How to Pay for a Vacation: 5 Ways to Fund Your Trip

Economic factors, like inflation and changes to cost of living, have had an impact on average vacation prices over time. For example, according to the Travel Price Index, the average cost of travel climbed by 14% from 2019 to 2024. Today, the average cost of a one-week U.S. vacation for one person is currently around $1,990, or around $3,980 for two people. 

While these numbers give an idea of the average vacation cost, the actual price can vary widely depending on numerous factors. These factors include your travel destination, the time of year, the length of your trip, the size of your group, and more. Researching costs ahead of time can help you create an accurate budget and determine the best saving strategy.

When it comes to how to pay for a vacation, different age groups tend to follow different financial strategies. For example, younger travelers are more open to taking on vacation-related debt than previous generations. A recent survey revealed that, 42% of Gen Z (1997-2012) and 47% of Millennials (1981-1996) were willing to take on debt in order to finance their summer vacations in 2024, compared to only 31% of Gen X (1965-1980) and just 22% of Baby Boomers (1946-1964).

The ways that people pay for their vacations have shifted over time as technology — and consumer preferences — have evolved. In the past, it was more common to finance a trip by relying on cash or traditional credit cards. These options remain popular payment methods, with about 62% of people saying they planned to use credit cards for an upcoming vacation. However, today’s travelers have a wider and more flexible range of options. For example, the past few years have seen a steady rise in the use of buy now, pay later (BNPL) services, which let travelers break big purchases like airfare into manageable installments.

Looking for ideas to help pay for your vacation? Here are a few tips to help you start planning for your next getaway. While this is not financial advice, we’ve included some options to consider alongside your needs, budget constraints, and dream destination.

1. Use a credit card

A recent study noted that 62% of travelers — well over half — planned to use credit cards to help pay for vacation expenses in 2024. Not only do credit cards offer a convenient way to make purchases, many also provide the ability to earn travel points or rewards. In fact, many companies offer travel credit cards that are specifically designed to maximize perks like air miles and hotel discounts. By using a travel credit card, you can rack up rewards faster and unlock bigger, better deals on your next vacation. Just remember to pay off your balance in full and on time, which will help you avoid compounding interest on any remaining balance.

2. Leverage a vacation savings account

Another way to finance a vacation is to start saving early and often by creating a dedicated savings account intended to fund a specific expense, like travel. To get the most value from this strategy, consider choosing a high-yield savings account that offers a generous APY, or annual percentage yield. You may also want to consider scheduling automatic recurring transfers that let you “set it and forget it” instead of manually making deposits. This way, a portion of your monthly pay is automatically direct deposited into vacation savings, helping you bank for your next getaway.

3. Apply for a vacation loan

Another option to consider is to apply for a travel loan to help cover the costs of your next trip. Also called a vacation loan, a travel loan is a personal loan intended to help pay for travel expenses like hotels, rentals, and airfare. 

You may qualify for a variety of travel loans depending on factors like your credit score, debt-to-income ratio, and the loan amount you’re requesting. Before you apply, be sure to compare interest rates and fees, such as: 

• Late payment fees

• Loan application fees 

• Origination (processing) fees 

• Overdraft or insufficient funds fees 

• Prepayment penalties for early loan payments

4. Use buy now, pay later services

When deciding on how to pay for a vacation, buy now, pay later (BNPL) is another option. For instance, using a BNPL provider like Zip, you can pay for travel fare and lodging reservations today, then pay off your purchase over the course of several weeks in a series of installments. Zip lets you split purchases into 4 biweekly payments², which means you can snag hot deals on flights and hotels before they’re gone. Another convenient advantage of BNPL is that many providers offer interest-free payment plans and smaller installment fees as you’re paying off your purchase. 

Learn more about how to finance a vacation with Zip.

5. Take advantage of credit card points and rewards

Many credit cards give users the ability to earn travel-related rewards when they use the card to make specific types of purchases. These perks can include travel miles, cash back, upgrades, and free baggage check – to name a few. Depending on what type of credit card you have, you might be able to redeem your points for discounts on: 

• Domestic or international flights

• Hotel rooms

• Spas and resorts 

• Vacation packages

• Other travel expenses 

Additionally, many credit cards offer special introductory bonuses for new users. If you recently signed up for your card, you can potentially use your welcome bonus to help cover your vacation costs.

Zip is a free app that makes it easy to finance a trip or vacation — no matter where the next journey takes you. By letting you split up purchases into a series of 4 interest-free payments², Zip gives you the power to manage your travel budget with confidence. 

Zip is accepted by thousands of merchants worldwide, including Priceline, Vrbo, Hotels.com, Delta, Travelocity, Tripadvisor, Amtrak, American Airlines, and more. Plus, you’ll get access to exclusive deals on flights and hotels from our partners like Alternative Airlines. Whether you want to book a room, catch a flight, rent a house, or hop a train, Zip gives you flexible ways to pay for vacation in just a few taps or clicks.