NerdWallet's Smart Money Podcast - What are your best tips to save on family holiday travel?

Episode Date: December 2, 2019

Holiday travel can be expensive — especially if you’re traveling with family. But you have options to make the cost more manageable. In this episode, Sean talks with travel Nerd Sara Rathner about how you can save on family holiday travel costs.

Hello, and welcome to NerdWallet's Smart Money Podcast, where we answer your money questions in 15 minutes or less. I'm your host, Sean Piles. This episode, I'm joined once again by Sarah Raffner, travel nerd extraordinaire. Hi, Sean. I'm happy to be here. I'm so glad you're here, Sarah. If you don't mind, can you do the honors of reading this episode's question? I'd be delighted. So this question is from Marsha in Los Angeles.

What tips do you have for families traveling during the holidays? It's already hard to budget for the gifts I buy for my family and friends. My husband and I are both from the East Coast, so the cost of flying across the country with our young children every year leaves us financially wiped out by January. What can we do? Oh boy, this is a toughie here. Sorting out family holiday travel is always tricky because not only do you have to balance family priorities and personalities, you also have to sort out how much money you're going to spend and who's going to be spending it. Throw kids into the mix and the equation can get even

more complicated and expensive. Travelers with children definitely feel the squeeze. Our 2019 holiday travel study found that Americans traveling with partners and kids are spending a lot on flights and hotels, around $1,600 to $1,900. And that's before you buy any gifts. It's enough to make more than half of survey respondents say they'd prefer to skip holiday travel and visit family during a less expensive time of year. Yeah, and I don't blame them. Because while having family together for the holidays is really nice and it looks really nice on a season's greeting card, the logistics of it can be too much of a headache to deal with sometimes. But there are

a few different options for families that want to travel during the holidays. So in this episode of NerdWallet's Smart Money Podcast, Sarah and I are going to talk you through a few of these options, including their pros and cons and potential costs. Then at the end, we'll leave you with the takeaway tips so you can feel confident about your family's holiday travel plans. Also, a quick note before we dive in, you are listening to season two of the Smart Money Podcast, but we're already planning season three, and we want to hear from you. We have a survey at nerdwalk.com slash podcast, so please check that out and let us know what you think. Okay, now to the episode.

Sounds great. Let's get to it. Okay. So Sarah, I feel like we need to set the stage for our listeners so they understand exactly why you're the nerdiest, aka best person to talk with about holiday travel hacks and family travel. To start, you gave us a bunch of really great insider tips on our episode about summer travel, so folks should definitely listen to that if they haven't already. But I would love

to hear a bit about your experience navigating holiday travel in the past. Well, my family doesn't actually celebrate Christmas, so I use that time of year as an opportunity to travel for myself. So I'm no stranger to crowded airports at that time of year. I would say that my most harrowing holiday travel adventure was a Christmas Eve flight home to the East Coast from Hawaii. For those keeping score, that's over 12 hours of travel. Assuming everything goes well. So my husband and I booked an itinerary with two layovers, which was a huge mistake. And there was a storm system over the entire state of Georgia. So our flight to

Atlanta got diverted to Alabama. And not only did we end up taking off and landing four times in a 24-hour period, but we also had to book it through the Atlanta airport to make it on the last of our flights. Yikes. So what I'm getting from this is that even though you weren't visiting family during the holidays, you nonetheless traveled during this peak season just for the sheer masochistic joy of it. I mean, you might say that Hawaii in December is always worth the struggle, right? Yeah, especially if you're coming from the East Coast, nothing like a nice beach after a cold winter. Exactly. So you're clearly a travel pro.

