October 22, 2024 • 10 mins
Bankrate's Ted Rossman says 83% of Americans are changing their travel plans due to the high cost
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Everybody could use a couple extra bucks, especially heading into
the holidays.
Speaker 2 (00:03):
There's no question about it.
Speaker 1 (00:05):
I want to talk about travel here in a second,
and people are booking their holiday travel and trying to
get out of town for a couple of days. But
people are changing the way they're doing that because of money.
Let's check in with our financial expert from bank rate
dot com. It is Ted Rossman on the Legacy Retirement
Group dot com phone line.
Speaker 2 (00:25):
Ted.
Speaker 1 (00:26):
Although inflation has come down a decent amount, or at
least it's not going up as fast as it was previously,
people are kind of changing how they're booking their holiday travel.
In fact, a lot of people, over eighty percent of
people are changing their vacation plans because of cash.
Speaker 3 (00:41):
What's the story that's right, Yeah, it's hard to get
eighty percent of people to agree on anything, but that's
what we're seeing with holiday travel and inflation. People are
still traveling, but they're doing it differently. They're traveling for
fewer days, they're driving instead of flying, their making cheaper accommodations.
(01:02):
These are some of the top modifications that people are making.
Speaker 2 (01:06):
Are people putting this on credit cards?
Speaker 1 (01:08):
I hope you say no. But I have a feeling
you're not going to or are they? Are they just
going to go in and go into savings or save
up actually to pay for their vacations.
Speaker 3 (01:17):
Credit Cards are projected to be the most popular payment method.
Now there's that big fork in the road, of course,
whether you pay in full or not. If you are
able to pay in full and avoid interest, then credit
cards are great. You know, you get rewards, you get convenience,
you get buyer protections. A lot of credit cards have
travel insurance perks. But if you're in the half who
(01:38):
are carrying debt from month to month, that's obviously really expensive.
Speaker 4 (01:42):
The average credit card rate.
Speaker 3 (01:44):
Is about twenty and a half percent, and you know,
even though it's come down a little bit, it's still
close to a record high.
Speaker 4 (01:52):
About one in four.
Speaker 3 (01:53):
Holiday travelers say they're likely to take on debt. I
actually worry the real cost could be higher because is
half of cardholders already have debt. So you know, whether
you kind of think of it this way or not,
I mean, basically, anything you're adding to that can be problematic.
So you know, use credit cards if you can pay
in full. If you have debt, it's better to use
(02:15):
a different method if you can.
Speaker 4 (02:18):
We're getting a little late in.
Speaker 3 (02:19):
The game to book holiday travels, so some of the
saving strategies are better suited earlier in the season. But
there are still some things you can do. You can
use those rewards points and miles if you have them,
or or really just try to be flexible, you know,
to the extent that you can maybe go a little
earlier or come back a little later. Sometimes flying on
(02:43):
the holiday itself is a lot cheaper, or going to
a further flowing airport or taking a connecting flight.
Speaker 4 (02:50):
Flexibility is key.
Speaker 1 (02:52):
And you know you've mentioned you're putting on credit cards.
You'll be paying for that, you know, holiday vacation at Christmas,
vacation all the way into Easter of next year. Thinking
of Ted R speaking to Ted Rossman from bankrate dot
com senior industry analysts there, So what is the average
cost of a holiday vacation, say between sometimes maybe you
go to you know, go to moms and dads and
Grandma's for Thanksgiving, maybe you got a book a flight there,
(03:14):
or maybe some time between Christmas and New Year's and
get someplace warm for a couple of days.
Speaker 2 (03:18):
What are people spending for the holidays this.
Speaker 3 (03:20):
Year, for people that are flying for Thanksgiving or Christmas,
it's around one thousand dollars per household on average. Hotel
and short term rental costs are similar. So if you're
doing all four things, you know, if you're flying for
both holidays, and if you're staying in accommodations for both holidays,
(03:41):
that comes out to an average of about four thousand
dollars per household. So that's where it really adds up
if you're traveling for multiple events, and then obviously it's
going to be higher for larger families. Younger people have
a bigger cost burden for holiday travel. People in their
twenties and thirties are more likely to be stressed about this.
(04:03):
It is often on them to travel home for the holidays,
so that's part of why they're more stressed than boomers.
Boomers often are a bit more financially secure anyway, But
it's those twenties and people in their twenties and thirties
who are bringing their kids.
Speaker 4 (04:18):
Back to mom and dads or grandma and grandpas. Those
are the people who are the most.
Speaker 3 (04:22):
Stressed by the cost of holiday travel.
