If you're planning a vacation and you're like most people, you'll probably put your biggest costs, such as transportation and hotels, on a credit card. In 2014, 32 percent of Americans who took vacations did just that.
It stands to reason: "Paying with plastic" is convenient and smart-but only if you've saved enough money to pay off the charges in full. With credit card interest rates currently averaging nearly 14 percent,
carrying a balance on your account from month to month can push the total cost of even a modest getaway far higher than you ever imagined-and it can keep you paying for years.
By saving for your vacation beforehand, you'll reap a number of benefits:
Saving for a vacation should be like saving for any other major financial expenditure, such as a new car, a family celebration, or a down payment on a vacation home. It's a straightforward matter of setting a goal, establishing a time frame, and creating a plan.
Begin by deciding on a destination and itinerary and how you'd like to travel-luxury class, economy, or somewhere in between. By researching online, you can estimate the total amount you'll need to save. Make sure to factor in all the costs you're likely to incur, such as:
Next, decide how much you can comfortably set aside each month to reach your goal. For example, if you're hoping to get away this time next year and you've calculated the total price at $6,000, you'll need to put away $500 a month. If that feels like too much, you can reduce the amount and extend your saving horizon accordingly.
Setting up a dedicated savings account for your vacation will help you stay focused on what you're saving for-and deter you from tapping into your fund to cover unrelated expenses. It's also a good idea to formalize your account with an explicit name-e.g., "2016 Yellowstone Camping Trip Fund" or "Eat, Pray, Love Wine Country Tour: 2018." Then arrange for a fixed amount to be transferred into it each month from your checking account.
If you're vacationing as a family, save for it as a family-and get everyone involved in researching, planning, and choosing activities. That will build excitement before the vacation and reduce the likelihood of disappointments and disagreements later on. Everyone will have a better time.
Saving on your vacation is as important as saving for your vacation. Whether you're traveling abroad or staying close to home, consider these tips for getting the most mileage from your money:
Spending your vacation worrying about how you're going to pay for it is no day at the beach. Start your vacation fund now, and take worry out of the picture.
http://www.creditcards.com/credit-card-news/credit-card-statistics.php; National average credit card rate accurate as of November 24, 2015.
Visit BankOnCIT.com to explore the products offered by CIT Bank.
The U.K. vote to secede from the E.U. had an immediate impact on U.S. mortgage rates. A 30-year fixed-rate mortgage now hovers around 3.25%, a record 3-year low. If you considered refinancing your mortgage, now might be the time to lock in low rates.
Try as they might, many find it difficult to save consistently. Monthly bills, needs and indulgences seem to absorb every dollar. When an unexpected expense arises, people realize they should've been saving all along.