6 Ways to Save on Flights & Hotels This Summer

When it comes to the most expensive costs associated with traveling, it’s always the big three — hotels, rental cars and flights.

You’ve scrimped and saved to treat your family to a nice vacation this summer, but now that you’ve started to research how much it would actually cost to book airfare and hotels, you’re having second thoughts.

When it comes to the most expensive costs associated with traveling, it’s always the big three, says Travis Katz, co-founder and CEO of Trip.com — hotels, rental cars and flights. The good news is that with a little planning, most of these costs can be pared down. The following are Katz’s five biggest tips to help families save a little cash when booking flights and airfare this summer.

1. Think Outside the Box

Up-and-coming places are less crowded, and activities, hotels and restaurants tend to be cheaper (with better service!) because they’re eager to welcome you back, says Katz. He says his site has seen an uptick in travelers flocking to places like Hot Springs, Arkansas, Chattanooga, Tennessee and Santa Fe, New Mexico, to name a few.

2. Take the Right Flights

If you can hack it, taking the red-eye roundtrip could save you a night (or two!) on accommodation. As an added bonus, your kids might sleep through the trip. If you don’t want to over-night it, consider at least traveling on off-peak days, like Tuesday to Thursday, when airfare is generally cheaper.

3. Haggle for Your Hotel

Pricing for hotels and other types of lodging is not set in stone. Katz suggests asking nicely at the front desk at check-in for an upgrade. “If one’s not available, hotel staff might be inspired to give a freebie or two — comped breakfast, for instance,” he says.

Bonus Tip: Home rentals on sites like Airbnb offer full kitchens, so “you can shop locally and eat simple breakfasts and lunches,” Katz adds.

4. Make the Most of Your Memberships

Your vacation discounts could already be in your wallet. Memberships to some organizations like AAA or AARP come with travel discounts, and you should always check your credit card to see if they offer discounts — or bonus rewards — when booking hotels or flights through their affiliate programs. Even your Costco membership could score you some deals. Check out the Costco Travel site for information.

5. Consider Opening a Travel Rewards Card 

Rewards credit cards, when used wisely, are a helpful way to pay for a family vacation. Just remember not to go overboard so you don’t lose your rewards to high interest, or wind up accruing unneeded debt. The last thing you want is to come home to an upsetting credit card bill.

Before you apply for one of these cards, be sure to read the terms and conditions so you know what you’re getting. Also evaluate whether you’ll actually use the rewards. A Southwest rewards credit card, for instance, won’t do you any good if you don’t fly the carrier. Research what airlines have hubs in your area —you can find a helpful list of the best credit cards to use in every major U.S. airport here. If you don’t think you’ll frequently fly with a specific carrier, consider a general purpose low-annual-fee travel rewards credit card.

Just be sure you know where your credit stands so you’re certain you’re able to qualify. Travel credit cards generally require good credit. You can view two of your credit scores, free of charge, on Credit.com.

Bonus tip: Travel rewards credit cards generally partner with rental car companies so your plastic may qualify you for a discount — or at least earn bonus points — on that expense, too.

6. Be Loyal to a Particular Airline or Hotel Brand

Besides using your credit card rewards to fund your trip, consider becoming loyal to a particular hotel or airline to cash in on some of their loyalty programs. Become a member of Southwest’s Rapid Rewards Program, for example, and you’ll earn points for every dollar you spend that you can put toward a free flight sometime in the future.

Bonus tip: See if you can pool your credit card rewards with the points or miles you earn through a travel provider’s loyalty program to qualify for a free night or award flight faster.

Note: It’s important to remember that prices for products and services frequently change. As a result, rates, fees and terms cited in this article may have changed since the date of publication. Please be sure to verify current rates, fees and terms with the company directly.

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I Got an Airline Voucher for Being Bumped. Do I Owe Taxes?

Bigger payouts from the airlines could get a review from the IRS. Here's what a tax expert has to say.

Unless you’ve been living under a rock the last month, chances are you heard about the passenger-crew-police altercation on a United Airlines flight that led to a passenger being dragged off the plane to make room for a United employee.

You probably also heard about United’s ensuing policy changes that will hopefully keep such an altercation from happening again, particularly the airline’s decision to increase the amount it will offer passengers who volunteer to be “bumped” from their flight.

That new amount is $10,000, and while it’s highly unlikely you’ll ever be offered that big a payout, you might be wondering what, if any, tax consequences would arise from that kind of cha-ching moment.

First off, it’s important to note that you’re probably never going to get cash for voluntarily agreeing to take another flight, so there’s no big shopping spree in your future. Any compensation is probably going to be a voucher for future flights and services. Quick note: If you are involuntarily bumped, the Department of Transportation requires the airline give you a check instead of a voucher if you request it. Such a payment likely would not have tax consequences. (Your airline credit card may help keep you from getting bumped. And if you’re ditching United altogether, here are four airline credit card alternatives.)

