Credit Cards

How to Avoid Overpaying for Your Next Vacation

Travel can be expensive without the worry of being overcharged. In this article, we outline a number of ways to get a fair price and even save on the total cost of your next vacation.

According to a report by the Competition and Consumer Commission of Singapore (CCCS), an estimated 81% of consumers report that they were charged a higher price than was initially advertised for their online travel bookings. To help you stay on budget for your next trip, we've laid out some of the common causes of expensive trips and tips for cutting the cost of travel.

Consumers Experiencing Final Price Different From Headline Price When Booking Travel

Common Pitfalls

In its recent study, CCCS identified 4 common practices of travel booking sites that can result in higher than expected travel bills. Being aware of these practices can help consumers ensure that they end up with the price that they expected, so we've listed and explained each practice below.

Drip Pricing

Drip pricing is the technique used by many online travel agencies and other e-commerce sites, in which additional mandatory and optional charges are not included in the initial price estimate. For example, some sites will not display their platform fee until customers reach the final confirmation page. This practice makes it tough for consumers to accurately compare pricing across websites to ensure that they are getting the best deal possible. To avoid falling into this trap, we recommend clicking through to the final confirmation page (i.e. right before paying) to get the most accurate cost estimate by site.

Pre-Ticked Boxes

Another common trick used by travel booking sites is to make certain add-on products automatically added to the bill. For example, some sites will add in-flight WiFi or extra leg room charges unless you uncheck the boxes for these options. The best way to avoid paying for unwanted add-on services is to carefully review each page before proceeding to the final payment method page while booking your next trip.

Strikethrough Pricing

Strikethrough pricing is the practice of showing a price in strikethrough text (i.e. crossed out) next to the advertised text. This may subconsciously suggest to the consumer that the advertised price is a great deal. We suggest conducting your own research in order to decide whether the advertised price is actually a good one.

Pressure Selling Using Misleading Claims

Finally, CCCS identified pressure selling or using misleading/false claims as a method of encouraging consumers to complete their travel bookings. Examples could include a message stating that there are only a certain number of seats remaining or a countdown clock (e.g."0:45 remaining"). We can't say with certainty that these claims are false, but we can be sure that travel booking websites and other online vendors are using this technique to create a sense of urgency in their customers. Again, if you conduct thorough research of other available travel options, you'll be less likely to panic when you see these messages.

Other Tips for Keeping Travel Affordable

What else do consumers need to know in order to make sure that they can afford their next trip? We've selected the most important pieces of advice to help prospective travelers get a good deal.

Hotels Can Wait, but Airfare Should Be Booked Early

The standard advice for travellers is to always book early. However, our team of analysts has found that not all early bookings are significantly cheaper. In particular, hotel bookings do not appear to be much cheaper in advance. Instead, hotel prices are usually dictated by predictable patterns such as holidays and peak seasons.

This graph shows the difference in pricing per night between booking a hotel last minute as opposed to 6 months in advance

With that said, we recommend booking airfare in advance in order to save on your vacation. Our analysis suggests that travellers can save hundreds of dollars by purchasing their flights 6 months in advance compared to booking 1 month in advance.

This graph shows the average cost of airfare purchased a week before travel compared to airfare purchased 6 months before travel

Use Credit Cards Wisely

Another common piece of advice for travellers is to always use a credit card to book travel. This is almost always true, but it's slightly more nuanced than just using any credit card. For example, there are hundreds of credit card options and some offer great rewards and benefits for travel or even for purchases made overseas.

These cards can be a great way to reduce the total cost of your trip or to build up air miles for your next vacation, but they aren't always the best way of paying for travel. In fact, if you are unable to pay your credit card balance in full each month, credit cards can be an expensive way to pay for travel as they typically charge interest rates of 25-30% p.a. on unpaid balances. Therefore, we strongly suggest that you choose an affordable vacation and save money in advance to pay for your trip. If you get caught in a situation where you don't have the money to pay for a trip, but absolutely must go, we recommend using a personal loan rather than putting the charges on your credit card. This is because the best personal loans charge far lower interest rates (8-10% p.a.) than credit cards.

Shop Around for Travel Insurance

Finally, if you decide that you want to purchase travel insurance, we recommend comparing the best options before signing up. Some insurance companies offer policies that are half the price of other insurers, which means that you could definitely end up overpaying if you aren't careful.

This graph shows the cheapest annual travel insurance plans in Singapore

Take the Time to Avoid Paying Extra

The best ways to make sure that you aren't overpaying for your next trip is to carefully review your travel arrangements and make sure to compare prices before booking. While it may take a few extra minutes, taking these steps can save you a significant amount of money and give you peace of mind on your next vacation.

William Hofmann

William is a Product Manager at ValueChampion Singapore, helping consumers and SMEs find the best banking products through comprehensive analysis of data. He previously was an Economic Consultant at Industrial Economics Inc, where he conducted a variety of research and economic analyses. He graduated from University of Vermont with degrees in Economics and Psychology. His work has been featured on a variety of major media such as the Straits Times, the Business Times, the Edge, DailySocial, the Entrepreneur and more.

{"endpoint":"\/newsletter\/subscribe","style":"blue","title":"Keep up with our news and analysis.","version":"sidebar"}