A Piggy Bank for Travel? How to Make Sure You’re Saving Up for Vacation Chris Caggiano August 8, 2023 general When it comes to taking a dream vacation, we all could use a little help. Any trip that’s dream-worthy is usually going to require a little planning and a whole lot of saving. For many, the planning part comes easy. It’s the saving part that’s a bear. The good news is that with the right strategies and financial tools, you can make your dream getaway a reality. Are you dreaming of that perfect vacation but finding it challenging to sock enough money away? Then let’s dive in and discover how you can make your dream vacation happen. Airline Credit Cards Of course, no article about saving up for a dream vacation would be complete without mention of the frequent flier miles you can accrue with a dedicated airline credit card. These credit cards offer rewards like points or miles for purchases and often dole out higher rewards for actual travel expenses. As an incentive, the airlines also grant a generous amount of bonus points when you first sign up for the card. Travelers can exchange points for flights, upgrades, hotel stays, and more. Other benefits to these cards include priority boarding and lounge access. How fast can you rack up enough points for that dream vacay? Well, it depends on your spending habits, sign-up bonuses, travel frequency, and your choice of card, since different airline credit cards have different earning rates and benefits. What’s more, some cards offer flexible redemption options allowing you to apply your points towards expenses beyond your flights, including accommodations, car rentals, dining, and entertainment. Dedicated Savings Accounts Some travel companies — including CheapOair — offer dedicated savings accounts to help you save up for your next trip over time. These programs help you gradually set aside cash to save up for your next vacation. CheapOair has partnered with financial technology company Accrue to provide this service to customers who are interested in setting up dedicated accounts for saving towards vacation packages. With these programs, you simply sign up and deposit your first $1 into an an FDIC-insured account. You can then save at your own pace with one-time or recurring deposits. You have the flexibility to cancel or withdraw anytime. What’s more, some providers will match your contributions up to a certain percentage to further encourage you to save. Once you’ve saved enough, you can instantly book your trip using a one-time virtual debit card loaded with your savings and rewards. The best part here is that the accounts don’t charge any fees and you don’t have to pay any interest. You can also share the link to your account with friends and family to help you reach your goal faster. Maybe you’ve got a big birthday coming up, or are graduating from college. Or perhaps you’re getting married and would like to ask people to help you pay for the honeymoon in lieu of gifts. There are tons of possibilities. Banking Services One smart and effective way to save up money for that dream vacation is to take advantage of various tools and services available at your local bank. You can start by setting up recurring transfers from your checking account to your savings account. This automatic process ensures a steady flow of funds into your vacation fund, making saving easier and more consistent. To make the saving process even more effective, consider making your savings account less accessible, such as opening a separate account without a debit card or online banking access. This extra step adds a layer of discipline, reducing the temptation to dip into your savings for impulse purchases. Additionally, you can explore the use of boosters like “Keep the Change” services that many banks offer. Here, when you make a purchase, the bank automatically rounds the amount up to the next dollar and transfers the difference from your checking to your savings account. You can also consider setting aside a portion of windfalls, bonuses, or tax refunds specifically for your vacation fund. By combining these strategies, you’ll watch your vacation savings grow steadily, bringing your dream getaway within reach. Buy Now, Pay Later You’ve no doubt seen these “buy now, pay later” (BNPL) programs that have been proliferating on many e-commerce web sites. These programs allow customers to purchase goods or services and pay for them over time, typically in installments. Well, travel companies have started offering these BNPL programs as well. A BNPL account can be a convenient option for travel, as it can help you spread the cost of your trip over several months. These buy now, pay later programs often offer 0% APR for qualifying purchases, and you can choose to pay for your purchase in 3, 6, or 12 equal installments. You will typically need to create an account with the BNPL provider and link a credit or debit card. Then once you’ve found your (hopefully) cheap flights and hotel rooms, you can select the BNPL option at checkout and choose the number of installments you plan on breaking the amount into. It is important to note that BNPL programs, unlike dedicated savings accounts, can have fees and interest associated with them. It is also important to make sure that you can afford to make the monthly payments before you choose a BNPL program. Overall, BNPL programs can be a convenient way to book travel. However, it is important to weigh the pros and cons before using one of these programs. You Might Also Enjoy: Tight Budget? Here Are 10 Tips to Stretch Your Vacation Money! Wholesale Club Memberships Many people belong to a membership-based warehouse club like Costco and BJ’s. And while these retailers don’t offer specific vacation savings accounts, their membership benefits can indirectly assist consumers in saving for vacations. Of course, there’s the savings part: by purchasing items in bulk at discounted prices, customers can save on everyday expenses and allocate the savings to a vacation fund. These wholesale clubs also occasionally provide travel deals and vacation packages for members, helping them obtain discounted rates on accommodations and activities. Additionally, any credit cards that consumers might have from these warehouse blubs may offer cashback or rewards on purchases, which can enable members to accumulate savings to put towards vacation costs. Leveraging these discounts and rewards can be a great way to help consumers save up for their dream getaway. FAQs: Q: How can I track my vacation savings progress effectively? A: Utilize budgeting apps or financial software that allows you to create specific savings goals. These tools often provide visual progress bars and send alerts to keep you motivated and on track towards your vacation fund target. Q: Are there any benefits to saving with a group or partner for a vacation? A: Saving as a group or with a partner can boost motivation through shared goals and accountability. It also opens the door for matching savings contributions, making the goal more attainable and potentially faster to reach. Q: What happens if I need to withdraw from my dedicated savings account prematurely? A: While dedicated savings accounts are designed to help you save for vacation, most offer flexibility in case of emergencies. You can usually withdraw funds without penalty, but it’s wise to check the specific terms and conditions of your account. Q: Can airline credit cards be used for everyday purchases to earn points? A: Yes, you can use airline credit cards for daily expenses to accumulate points faster. However, remember that travel-related purchases often earn you more points than general spending. Q: How do I choose the right “buy now, pay later” plan for my travel needs? A: Consider your budget and payment timeline preferences. Look for plans with 0% APR and no hidden fees. Always read the fine print to understand the terms and ensure the monthly payments are manageable. Q: Can I use the points from my warehouse club’s credit card towards travel expenses? A: Yes, many warehouse clubs’ credit cards offer rewards that can be applied towards travel expenses. Check your card’s reward program details for how to redeem points for travel deals, flights, or hotel stays. Q: How do I start a vacation fund if I have a fluctuating income? A: Start with a high-yield savings account to maximize your savings. Adjust your monthly savings goal based on your income each month, and consider setting aside a larger portion of your income during more profitable months. Do you have any tricks or tips to share about saving up for a vacation? Tell us about them in the comments below!
