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How to plan a vacation on a budget

The COVID-19 pandemic still has many Americans’ vacation plans on hold, but you can still save for a future trip of your dreams


A vacation can be expensive no matter where you travel to. By planning ahead, however, you can stash away some travel money or rewards and get into a savings mindset early on. If your goal is getting away on a budget, these experts tips can help.

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The Bank of America content in this article was last updated on March 30, 2021.

It’s been over a year since the COVID-19 pandemic hit the U.S., and life has yet to return to normal.

In the wintry weeks prior to the pandemic, many of us likely dreamed of better weather, and perhaps even a change of scenery to somewhere new and different. But if you had plans for a summer vacation in 2020, chances are they were significantly altered or outright canceled.

Fast forward to spring 2021: Millions of Americans are getting vaccinated, COVID-19 cases have fallen after a winter surge and U.S. travel restrictions could be lifted by mid-May. You may be planning to take that trip you had to put on hold back when the world shut down.

Any vacation – particularly if you’re taking the whole family – can be a budget-buster. By planning ahead, however, you can stash away some travel money or rewards and get into a savings mindset early on.

If your goal is getting away on a budget, these expert tips can help.

See related: Best travel credit cards

Be flexible with your destination and dates

Kevin Payne, who writes about his own family travels and finances at Family Money Adventure, says the most important tip for anyone who wants to save on travel is a matter of common sense.

“Be flexible with where you travel … and try to be open about the dates you travel on,” he says.

As an expert who books travel regularly, Payne is intimately familiar with just how much pricing can vary for airfare and hotels across different dates and destinations. If you have any flexibility at all, he says, you’ll be in the best position to save big and potentially score a deal.

To start your search, Payne suggests creating a list of potential destinations you might want to visit, as well as dates you could potentially travel on.

“From there, use a website like Google Flights to compare pricing among all the different airlines,” he says. “It can be shocking just how different pricing can vary from Miami to Fort Lauderdale to Tampa, or from a Tuesday to a Friday for departure.”

If you’re not flying, take the time to compare pricing on hotels, rental condos or resorts in destinations you’re considering. You may find that one spot is considerably less expensive than others for any given reason, which is a good incentive to book right away.

See related: Earn more with airline, hotel rewards program special offers and promotions

Consider travel options known for their budget appeal

Also, consider types of travel that are known for being frugal.

For example, booking a rental condo with another family has long been considered a frugal option since you can share costs and use your own kitchen to prepare most of your meals at “home.” However, it may be difficult to practice social distancing if you’re sharing a relatively small space with multiple people who live outside your household.

If you book a reasonably priced Airbnb in a major tourist destination or along a beautiful beach, then voila – you can easily secure a low-cost getaway with plenty to do and see.

But there are plenty of other travel options to consider that might be more affordable than you think. All-inclusive resorts that include food, drinks and entertainment in your nightly rate tend to be popular since you know exactly how much you’re paying for your trip ahead of time, outside of extras like souvenirs and worker tips.

Melissa Lagerquist, cruise savings expert at CruiseFrugal.com, says that while cruises can be an inexpensive option, you should learn about and compare all the additional charges you’ll need to pay outside of your cruise fare.

“Cruise fares can be a great bargain, but they are only a portion of the total cruise vacation cost,” she says. “Additional expenses include gratuities, onboard spending, shore excursions as well as flights and a hotel night for those who don’t live near their cruise embarkation port.”

Once you educate yourself, it’s smart to look for discount cruises on cruise line websites, or by subscribing to cruise line newsletters. You can also browse discounted cruises using a website like VacationToGo.com, where you can find unsold cruise cabins at up to 82% off within 90 days of departure.

It’s also important to stay abreast of CDC guidelines and recommendations with respect to cruises. And even if you book a trip far in advance, be sure to monitor your cruise line’s website for any updated health and safety protocols, as well as postponements and cancellations.

See related: Stuck with cruise credits? Here’s how to use them

Sign up for travel credit cards ahead of your trip

Lagerquist and other savings experts also maintain that signing up for travel credit cards can be a good option to start building up savings for a trip.

That’s because many travel and rewards credit cards offer big sign-up or welcome bonuses you can earn after you meet a minimum spending requirement within the first few months. Many of these bonuses are worth $500 or more, and beginning the process now means you can have some rewards built up by the time you start planning your trip.

Which card should you sign up for? Lee Huffman, who writes about travel rewards on his website, Bald Thoughts, says more and more airlines are pricing their awards based on demand. As a result, you may not want to go with a co-branded airline credit card unless you’re entirely sure you can find award availability for your dates.

Instead, you might want to consider a card like the Capital One Venture Rewards Credit Card “because there are no blackout dates when using its rewards,” says Huffman. Simply pay for your travel expenses with the card, then you can erase them with your miles at a rate of 1 cent per mile.

Lagerquist also likes this card because the sign-up bonus is worth up to $1,000 (100,000 bonus miles after spending $20,000 on purchases in the first 12 months, or still earn 50,000 miles after spending $3,000 on purchases in the first 3 months*). As Huffman said, you also have access to versatile redemption options.

*The current sign-up bonus for the Capital One Venture is 60,000 bonus miles after spending $3,000 in the first three months, equal to $600 in travel

Among cards with transferable points, Lagerquist says it’s hard to beat the Chase Sapphire Preferred Card. Not only can you earn 60,000 points worth $750 in travel when you spend $4,000 on your card within three months of account opening, but you can redeem your rewards in more than one way.

You can cash them in for travel through the Chase portal, redeem for gift cards or merchandise or transfer to popular airline and hotel partner programs like Southwest Rapid Rewards, United MileagePlus, Marriott Bonvoy and IHG Rewards.

However, not all vacation expenses fit neatly into the travel category, so Lagerquist likes a good cash back credit card to use for meals, incidentals and anything else travel miles and points cannot cover.

While any cash back credit card can do the trick, the Bank of America® Premium Rewards® credit card is worth considering since the sign-up bonus is worth $500, she says. The bonus is 50,000 points after spending $3,000 in the first 90 days. Though this credit card comes with a $95 annual fee, this fee is easily offset by taking advantage of the up to $100 in airline incidental statement credits annually, which can be used for seat upgrades, baggage fees, in-flight services or airline lounge fees.

See related: Airline, hotel loyalty programs extending perks through pandemic

Start a travel savings fund

Finally, don’t forget the power of regular savings when it comes to building up a stash of fun money. If you want to have cash set aside for the trip of your dreams, Payne says it’s smart to open a separate savings account and begin regular contributions every month, or even every payday.

“Even small amounts of money can add up if saved regularly and over time,” he says.

Just make sure the money is kept separate from your regular checking and savings account. That way, you won’t accidentally spend it on bills or regular ongoing expenses.

You should also consider setting up your travel fund in a high yield savings account that earns more interest than you typically get with a brick and mortar bank. After all, compound interest can help your travel fund grow, but it works best when your account is earning a high return.

Bottom line

Any travel plan must be considered tentative as the COVID-19 pandemic rages on. After you book, continue to stay on top of any potential cancellations, even if your trip is scheduled for this year.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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