We talked to Mark Luscombe, principal federal tax analyst with Wolters Kluwer Tax & Accounting, about some of the possible tax consequences you should keep in mind in the unlikely case you get a $2,000, $5,000 or even $10,000 payout from an airline.

To Tax, Or Not to Tax. Is That Even a Question?

“You start off with the problem that, in general, anything that’s received in the way of compensation or payments are taxable unless you can find an exclusion in the tax code for them,” Luscombe said. “There’s no specific exclusion for this, and the IRS has not really directly addressed the issue, so you have to sort of analyze by analogy.”

In doing so, most people agree that things like airline vouchers probably aren’t taxable, Luscombe said. That’s based in large part on an advice memorandum to an airline about a decade ago outlining how the airline should handle these voucher payments for their own, internal accounting processes.

“In that memorandum, the IRS basically took the position that the airline could not defer part of their income for selling the ticket contingent on whether a possible voucher is ultimately used,” he said. “[The IRS] viewed it as what the passenger is really paying for. Their initial ticket is a whole package of services.”

Luscombe suggested that, because the IRS views the vouchers as part of the original transaction and doesn’t allow the airline to defer income (basically, claiming it as a liability on their books) for those vouchers, they likewise would not see them as income for a passenger, but rather the airline holding up its end of the contractual agreement between the passenger and airline.

So, in a nutshell, it’s unlikely the IRS would seek taxes for your voucher. However, the increased payout amounts airlines are now offering that total thousands of dollars do have the potential to make the IRS take a second look, Luscombe said.

The vouchers can be considered somewhat similar to an insurance payout. Say, for example, your house catches fire and your insurance pays you to take care of the damages. Those payments are, generally speaking, not taxable under the tax code. “But they can be taxable if the recovery is viewed as excess in some way,” Luscombe said.

So, could the same be true for a $10,000 airline voucher?

“You do get into the issue here when you’re talking about $10,000 as to whether the IRS might take another look at this and say, ‘well, this has moved into a new realm,’” he said, and could potentially reconsider whether these payouts for being bumped are considered “excess.”

While a $10,000 voucher for getting bumped from your first-class trip from New York to London probably wouldn’t be considered excessive, that same voucher for your coach-class trip from Los Angeles to Albuquerque possibly could. So, if you receive a voucher in an amount that is worth significantly more than you paid for your original ticket, it’s wise to play it safe and talk to a tax pro about whether you need to declare it on your tax return.

“If more dollars are getting involved here, then it’s possible the IRS will decide to address it, so it’s probably always a good idea to check with your tax professional about what the current state of the law is,” Luscombe said.

Remember, being truthful and accurate on your tax return can save you a lot of headaches, including the possibility of being audited by the IRS. If you’re unclear about something, it’s always best to reach out to a professional for guidance. Most importantly, whatever you do, don’t avoid paying your taxes. It can result in serious fines, potential jail time and can wreck your credit.

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The ‘World’s Best Airline’ Is About to Start Charging to Pick Your Seat

emirates-airline-charges-for-seat-selection

Emirates, lauded as the world’s best airline with the world’s best in-flight entertainment, plans a major booking change beginning next month that flyers may or may not like.

Beginning in October, Emirates will charge flyers to choose their seats. An Emirates spokesperson told Credit.com by email that the Dubai-based, government-operated airline will introduce “a minimal charge for those looking to select their Economy seat in advance, for tickets issued on or after October 3, 2016.”

The charge, the price range of which the spokesperson hadn’t confirmed by press time, will apply specifically to Special and Saver fares in the Economy Class, and “will vary depending on the duration of the flight,” they noted. Passengers checking in online two days before departure will not pay the fee.

According to the carrier’s site, Special fares are the company’s lowest and carry restrictions. Meanwhile, “a Saver fare is slightly more flexible than a Special fare,” the site says. (Emirates defines its fares as the price of a ticket, and not the ticket itself.)

The Emirates fee may be new, but the precedent for charging customers was set long ago by other international carriers. Baggage fees are increasingly common among airlines like Aer Lingus and Air Canada, while others like British Airways are known for charging so-called service fees for cancelling, booking or changing a flight.

Brett Snyder, author of the consumer air travel blog, The Cranky Flier, said via email that we can thank economics for these fees. To him, Emirates’ latest change proves “that when economics get involved, it’s too hard to ignore the revenue benefit for charging for services that may be included in the ticket price today. Emirates is seeing revenue softness,” he added, “and is trying to boost its bottom line.”

