NerdWallet's Smart Money Podcast - Summer Travel Insights: Maximize Your Vacation Budget

Episode Date: April 10, 2024

Unlock insights on vacation spending to leverage summer travel trends, and dive into the latest employment report.  Planning to travel this summer? In this episode of NerdWallet’s Smart Money podcast, hosts Sean Pyles and Anna Helhoski delve into the world of summer travel. They discuss the key findings from NerdWallet’s 2024 Summer Travel Report, revealing insights into Americans’ vacation plans and expected spending. NerdWallet travel rewards expert Sally French joins them to dissect the latest trends in airline fees, price fluctuations, and factors influencing travel decisions. Whether you plan on traveling across the globe, or staying local, understanding summer trends can help you optimize your travel planning. Later in this week’s Money News roundup, Sean and Anna cover the latest money headlines, including the March employment report and a new student loan relief program. From travel and job market trends to initiatives aimed at reducing student loan debt, this episode highlights some evolving aspects of the American financial landscape.   In their conversation, the Nerds discuss: summer travel, vacation spending, travel trends, money news, airline fees, travel expenses, travel insights, travel decisions, travel tips, travel rewards, employment report, job market trends, student loan relief, student loan debt, financial developments, personal finance, summer vacations, travel planning, inflation impact, travel industry, airline pricing, travel costs, budgeting tips, financial decisions, economic indicators, financial trends, travel research, travel data, travel analysis, vacation budget, travel hacks, budget travel, money management, financial advice, money-saving tips To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to NerdWallet's Smart Money Podcast. I'm Sean Pius. And I'm Anna Hilhoski. And this is our weekly money news roundup, where we break down the latest in the world of finance to help you be smarter with your money. We'll go deep into a single topic and then leave you with the latest money headlines. And today we're talking about summer travel. Anna, do you have any big vacation plans this year? Not yet. I need to get cracking. How about you, Sean? I'm hoping to meet up with my

twin sister in Chicago for our birthday in June, but we have yet to work out the details. But here is some information that might help your decision. NerdWallet's 2024 Summer Travel Report, a survey of more than 2,000 adults conducted by the Harris Poll for NerdWallet, found that this summer, nearly half of Americans plan to take a trip that includes a flight or hotel stay. That's right, Sean. And they'll spend an average of $3,594 on their trips. All in all, over 118 million Americans are expected to spend more than $424 billion on this kind of travel for summer 2024. Today, we have Sally French, a travel rewards expert here at NerdWallet, to talk us through some of the findings. Welcome back, Sally. summer 2024. Today, we have Sally French, a travel rewards expert here at NerdWallet,

to talk us through some of the findings. Welcome back, Sally. Thanks for having me. Always great to be here and great timing as summer trip planning is right here. All right. So Sally, as you know, summer travel took a nosedive at the start of the pandemic. Can you tell us what the recovery has been like in the last few years? Travel is definitely back. The nosedive is absolutely over. We're seeing the largest flight schedules we've ever seen. For example, Delta said they're running their largest transatlantic schedule yet. We've seen all sorts of records being broken

in terms of number of people going through TSA pre-check. We've seen all sorts of people applying for new passports. Basically, people are back and ready to travel. So with all that in mind, what is summer travel this year going to look like? I'm guessing very busy? It's going to be busy. And it's also going to have some fees that you need to be aware of. One of the biggest stories so far this summer is rising bag fees. We saw plenty of major airlines

raise their bag fees. That includes Alaska, American, Delta, JetBlue, and United. And then JetBlue just did something really interesting. They introduced surge pricing for bags. We're probably used to surge pricing for things like Ubers, where it's more expensive on a Friday night when everyone wants to ride. But now it's going to be more expensive to check your bags during peak times. And is that depending upon when you're checking in for your flight or when you're booking your flight? How will you know if you're going to be dealing with surge pricing on checking a bag or not? Yeah, so that's an interesting question. Many airlines actually charge you less if you pay for that bag in advance versus waiting until the day of or 24 hours before departure. Of course, all those prices vary by airline, but NerdWallet does have a baggage

price calculator on its website. So you can calculate and see how much those bags will cost you. Well, that's just reaffirming my belief in being carry-on only. So thanks for that. I'm with you, Sean. I'm also carry-on only. But that brings me to my next point. And I know it's really frustrating for a lot of people to see their bag fees going up, but the reality is we're seeing airline experiences getting better. So for example, American Airlines just announced that they're going to be rolling out free Wi-Fi on their planes. That makes it convenient for us when we're in the air and so bored. Another even more important thing I think is that we're actually seeing a drop in airfare. According to the American Express Global

Business Travel Air Monitor report, prices, especially on international routes, are expected to drop some by as much as 12% on average. So for example, flights from South America to North America are expected to drop by 12%. North America to Asia expected to drop by 7.5%. And so what it all really chalks down to is that even though we're seeing raising prices for these ancillary fees, things like bag fees, the overall base rate is actually on average going down. So like you said, Sean, if you're a carry-on only kind of person, you may be able to save money now versus in years past. That's all really good to know.

NerdWalt's report found that about 45% of people are planning on air travel or a hotel stay this summer. So what's holding the other 55% back? Is elevated inflation still playing a big part here? You know, Ana, you nailed it. Elevated inflation is something that is holding people back. In fact, according to NerdWallet's summer travel study, more than 22% of people say it's because inflation making travel more expensive that they're just opting out of travel completely. The good news is that actually 22% is slightly down from last year's 23%. Of course, that's a small amount, but hopefully that means that people aren't as much feeling the pressures of inflation as they did in past years. Of course,

the other things like those bag fees that I mentioned earlier are kind of providing a sticker shock and really making it feel like airfares are more expensive, even though they might not necessarily be more expensive. Another reason why people aren't traveling is simply because people have more flexible schedules. We used to really be tied to only traveling during the big winter holidays or during summer because that's when we could get off work. That's when our kids could stay home from school. But especially now with this work from home culture, we're seeing this trend of more people traveling during what we call shoulder season. And that is a great time to travel because it's typically less expensive.

