if you end up going over budget, don’t despair. Just resolve to tighten your belt for a month or two – or three – and pay off that new debt entirely.
“Whatever you do, don’t carry holiday debt into April and May,” Lynch cautioned.
Consider cutting back a tad on gifts
If your money is tight and you need to pay for travel in addition to gifts, consider cutting back on your gift budget to supplement your travel budget, Duren said. Remember, you’re sacrificing time, energy and money to fly to see family or friends, so really, your presence is a gift, he added.
“There are hundreds of budget-gift guides online \u2014 find a few you like, make some smart purchases and use your leftover cash to get a plane ticket,” Duran suggested.
If you need to take gifts with you
You might need to take gifts with you on your trip. If that’s the case, be strategic about what you buy, Duren said. For example, although they’re not nearly as sentimental as physical gifts, gift cards are going to take up very little space in your baggage. Or, just buy and send gifts online ahead of time, he said.
Also, remember that you can buy gifts at big-box stores near your destination and pick them up, Duren advised.
“That way, you can avoid taking gifts with you on the plane – and risk damaging them. Also, your hotel should have scissors and tape you can borrow, so you could even do some gift wrapping in your room,” he said.
Lynch suggests airline travelers who need to take gifts with them consider shipping them directly to their destinations instead of paying extra to carry them on flights.
But Rodriguez has a different approach. “If you’re taking additional gifts with you on a holiday trip in addition to your own suitcase, consider packing your clothes into a collapsible duffel and your presents into a carry-on sized, hardcover suitcase,” she said.
That way, if you have to check a bag, you’ll have to pay the fee only one way. You can consolidate your collapsible duffel into your hard suitcase on the way back and carry it on, Rodriquez said.
Create your own balancing act
Whether you travel by plane, train or automobile, it’s important to balance your travel and gift-giving costs. Use these tips to help you create your own balancing act. When all is said and done, you’ll be a much happier traveler – and gift giver.