Tyler Weaver, Wealth of Geeks
More than 113 million people will be traveling for holidays this year and spending around $180 billion on travel expenses.
Holiday travel is always hectic. Even if you plan your holiday travel far in advance, everything is still exorbitantly expensive. With rising inflation impacting nearly every industry in the United States, Americans have to take steps to conserve cash as the holidays draw near.
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Globetrotters
According to a study conducted by Harris Poll on behalf of NerdWallet, 44% of Americans plan to spend their hard-earned cash on flights and/or hotels this holiday season.
The Harris Poll surveyed 2,000 U.S. adults to find out how much they will be spending on travel this year and how much will go onto credit cards.
Of those, 891 plan to shell out money for flights, hotels, or both this holiday season. The poll also asks participants how they will save money ahead of their travels.
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Preliminary findings
Preliminary findings in the survey show that 66% of holiday travelers will be using their credit cards for some or all of their travel expenses and are averaging $1,417 on these expenses. That would amount to more than $106 billion in credit card spending this year on holiday travel alone.
According to the survey, 7% of Americans who used credit cards on their holiday travels in 2021 still haven’t paid off the balances.
29% of travelers reported that they would opt to drive this year instead of flying, citing lost baggage and canceled flights. But high fuel costs mean 20% of Americans plan to fly to their destinations this year.
Two-thirds of holiday travelers are concerned about how much more travel is going to cost them this year compared to last year, thanks to higher inflation.
Cutting back on their everyday spending to afford their holiday travel this year is the answer for 36% of travelers polled. And 27% are planning to spend less on gifts to save money for travel expenses.
“Between inflation, rising demand in travel, and ongoing staffing shortages within the travel industry, high travel costs are set to put a strain on many budgets this year,” says Sally French, a NerdWallet travel expert. “So many people are turned off by airport chaos and are opting to drive. But with rental car and gas prices so high, a road trip might not necessarily be much better.”
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Credit cards for the win
According to the poll, 66% of travelers plan to use their credit cards to cover some or all of their travel expenses. 20% reported that they would pay off the balance when they get their next billing statement. However, most who plan to use their credit cards for travel expenses believe it will take around three months to pay off the balance.
15% of respondents said they have applied for a new credit card to collect a sign-up bonus to help pay for holiday expenses. Credit cards can be helpful for travel if you have a card that rewards you with air miles or cash back, but they can become burdensome if the balance isn’t paid off within the next couple of billing cycles.
NerdWallet suggests looking past the sign-up bonus and choosing a card based on how long you think it will take to pay it off. If it takes more than one or two billing cycles, applying for 0% APR credit cards may be best.
“When applying for a credit card, understand your goals and choose a credit card that helps to support them,” French says. “If you know you’re going to take on debt to pay for holiday season expenses, prioritize low-interest rates over rewards, as any rewards earned will almost never be negated by the money you’ll owe in interest.”
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Playing catch-up
In the 2021 holiday season, 79% of holiday travelers put at least a portion of their travel expenses on a credit card. However, only 16% of those travelers paid the balance off within the next billing cycle. 7% still haven’t paid off their balance from last year.
Americans who used credit cards for travel expenses last year took, on average, 2.5 months to pay off the balance.
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Current events affect travel plans
Many Americans are taking into account current events, such as inflation when making holiday plans this year. Airline issues, high gas prices, and work flexibility are other things travelers have to consider.
The transition to hybrid or fully remote work will also impact travel plans this year. Travelers may have more flexibility when planning travel dates if they work remotely and do not need to ask for time off.
38% of travelers this year plan to avoid busy travel days by extending their trips.
One out of 8 respondents plan on buying or purchasing travel insurance for their trips this year.
“Travel insurance can be great when it works, but just understand the scenarios where it’ll work,” French says. “Unless you’ve got the more expensive Cancel For Any Reason coverage, most policies will only reimburse you for covered reasons. Deciding you’re too busy to travel, or fear of traveling should COVID-19 cases spike, are otherwise not commonly covered reasons.”
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Taking steps to save
72% of Americans who travel for the holidays report that they save ahead of time for travel expenses. Holiday travelers start saving 8.9 weeks in advance, on average. But a quarter of Americans save for travel expenses five weeks or fewer in advance.
Inflation is up 7.7% as of this writing, and many travelers are worried about how this will affect their holiday plans. 37% of travelers are concerned about how much more expensive travel will be this year due to inflation.
The majority of those polled are taking preventative steps to save money on travel expenses this year. 39% of travelers are choosing flights based on price rather than convenience, and 38% are choosing hotels based on price instead of amenities.