It's typically less crowded. So it just sort of spreads everything out. So NerdWallet actually encourages people to opt out of that busy summer travel and instead travel during those shoulder seasons. You avoid the crowds that way too, hopefully. So how are travelers typically paying for their travel? Is it mainly out of savings or are some taking on debt?

Of course, there's many ways to pay for travel. There's savings. You might have your vacation fund. You might pay with your credit card points. But what NerdWallet is seeing is that about 20% of people say they'll use a credit card to pay for their travel expenses and they don't intend to pay off the balance

within the first billing statement. That is something to be careful of because if you carry over a balance, then you're very likely racking up costly interest charges unless you have something like a 0% APR promotion. If you can afford to pay your credit card statement in full, you should. And as ever, we should remind people that carrying a balance on a travel credit card can wipe out any benefit that you might be getting from points earned on the charges that you're putting on that card. So Sally, I'd love to hear how people are maybe trying to save money on their summer travel this year. Yeah, people are doing the

tried and true classics. We're seeing a lot of people driving instead of flying to their destination. About 42% of people in their wallet studies said that they would drive versus fly. That's actually up from last summer when 35 percent of travelers said that they would drive versus fly. Another thing that we're seeing that NerdWallet actually really recommends is choosing a flight based on price instead of convenience. 35 percent of people say that they're doing this and sometimes this can save you a lot of money and there are tools that make this easier to figure out the cheapest flight. So a lot of people just figure, you know what, I'm going to leave on Friday and I'm going to return on a Sunday because that aligns with my standard Monday through Friday work schedule. But what a lot of people don't realize is sometimes that flight that returns on

Tuesday might be a lot cheaper. And once you multiply your whole family or group traveling with you, you can save so much money by adjusting your trip by a few days, even if that's not necessarily the most convenient day to fly out. If it's the cheapest, then it very well could be the best. And we're seeing a lot of smart readers doing that. That's really helpful, Sally. Do you have any other wisdom for prospective travelers this summer? Definitely don't overlook those credit card points and miles. You might have accumulated them. NerdWallet loves to recommend that people save, but points and miles are one avenue where NerdWallet actually doesn't recommend you save, especially when it comes to credit card points and miles. Inflation is so magnified. And so it's best to spend those balances down rather than sit on points. You can't use them

to cover anything else like rent. You can't invest them. They don't accrue interest. So spend those balances down and don't overlook signup bonuses. A lot of credit card offers are really, really good lately. They're offering tons of points and miles, which can cover many days in a hotel that can eat up a huge chunk of your vacation budget otherwise. And so if you have a big purchase and you can take advantage of that credit card signup bonus, that's a smart idea. Well, Sally, thanks so much for joining us. Thanks for having me. Up next, a few money headlines in the last few days. Sean, I'm feeling like a broken record as we start our headlines for this week.

So you're skipping? No, even though it's spring, I'm not skipping. But we're here with yet another government report showing that the job market just keeps going and going and going. Yeah, the Labor Department released March employment figures last Friday and companies added 303,000 jobs last month. The unemployment rate dropped to 3.8 percent, down from 3.9 percent in February. You're right. We could just run these sentences on a loop. Exactly. And the biggest employment gains were in health care and government, followed by the leisure and hospitality industries and construction. These are more numbers that the

Federal Reserve will factor in as it decides whether or not to start bringing interest rates down. A tight labor market, one where there are more jobs and workers to fill them, can pressure companies to raise wages and that, in turn, can contribute to inflation. But Fed officials have signaled that they aren't as worried about strong employment figures these days and are concentrating on inflation itself, as in price increases. The Biden administration announced yet another new program to cut student loan debt this week. This plan would reduce loan balances for about 23 million graduate and undergrad borrowers and eliminate them for 4 million. Yeah, and one twist here is that part of this plan targets borrowers whose loans have gotten bigger than what they originally took out. That's because interest has accumulated to the point of making it really difficult to pay off.

This plan would essentially wipe out all of that interest on loans held by people who make less than $120,000 a year or couples making less than $240,000. This is something that has really wrangled loanholders over the years, that they end up owing so much more than they borrowed, even if they pay on time and what their payment plans say they owe. But if you're in this cohort, don't count on it happening right away. The proposal still has to go through a comment period and faces the prospect of lawsuits similar to the ones that ended up at the Supreme Court last year. The administration says this proposal is more targeted than that

earlier one, but legal action could delay any implementation. One final headline for today, Sean, and it's a direct question for you. I saw that the $1.3 billion Powerball lottery ticket was won in Oregon. I know you don't live there, but you do live in Washington. So I'm wondering if you bought a ticket and if just maybe you're a billionaire? Only time will tell, Ana. Oregon law requires lotto winners' names to be made public,

so you'll just have to find out along with everyone else. Should we take it as a clue that you're still at work today? Yes, you should. That's what we saw and heard over the past week in Money News. Let us know what we missed and send us the headlines you've seen

and want to hear more about. That's it for this week's Money News. We always know what we missed and send us the headlines you've seen and want to hear more about. That's it for this week's Money News. We always welcome your money questions and comments. Turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. Or send us a voice memo at podcast at nerdwallet.com. And remember to follow, rate, and review us

wherever you're getting this podcast. Today's episode was produced by Tess Vigeland and edited by Amanda Derengowski. Sarah Brink makes our audio. Here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.