Matthew Ma, co-founder of the travel deals site, The Flight Deal, agreed, noting the practice will likely only continue. “More airlines will charge for services they used to give for free,” he said over email.

Tips for Avoiding Airline Fees 

With the price of travel soaring ever higher these days, consumers owe it to themselves (and their wallet) to check the total cost of tickets before signing up. That means factoring in charges for baggage fees and meals, as well as any fees for bringing pets or carrying an infant on your lap, for instance.

One way to cut down the price of airfare is by putting miles from airline rewards credit cards to use. Some cards will grant you the VIP treatment, offering access to airline lounges and waiving baggage fees away. Just remember, your credit needs to be solid before you apply as these cards are typically extended only to those with good credit. You can see where you currently stand by viewing a free summary of your credit report on Credit.com.

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The 10 Best Airlines in the World

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Americans’ Favorite Airlines: Southwest, Alaska & JetBlue

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If you’re comparison shopping flights for you summer vacation, take note: Southwest Airlines, Alaska Airlines and JetBlue were named as the airlines with the best customer service in the industry.

These rankings are based on the 2016 Temkin Experience Ratings, an annual customer experience ranking of companies using the opinions of 10,000 consumers in the U.S. This is the seventh year of the survey, which is conducted by Temkin Group, a research and consulting firm.

The survey asks consumers about their experiences with different companies and ranks them based on three main elements — how successful consumers are at doing what they set out to do with the brand, how easy/difficult it is to work with the brand, and how consumers feel about their experience with each brand.

Southwest has earned the top spot every year since the report was first issued in 2011, except in 2015 when JetBlue overtook the leading position. Southwest is back on top again in the airlines category this year, coming in at 52nd place overall out of the almost 300 companies ranked in 20 different industries.

While Southwest earned a 67% approval rating that caused it to lead the nine airlines that were ranked, Spirit Airlines made the bottom of the list, with only a 40% approval rating. (Spirit Airlines did not immediately respond to Credit.com’s request for comment on the rankings.)

Here is how each airline included in the survey ranked:

1. Southwest Airlines: 67%

2. Alaska Airlines: 62%

2. JetBlue Airlines: 62%

4. Delta Airlines: 59%

5. Virgin America: 55%

6. American Airlines: 52%

7. United Airlines: 51%

8. US Airways: 48%

9. Spirit Airlines: 40%

Whichever airline you prefer to fly with, flights can get expensive. You can cut back on some of the extra fees with airline credit cards and even get rewards points that help you pay for your next flight (you can check out our independent ranking of the best airline credit cards on the market here). But keep in mind that, while these credit cards offer some perks you may enjoy, getting into credit card debt to save on checking a suitcase simply isn’t worth it.

(You can see how paying your credit cards off in full each month helps your credit score by reviewing your free credit report summary for free each month on Credit.com.)

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People Would Rather Sit Next to Donald on a Plane Than Hillary, Bernie

donald_trump_poll

Pretend for a moment that you’re on a plane, and a flight attendant taps on your shoulder: “Just FYI — the seat next to you will be occupied by a presidential candidate.”

Who do you hope it is?

For many Americans, it’s Donald Trump they’d prefer for a seat buddy on this highly improbable flight. According to a survey of 9,700 travelers, 36.8% said they’d most like to sit next to the presumptive Republican nominee for president. Bernie Sanders was second-most popular (barely) with 31.9% of the vote, followed by Hillary Clinton (31.3%). The margin of error is plus or minus 1.1%.

SmarterTravel, parent company of flight-comparison site Airfarewatchdog, conducted the email survey between May 19 and May 23, and the sample is nationally representative, according to a company spokesperson. It was part of a larger survey about air travel.

What the survey didn’t ask about, unfortunately, was the respondents’ motives for choosing their seat mate. Sitting next to politician isn’t necessarily indicative of a vote. Some people might want to sit next to Trump (or Clinton or Sanders) for the chance to interrogate them. (My boss, for one, would treasure such an opportunity.)

Of course, the odds of you seeing a presidential candidate on a commercial airline aren’t great — even Sanders, who collected social-media praise for flying coach, is taking more private flights. Heck, Trump has his own plane, complete with gold fixtures and Trump-crest-embroidered pillows. And Clinton likely would be far too busy doing who-knows-what on her phone to engage with whomever she’s seated next to.

For more realistic flight perks, you might want to look to an airline loyalty program or a credit card that rewards you for travel. That’s not necessarily going to land you in the seat next to anyone notable, but maybe you’ll see someone famous in an airline lounge. If not, a free checked bag or priority boarding should be some sort of consolation. As always, consider your overall financial goals before getting a credit card just for the perks — rewards credit cards can make it tempting to overspend. You can monitor your financial goals, like your credit score, for free on Credit.com.

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