Pay Monthly on a Vacation

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Vacations are excellent motivation to work hard and save money. Larger vacations can cost hundreds or thousands of dollars. Saving in monthly installments for a vacation can allow you to afford more time away than you could pay for at once. Some travel companies have adapted the idea of retail layaway, or paying in monthly installments, to the travel industry. These plans usually come with some fees, but they may be a better option than paying credit card interest rates after a large purchase. You can choose to pay monthly through a company or through a savings account at a bank. Read more to find out how to pay monthly on a vacation.

Steps

Commercial Vacation Layaway

  1. Search for vacation payment services using the terms "travel layaway" or "vacation layaway." The layaway plan now extends to student travel, vacation rentals, cruises and packages. You will get a better idea of the market before committing to a company.
  2. Choose a financially stable company. Read reviews and do your research to be sure the company you want to book a trip with is strong enough to make it through the next few years. Travel is a volatile market and you can lose your layaway payments if the company goes bankrupt.
    • The Fair Credit Billing Act protects people who have purchased travel tickets or packages on a credit card, if the company goes bankrupt. This protection does not extend to payment plans.
    • Popular layaway websites are eLayaway.com and Lay-Away.com. Disney is also a big proponent of helping families to save through a layaway plan.
  3. Pick your layaway package or destination carefully. Not all vacations are good candidates for layaway plans. The following are good monthly payment plan guidelines:
    • Don't choose a layaway plan for trips abroad. Currency fluctuates every year. You may end up paying much more, if the local currency decreases in value. If you feel like you are getting a good deal because you have invested early and the local currency rises in value, you may be billed for a "currency surcharge."
    • Choose layaway options to reserve hard-to-book locations. If you want to get a low-cost stay at an expensive ski resort, a local vacation rental may offer the ability to put 20 percent down and pay monthly. They get the security of booking their rental far in advance, and you have the security of a guaranteed price.
    • Book monthly payment plans with tour companies. The nature of most tour companies is to take a deposit, bill monthly and require the remaining balance 45 days before departure. Ask about their payment plans and whether you can pay online.
    • Disney's "Magic Your Way" vacation packages offer a very flexible payment plan. It is geared toward families who want to visit their theme parks. You can make monthly payments or occasional payments, as long as you pay everything 45 days in advance.
  4. Compare the fees. Almost all layaway plans come with fees, because they are offering an extra account processing service. Pay attention to booking fees, agent fees, cancellation fees and percentages.
    • For example, a vacation rental may offer layaway for a $25 fee. This is a reasonable fee because you are getting peace of mind by booking early. Websites like eLayaway.com may charge a 2 percent fee plus other charges for the service. This can add up to a few hundred dollars.
  5. Read the contract carefully. Before signing, you should feel comfortable that there is the ability to reschedule or get some of your money back, if you cannot take the vacation. Layaway vacations are planned well in advance, and life or money situations can change during that time.
  6. Pay an initial deposit. These can range from 10 to 50 percent.
  7. Start paying 6 months to 1 year in advance. Starting payments less than 6 months before travel may mean you only make 2 to 3 payments before the final payment deadline. You may not know your own schedule if you start payments over a year in advance.
  8. Ask for a contact number for a billing representative. Creating a payment plan can leave you exposed to human error. Check your statements carefully, and call someone immediately if you see a problem.
  9. Research and purchase travel insurance. Choose a plan that offers coverage in case of cancellation. Ask if the service you are using will be covered before signing up.

Personal Vacation Layaway

  1. Inquire whether your bank has a "Christmas Club" or "Very Important Purchase" (VIP) savings account. These accounts allow you to make a monthly payment to the account and set a date to take the money out. People used to add money to the account in time for Christmas purchases.
    • These accounts usually offer a slightly higher interest rate than a savings account; however, you cannot touch the money until the date you specified earlier.
  2. Read the contract carefully. Most banks specify time limits, maximum payments per month and early withdrawal fees. Make sure you can follow the terms before signing up.
  3. Start saving 1 year to 9 months before your vacation, if possible. Since there is likely to be a maximum payment amount per month, you will need to contribute for a longer period of time. If plans change, you will still have the money, plus interest.
  4. Set the date to receive the funds at least 3 months before your vacation. Airfares and some packages go up at this point.
  5. Make the maximum payment, if possible. Many VIP accounts have a maximum amount that you can contribute each month. Schedule a monthly transfer or pay into the account whenever you have a little extra cash on hand.

Tips

  • Monthly vacation payments differ from those offered by airlines and vacation sites, like Expedia.com. Usually these companies give you the option to split a payment between 2 credit cards or pay a deposit and pay the remainder at a later date.
  • If you are unsure whether a hotel or vacation rental offers a monthly payment plan, be sure to ask. Many people will be open to the idea if they receive an up-front deposit.
  • Most VIP accounts are only available if you have an established checking or savings account at the bank where its offered.

Warnings

  • Some commercial layaway or monthly payment plans make you forfeit your deposit if you cannot make payments or you cancel.

Things You'll Need

  • Bank account
  • VIP account
  • Cash, check or credit card
  • Contract
  • Travel insurance

Sources and Citations