Preparing to book that perfect flight and hotel stay with rewards earned on your travel credit card is a thrill. After saving up for years, it’s finally happening — you’re about to take a once-in-a-lifetime trip for free.
Well, at least that’s the plan.
But budget-conscious travelers, take note: Although it’s possible to book a trip with rewards that make your flight or hotel stay totally free — or almost free — it doesn’t always work out that way. It’s also entirely possible you’ll still have to pay hundreds of dollars in fees. But with some planning, you can avoid or minimize these charges.
Say you booked a one-way flight from John F. Kennedy International Airport in New York City to London Heathrow Airport on British Airways using Avios, the airline’s award currency. For a business-class ticket costing 60,000 Avios, you’d also pay about $530 in “taxes, fees and carrier charges,” as of this writing — far more than you’d typically pay on an award ticket. In particular, those carrier-imposed charges account for the majority of that total. You’ll find out about these charges before you finish booking your ticket.
“Any taxes, fees or charges assessed on redemption tickets (or any of our tickets) are fully disclosed prior to purchase,” a spokeswoman for British Airways said by email.
But that extra expense could tank the value of your rewards and throw a monkey wrench into your vacation budget.
British Airways — which recently agreed to settle a class-action lawsuit relating to fees applied to tickets purchased with rewards in the U.S. — isn’t the only airline that charges plenty on certain award tickets. Other international airlines, such as Lufthansa and All Nippon Airways, also have surcharges on their award tickets, for example.
How to lower your costs: Redeeming your rewards through a different airline or adjusting your route, dates or fare class could give you a better deal. Keep in mind that surcharges like these don’t typically apply to domestic flights.
Change or cancellation fees
You might not have paid much in cash for your award ticket. But that could change if your schedule does.
“If you want to change or cancel [your ticket], they can charge you a fee for that, to put the miles back in your account. I’ve seen that fee as high as $150,” says Paul Hudson, president of airline passenger advocacy group FlyersRights.org. These charges, which are often said to cover the cost of redepositing rewards into your account, can get steeper as you get closer to your trip.
Likewise, some hotels charge “no-show” fees to folks who don’t check in to award night stays and apply charges to those who cancel too close to the reservation dates.
How to lower your costs: Before booking a trip, check the policy on changing or canceling flights or stays paid for with rewards. In some cases, having elite status might allow you to change your plans without paying a fee. Alternatively, using a credit card with trip cancellation insurance that covers award travel might help, for covered events.
A resort fee, which is charged at certain hotels or resorts and often ranges between about $15 and $45 a night, is “a mandatory charge for a bundle of services. In other words, it may be for towels at the pool, a free newspaper, Wi-Fi access, maybe gym access,” says Kenneth Free, president of Straightline Hospitality, a hotel consulting firm. For hotels and resorts, these fees are major profit centers, he notes. While all guests typically pay the mandatory fee, not all guests will use the services they purport to cover.
Often, hotels and resorts waive these mandatory fees on award night stays — but not always.
Say you wanted to stay at the Palazzo Las Vegas using IHG points, from InterContinental Hotels’ loyalty program. You’d still have to pay for the resort fee — $45 a night — and taxes separately. Other IHG properties come with similar charges, even when you’re paying with points. Similarly, Marriott notes in its terms that for stays paid for with rewards at participating properties, the resort fee is the “responsibility of the member.”
“In my opinion, giving a free room to a loyalty club member and charging them something on a mandatory basis that they may or may not use, I think that’s the wrong approach,” Free says.
How to lower your costs: Although some hotels do charge resort fees, most don’t. If you’re facing huge charges at checkout online, try redeeming your rewards at a different location with lower fees or no fees. Some hotel chains, such as Hilton and Hyatt, waive resort fees for eligible award stays.
This article was written by NerdWallet and was originally published by Forbes.