I would love to hear your thoughts about what options families have for traveling during the holidays. To me, it seems like there are a few obvious options. Families could fly to grandma's house, have grandma fly to them, or you can meet up with family at another time when prices are a little more reasonable. Does that seem about right to you? It does. You know, young families' finances are pulled in a lot of different directions. So anything they can do to cut back on holiday spending would be a huge help. I know that balancing family expectations is tough, but you can push for some changes to traditions and still end up with a holiday that your family will love. You know, the key here is to communicate your needs, which is scary, but other people in your family may actually feel

the same way that you do and also be afraid to express themselves. You know, for example, like your mom might secretly want you to take over hosting, but all this time you thought she wanted to keep Thanksgiving at her house. That's a really great point there. So let's start with option one, going to visit grandma or whatever family, which for a lot of families means schlepping the kids over there on an airplane. And to the shock of potentially no one, this can be one of the most expensive and logistically complicated options. NerdWallet's 2019 holiday travel study found that Americans traveling with a significant other and their children can shell out between $1,600 and $1,900 for holiday travel, including flights and hotels. And that's potentially close to $2,000 just for travel and lodging, which is a ton of money. That doesn't even include

presents, food, or the many bottles of wine that can make the holidays a little easier to swallow. So cost is a clear con here, but I think the travel in and of itself could be a really big pro. Say grandma or your other family can't really get around too well and can't really sit in an airplane to travel to see you. This could be one of the only times of year where you can get your family together. And to me, that would clearly make the cost worth it. But there are some ways to help reduce the cost here. So I have a question for you, Sarah. Do you think that travel credit card points could actually help mitigate some of the cost? They can, but you should know before you book anything that your points won't go as far during the holiday season. That's because traveling at a peak time is more expensive, even when you're cashing in miles.

That said, almost a third of Americans surveyed are planning to use the points to cover some of their holiday expenses. And for them, they might not mind that their points aren't going as far, so long as they don't have to pay out of pocket for holiday travel costs. Okay, that makes sense. And I do want to give some tips here for listeners about using a credit card to cover holiday costs, since I know a lot of families will be going that route. The advice basically boils down to be smart about it so you don't pay a ton in interest. We found that families who are going to use a credit card to cover holiday travel costs this year are planning to charge a little over $1,000 on average. And while it may be tempting to use a travel credit card to cover that and get those points, you might actually come out ahead by using a different card with a lower

interest rate if you aren't planning on paying off your balance monthly. That's because any amount you pay in interest could wipe out the value of the points you earn. That's true. And we found that many people do take a few months to completely pay back the amount they charged to their credit cards for the holidays. So if you overdid it on Black Friday, you could look into a balance transfer card that lets you move your debt to a card that charges 0% interest for a year or more. But again, before you do that, there are a couple things to consider. First, you will pay a fee to transfer that balance and the lowest fee we've seen is 3% of the balance. And second, aim to pay down your balance completely before the 0% APR period ends, because once it does, your interest rate on any remaining debt will skyrocket.

Right. It's really important to keep an eye on the time frame for that. Otherwise, it can really throw your budget into a tailspin, having to pay unexpected interest. So circling back to which card to use to cover holiday travel, I'm wondering if you have any other tips about how travelers can use credit cards to save money this year. Using the right rewards card to book your travel can help you save money because these cards often come with perks that have real monetary value. So for example, let's say you're loyal to a specific airline. Using that airline's credit cards to pay for your flights can get you free check bags.

If your family is checking two bags, that'll save you $120 in baggage fees on a round-trip flight. By the way, parents of young children should know that if you're checking a car seat or stroller, you can do it for free. That's super handy. I'm wondering if there are any other benefits with an airline card. It depends on the card, but a common one is airport lounge access, which can give you a calmer space to wait for your flight, especially when the airport is super crowded. You could also get a discount when you buy food or drinks on your flight. So if you choose your card carefully, it can help you stretch your travel budget a little bit further. And speaking of budgets, that gives me another idea of a way to save money during the holidays. If you plan to spend a lot on travel, consider cutting back in other areas like buying presents. 44% of our survey respondents said they wouldn't buy gifts for family members they were flying to visit.

