man at the airport learning how to pay for a vacation.
Moving & Travel

How to pay for a vacation key takeaways

  • Start planning as soon as possible and you might get discounts for early booking.
  • Early planning also could give you more time to save up and your savings could earn more interest.
  • Rewards credit cards, used properly, can help cut costs or build up rewards for future trips.

Dreaming of your next vacation? You’re not alone. When it comes to hitting the road, picking out your dream destination is probably the easiest part of planning your next trip. Paying for it without going broke could be the hardest.

Vacation costs can add up quickly. Often, we find that travel expenses are higher than expected. The good news is there are ways to plan and save money for those dream trips, and those options are ever-evolving.

In this article, we’ll review several ways to pay for bucket-list vacations and much-needed getaways.

1. Plan ahead and book early

Long before you open a vacation savings account, or empty it, you should have a good idea of where you want to go. Estimate any predictable expenses, like airfare, food, and activities you might like to do once you’re there. Then think about discretionary expenses like souvenirs, tips, and excursions. This will give you an idea of how much you’ll need to enjoy your trip to the fullest.

Some experts say you should expect to spend about one week’s salary for a once-a-year vacation. Of course, that could vary greatly depending on the number of people traveling with you and where you’re going.

Knowing how much travel money you’ll need ahead of time can help you determine much more than how you’ll pay for it. A major advantage of planning ahead is that you could save money by booking early with hotels, airlines, and car rentals. It can also help you find prime opportunities to use rewards credit cards.

Ways to pay for your vacation

Now, we’ll look at some commonly used methods to plan for and cover those vacation costs.

2. Start a travel savings account

Like most things in life, paying cash is the simplest route. It means you’ll avoid paying interest charges. Setting up a travel savings account is an ideal method for socking away money.

Once your savings account is established, keep that money separate from your other accounts and don’t dip into it for anything else. Next, have money automatically transferred to your travel savings account. Pick a certain amount to move from your checking account on a regular basis. Create a monthly savings schedule to make sure you’re building the funds needed for your trip when it’s time.

Another benefit of getting an early start: More time for your savings to earn interest. You’ll want the highest interest rate possible, but also want to make sure you have access to the money when you need it.

3. A travel loan

Travel loans are a type of personal loan that you can use to cover travel expenses. You can request a specific amount and opt for a fixed interest rate that will have fixed monthly payments. 

Shop around to find the lowest APR. Review any possible fees, such as loan origination fees and late-payment fees. Some lenders charge a fee if you make advance payments and try to pay the loan back ahead of schedule.  

4. Get a side job

Have a talent or hobby that can easily be monetized? Start a side hustle to bring in some extra cash. You could take on a part-time job or jump into the gig economy by working for businesses like Uber, Lyft or TaskRabbit in your free time. Then, put all the extra money into your travel savings account. 

5. Credit cards

Paying for your vacation on a credit card is an option—especially if you can immediately pay the credit card bill. However, make sure you’re using the right kind of card and not, for example, a high-interest credit card.

If you’re interested in opening a new credit card account, look for one that comes with perks like an introductory bonus. You could possibly turn that bonus into a free flight and hotel stay at select locations. Many travel rewards credit cards offer travel points or miles, meaning for every dollar you spend, you earn free travel. This may help you cut your trip costs, so do some planning and figure out what cards will save you the most money and destinations with the biggest discount.

If you’re just opening a card with points or rewards and haven’t racked up any to use just yet, use the card responsibly to generate future discounts for trips down the road. Another option to consider is one that offers a no-interest period or no balance transfer fee.

If you plan to use any credit cards while you’re traveling, it’s important to know if the card has an annual fee, foreign transaction fees or processing fees. These vary greatly from credit card company to company.

6. Point-of-sale loans

These loans are a newer option and are widely available, with more businesses accepting them every day. You can use this “buy now, pay later” method as a form of vacation layaway. Some of the most popular providers are Affirm, Afterpay, Klarna and Uplift.

When it’s time to pay for something, either online or in-store, you can opt to set up a payment plan with the authorized provider. You’ll then make installment payments over a fixed period of time until you’ve completely paid off the loan. Your balance could inflate because of fees for late or missing payments and the APR may reach upwards of 30%, which is higher than most credit cards. However, some providers offer 0% interest deals on qualifying purchases.

7. Vacation clubs and travel clubs

Vacation clubs are exactly what they sound like: a club that you join to go on vacations. Typically, you’ll pay membership fees and maintenance fees and in return you get access to discounts for specific travel destinations and even cruise lines that are part of the club.

A travel club is similar and may have many of the same fees but offers discounts on group rates because members of the club travel together in larger groups.

Make sure you investigate these clubs carefully. They have been compared to time shares, because of the way that fees eat away at the actual discount you stand to receive. 


This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.


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