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Compare the cost and hassle of travel methods. The way you've always done it might not still be the best.
Look at ways to cut down on credit card spending or ways to pay your balance off faster in 2023.
The best time to look at cards with better rates and perks is before you start booking airfare and hotels.
In 2022, holiday travel is predicted to continue climbing back toward its pre-COVID-19 level, according to travel booking app Hopper. That means more of us on the road, at the airport and huddled around plates of overcooked turkey and mashed potatoes. For many Americans, that travel comes with a hefty price tag, often paid for with a credit card.
A new NerdWallet survey found that 44% of Americans plan to spend money on flights or hotels during the 2022 holiday season. Of those holiday travelers, about two-thirds (66%) plan to put some or all of the bills on their credit cards.
If you plan to join the ranks of holiday travelers, here are some tips to get you through the season with as little financial stress as possible.
1. Compare travel options
The way you've always traveled doesn't have to be the way you always travel. As creatures of habit, we often take the same familiar paths to get from point A to point B, even when other routes might be faster, cheaper or more efficient.
According to the U.S. Energy Information Administration, the price of gas rose 16.7% from September 2021 to September 2022. If you used to save $100 on travel costs to grandma's house by driving, you might now be saving much less, if anything at all. Our survey found that 20% of holiday travelers are planning to fly rather than drive due to fuel prices.
Conversely, maybe you've always flown. As airports begin to refill with travelers, more flights are being delayed or canceled. Through July this year, 21% of flights had been delayed by 15 minutes or more, and 3% had been canceled, according to the Department of Transportation. The survey found that 29% of holiday travelers are now planning to drive due to current issues with the airlines.
Whether it's to decrease costs or avoid headaches, rethinking your usual flying versus driving calculation can be a helpful first step toward low-stress holiday travel.
2. Start saving, and plan for repayments
No matter how you get there, traveling for the holidays is an expensive proposition for many Americans. While 66% of holiday travelers plan to put some or all of their holiday travel costs on a credit card, many are also hoping to save to pay for their plans, according to our survey. Among holiday travelers, just over a third (36%) say they're reducing everyday spending in order to save money to pay for that travel.
With interest rates forecast to continue rising through 2023 — according to a survey by the Federal Reserve — the cost of borrowing with credit cards is likely to continue rising as well. By setting money aside to make purchases in cash, you can avoid adding to your post-holiday debt obligations.
If you are going to pull out the plastic for your holiday travel, though, you should at least have a plan in place for how much you'll spend and how you're going to pay that debt off in 2023. Of those who put some of their holiday travel on a credit card in 2021, 7% reported in our survey that they still haven't paid off those expenses, and another 14% told us it took them five to 12 months to pay off their debt.
To avoid having your flights or gas bills looming over your Fourth of July next year, set up a repayment plan for yourself. You can start with NerdWallet’s credit card repayment calculator to figure out what you'll need to repay. Then, work that payment into a monthly plan so you can clear your debt and start saving for the 2023 holidays.
3. Examine your credit card options
According to our survey, holiday travelers who say they'll use their credit cards to pay for holiday travel-related expenses plan to spend $1,417, on average, on those cards.
Spending that much in a short period of time might give you new options when it comes to card rewards or offers. Many credit card companies offer bonus rewards if you spend a certain amount within the first few months of owning a card. If you're already planning to shell out, you may as well get a benefit where you can.
You may also get benefits that cut down on your travel headaches. Many travel cards offer extra points when you book travel, annual statement credits for travel purchases, or reimbursement for the cost of programs that allow you to get through airport security faster or easier (like Global Entry or TSA PreCheck).
You might also find that your current card has an APR that's less attractive when it's holding onto a $1,400 balance from the holidays. In that case, it may be worth considering a new balance transfer card to shift your travel spend into the new year. These cards offer a 0% APR for balance transfers, giving you more time to pay off your debt without having to pay interest.