Skip to Content
Tally logo

How to Manage the New Financial Risks of Vacation Travel

Traveling right now looks a lot different than it did pre-pandemic and this shift can lead to paying for hidden costs you might not anticipate.

Bobbi Rebell, CFP®

Personal Finance Expert at Tally

February 23, 2021

As coronavirus vaccines become more and more widespread, the Tally Credit Card Spending Index found a notable 26.6% month-over-month increase in credit card spending on travel (e.g., flights, hotels, cruises) in January. This increase suggests that pent-up demand may drive a sharp comeback in discretionary spending on travel and travel-related expenditures this year as more people get vaccinated and travel restrictions are loosened.

After nearly a year of social distancing and staying at home, many people are eager to make up for lost time, finally seeing loved ones that live far away and getting some quality time out of the house. The increase in travel spending suggests that more Americans feel more confident about planning a vacation and starting to travel to see friends and family this year.

But there are still financial factors that would-be travelers should be considering when booking travel in order to protect themselves and their money. 

Read the Fine Print

Before making any bookings, take the time to read the fine print before you check that box when booking a hotel room, flight, cruise, or any other travel expenses (this is a good thing to do in general when booking travel). Plenty of people learned the hard way last year that cancellation policies can be strict. Although the hospitality industry has made cancellation easier during the pandemic, as things pick up, don’t assume that to be the case.  Even when the pandemic made it impossible for them to travel and use their bookings, many travel providers refused to issue refunds. Things can get especially complex when booking international travel. 

The good news is that many travel companies still have flexible booking and cancellation policies, but it’s best not to make any assumptions. Read up on how far in advance you can cancel a booking, and if there are any fees associated with cancellations. Also, ask what your options will be if you cancel.  For example, will you be given a credit instead of a refund if you choose to cancel?

Have a Plan B

Either before or after you’ve booked your trip (depending on your risk tolerance) start coming up with a Plan B in case things don’t go according to plan. A travel ban or more stringent quarantine requirements can happen suddenly and without warning, so you need to be prepared to adjust your travel plans quickly. 

For example, if a two-week quarantine requirement is issued, will you be able to extend your trip so that you can comply with the order? Will you be bringing what you need with you in case you are required to stay there and need to be working virtually? You’ll want to pack extra clothes, toiletries, and medication in case your stay lasts longer than intended. How will you handle missing work? Will someone be able to look after your pet if you don’t come home on time. Have a backup plan in place for anything that can go wrong, because there is a very real chance something will go wrong. 

Buy Travel Insurance

Even with many companies offering flexible booking policies right now, having a bit of extra protection on your side can’t hurt. With so much uncertainty surrounding travel in the coming months, it’s almost always worthwhile to purchase trip protection or insurance. And make sure your health insurance is valid where you are going. Doing so will help ensure you get most if not all of your money back in the event that a trip gets completely canceled. Make sure you read your travel insurance policy and understand what’s included. Don’t assume every policy will have a COVID-19 clause.

Look Out for Hidden Costs

Traveling right now looks a lot different than it did pre-pandemic and this shift can lead to paying for hidden costs you might not anticipate. For example, depending on where you are going and how you’re going to get there, you may need to get multiple COVID-19 tests before your trip. Most insurance policies in the US should cover your tests, but if not, you may need to pay this cost out of pocket. And keep in mind that some policies that will cover it, will only do so after you meet your annual deductible. 

Have an Emergency Travel Fund

Having an emergency travel fund ready before you leave for your trip can give you peace of mind if something does go wrong and you need to throw a bit of money at the problem. When building your emergency travel fund, try to calculate potential costs that can come up in an emergency.


At the end of the day, there is no guaranteed way to entirely remove the risks associated with traveling right now. While traveling can always lead to unexpected expenses, this is especially true during the pandemic. If you do decide that traveling for vacation is worth the financial risks, hopefully, these tips will help you prepare in case anything does go wrong. Good luck and safe travels!

Want to pay down your credit card debt so you can focus on building a travel emergency fund? Learn how Tally can help today!