Speaker 1 (04:25):
And so, yeah, I was going to ask about the
sort of the demographic makeup. It's younger folks and people
probably earning less money that are filling to pinch a
little bit more than older folks who maybe have a
little more cash on hand.
Speaker 4 (04:36):
That's true.
Speaker 3 (04:37):
But interestingly, even among households with incomes of one hundred
thousand dollars or more, even there about three quarters are
stressed by the cost of holiday travel and making changes
because of inflation. So it's not quite as high as
the eighty three percent overall, but it's still a strong majority.
And one of the real key findings here is that
(05:00):
people are still traveling, they're just traveling differently. I mean,
this is likely to finish off a record year. A
year to date, the TSA has screened about five percent
more passengers than last year's record pace. This whole revenge
travel thing following the pandemic has really had a lot
of room to run, more than I would have expected.
(05:23):
We're starting to see some changes though. Really around midyear
we started to see travel demand tail off a bit.
And people are still traveling, and they're still buying holiday gifts,
but they're being especially thoughtful this year, and inflation is
still a big deal, you know, it's affecting eight and
ten holiday travelers. It's affecting one in three holiday shoppers.
(05:48):
Even though prices have stabilized, the cumulative damage has been
done in the past few years.
Speaker 1 (05:54):
So you're saying so between twenty twenty and now, it's
just it's just worn on people over and over year
after year, prices steadily going up, inflation steadily going up.
We're not going up as or going up faster than
previously had thought it it's just it's starting to get
to people now after three four years post pandemic.
Speaker 3 (06:12):
Yes, it's that cumulative effect. And interestingly, travel prices have
really stabilized. We've actually seen year over year declines for
both hotel costs and rental cars. Airfares are only up
about one and a half percent year over year according
to the Consumer Price Index, So travel prices have not
been running away from us. But it's the stacking up
(06:34):
of everything else. It's a few years of higher housing
prices and food and childcare and medical care and just
about everything else, and travel pricing has actually been a
bit of the silver lining. It has largely come down
over the past year, but that's not enough to make
a difference for people that are just feeling strapped and
(06:57):
understandably so.
Speaker 1 (06:58):
And those those are the big expenses too, right, that's
you know, airfare, hotel, rental, car. It doesn't you know,
factor in a lot of other little things that go
into the price of travel as well. While I have you, Ted,
I wanted to ask you about mortgage rates. There's some
confusion here. Mortgage rates are kind of ticking up, and
they have been for the last couple of weeks. I
(07:20):
think we're looking at in the mid six range now,
but we just had a FED rate cut.
Speaker 2 (07:25):
Why aren't they going their other direction?
Speaker 3 (07:27):
Yeah, it's a good question. Mortgage rates behave differently than
some other financial products. They're tied more to ten year
treasuries than to the Federal funds rate, and tenure treasuries
involve long term interest rates. So investors kind of reading
the tea leaves of what's ahead, not just from the Fed,
but the state of the economy. And actually some of
(07:49):
what we're seeing here is that as the odds of
a soft landing increase, you know, as the odds of
the Federal Reserve bringing down inflation without causing a session,
that's actually leading some long term interest rates to go
up a little bit. It's a little bit of that
good news is bad news for mortgage seekers.
Speaker 4 (08:11):
At least, you know.
Speaker 3 (08:12):
It's also a little bit of the by the rumor,
sell the news kind of thing, where a lot of
the initial come down was already priced in. A year ago,
the average thirty year fixed mortgage rate briefly hit eight
percent for the first time since two thousand and it
came down to around six and now it's edged up
(08:34):
about half a point in recent weeks, So still more
affordable than it was a year ago, but definitely frustrating
for people that wanted that to continue to come down.
Speaker 4 (08:47):
It's kind of one of.
Speaker 3 (08:48):
These things where you look at where do investors think
interest rates are going to be for much of the
next ten years, and they've just started to creep up
a bit. You know, maybe the FED doesn't need to
as much if the economy is stronger.
Speaker 4 (09:04):
It'll be interesting to continue to watch this.
Speaker 1 (09:06):
Yes, and that we've gotten what two more FED meetings
left this year, one in the next month in November,
and then in December.
Speaker 2 (09:12):
Is that right?
Speaker 4 (09:13):
Yes?
Speaker 3 (09:13):
And the Fed is likely to cut at a quarter
point at each meeting. But like I said, that is
probably already priced into mortgage rates.
Speaker 4 (09:22):
For the most part.
Speaker 3 (09:23):
Credit card rates and auto loan rates have started to edge.
Speaker 4 (09:27):
Down, but not by that much.