Their presence is the present here, I suppose. And that's a really smart way to approach holiday spending. You get to see your family, but you can also salvage your budget by not blowing a bunch of cash on presents. I actually really like the concept of buying fewer presents. Maybe it's the millennial in me talking, but it's so easy to accumulate a ton of stuff you don't need. If you've ever lived in a small apartment or moved frequently, and I've done both of those things, you've definitely secretly donated that sweater that your great aunt got you that never fit. And I don't have a particular great aunt got you that never fit. And I'm not, I don't have a particular great aunt that bought me a sweater I donated. I'm just, you know. We won't rat you

out to your family. I have a box in my shed that is full of stuff that I just haven't touched in years and years. And a lot of it has come from family. So I understand that entirely. And also, if you've traveled with a bunch of presents in your suitcase, you know how much of a nightmare that can be. It just gets really heavy and difficult, and all of that is just not worth it. So I think that's enough of option one. Let's turn to option two, having your family fly to you. Give us the rundown, Sarah.

Sure. It basically boils down to this. Begin hosting holidays at your home. Welcome to adulthood, right? I know lots of people who begin to do this, especially once they have kids, because it can be a lot more cost effective and easier to fly your parents or in-laws to your city instead of flying with your kids to your hometown. Almost half of respondents to our survey said they would rather pay to fly family to them. And paying for one or two flights is certainly cheaper than the three or more you'd need if you're traveling with your kids. And you get to avoid dragging a

young child through a crowded airport right at a holiday. And honestly, I'll bet most parents would pay any price to skip out on that. Yeah, absolutely. So it seems like this could be a really good option for Marsha and her family. If the grandparents or other family are able to fly across the country, this could be a great way for them to see where their family is living. And it also can be more cost effective overall. One downside I see is that a lot of families have grandparents that might not be able to fly all that well or at such a busy time, so this probably wouldn't work for them. That's why I really like option three, which is reschedule the holidays. More than half of American surveys said that they would prefer to do this. It may be

a bit controversial, but you could just move the holiday celebration to a different time. It's often significantly cheaper to fly the week after a holiday. It's kind of like buying chocolate the day after Valentine's Day. You know, who says you can't have Thanksgiving in early December? And airports are less crowded, and so as a result, it's so much less stressful to travel. Right. To your point, you really don't have to wait all that long to get cheaper flights. After the holidays and the New Year's rush, flight prices can go down pretty significantly. And I really like traveling around the Martin Luther King Jr. holiday for this reason. My mom lives out in Florida. And so traveling out there or getting her out here for Christmas can be really expensive. but her birthday is right

around the MLK Jr. holiday. And so we usually find a time to get together right around then. And I found that flights are often hundreds of dollars less than if I booked a month earlier. That's such a great tip. And there is a downside here though. You know, you won't have your family around for the actual holiday, which can feel a little bit lonely. And also getting time off of work or school can be a challenge right after the holidays. But, you know, maybe you can spend the holiday at home with local friends and then celebrate with your family later on. And that way you kind of get two holiday celebrations for a much lower price. Or you can also, you know, volunteer on the holiday or even just give yourself the gift of a quiet night in with some Chinese takeout and your favorite

Christmas movie. And you can't put a price on that, can you? No. Okay, well, Marsha, I hope that we gave you some great ideas to have a meaningful and budget-friendly holiday. And with that, let's get to our takeaway tips. So how can you keep holiday costs down? First up, sort through your holiday travel options. It's no secret that holiday travel can get really expensive. So find the option that fits best with your budget.

Second, don't be afraid to change things up. Fly family out to you or celebrate on a different date if that makes things easier, less stressful, and more affordable for everyone. Finally, if you do need to lean on your credit card to cover holiday costs, look into card options that lower the amount of interest you'll pay. Okay, and that is all we have for this episode. Do you have a money question of your own? Turn to the nerds and call us or text us your question at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com.

Also, visit nerdwallet.com slash podcast for more info on this episode. And remember to subscribe, rate, and review us wherever you're getting this podcast. And here's our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general education and entertainment purposes and may not apply to your specific circumstances. Thank you, Sarah. And with that said, until next time, turn to the nerds.