Speaker 3 (09:29):
I mean, that's another key point is that the FED
pushed rates higher by five and a quarter points the
past few years, and so far we've gotten half a
point of cuts. You know, we're going to settle into
a new normal that's higher than we got used to
much of the past fifteen years, and it's just going
to take a while to unwind all these increases. They
(09:50):
may end up only unwinding something like half of it.
You know, we're not going back to zero interest rates
anytime soon, and that does have ramification longer term. Mortgage
rates could settle somewhere in the fives, you know, rather
than the three or four percent that we saw a
couple of years ago.
Everybody could use a couple extra bucks, especially heading into
the holidays.
Speaker 2 (00:03):
There's no question about it.
Speaker 1 (00:05):
I want to talk about travel here in a second,
and people are booking their holiday travel and trying to
get out of town for a couple of days. But
people are changing the way they're doing that because of money.
Let's check in with our financial expert from bank rate
dot com. It is Ted Rossman on the Legacy Retirement
Group dot com phone line.
Speaker 2 (00:25):
Ted.
Speaker 1 (00:26):
Although inflation has come down a decent amount, or at
least it's not going up as fast as it was previously,
people are kind of changing how they're booking their holiday travel.
In fact, a lot of people, over eighty percent of
people are changing their vacation plans because of cash.
Speaker 3 (00:41):
What's the story that's right, Yeah, it's hard to get
eighty percent of people to agree on anything, but that's
what we're seeing with holiday travel and inflation. People are
still traveling, but they're doing it differently. They're traveling for
fewer days, they're driving instead of flying, their making cheaper accommodations.
(01:02):
These are some of the top modifications that people are making.
Speaker 2 (01:06):
Are people putting this on credit cards?
Speaker 1 (01:08):
I hope you say no. But I have a feeling
you're not going to or are they? Are they just
going to go in and go into savings or save
up actually to pay for their vacations.
Speaker 3 (01:17):
Credit Cards are projected to be the most popular payment method.
Now there's that big fork in the road, of course,
whether you pay in full or not. If you are
able to pay in full and avoid interest, then credit
cards are great. You know, you get rewards, you get convenience,
you get buyer protections. A lot of credit cards have
travel insurance perks. But if you're in the half who
(01:38):
are carrying debt from month to month, that's obviously really expensive.
Speaker 4 (01:42):
The average credit card rate.
Speaker 3 (01:44):
Is about twenty and a half percent, and you know,
even though it's come down a little bit, it's still
close to a record high.
Speaker 4 (01:52):
About one in four.
Speaker 3 (01:53):
Holiday travelers say they're likely to take on debt. I
actually worry the real cost could be higher because is
half of cardholders already have debt. So you know, whether
you kind of think of it this way or not,
I mean, basically, anything you're adding to that can be problematic.
So you know, use credit cards if you can pay
in full. If you have debt, it's better to use
(02:15):
a different method if you can.
Speaker 4 (02:18):
We're getting a little late in.
Speaker 3 (02:19):
The game to book holiday travels, so some of the
saving strategies are better suited earlier in the season. But
there are still some things you can do. You can
use those rewards points and miles if you have them,
or or really just try to be flexible, you know,
to the extent that you can maybe go a little
earlier or come back a little later. Sometimes flying on
(02:43):
the holiday itself is a lot cheaper, or going to
a further flowing airport or taking a connecting flight.
Speaker 4 (02:50):
Flexibility is key.
Speaker 1 (02:52):
And you know you've mentioned you're putting on credit cards.
You'll be paying for that, you know, holiday vacation at Christmas,
vacation all the way into Easter of next year. Thinking
of Ted R speaking to Ted Rossman from bankrate dot
com senior industry analysts there, So what is the average
cost of a holiday vacation, say between sometimes maybe you
go to you know, go to moms and dads and
Grandma's for Thanksgiving, maybe you got a book a flight there,
(03:14):
or maybe some time between Christmas and New Year's and
get someplace warm for a couple of days.
Speaker 2 (03:18):
What are people spending for the holidays this.
Speaker 3 (03:20):
Year, for people that are flying for Thanksgiving or Christmas,
it's around one thousand dollars per household on average. Hotel
and short term rental costs are similar. So if you're
doing all four things, you know, if you're flying for
both holidays, and if you're staying in accommodations for both holidays,
(03:41):
that comes out to an average of about four thousand
dollars per household. So that's where it really adds up
if you're traveling for multiple events, and then obviously it's
going to be higher for larger families. Younger people have
a bigger cost burden for holiday travel. People in their
twenties and thirties are more likely to be stressed about this.
(04:03):
It is often on them to travel home for the holidays,
so that's part of why they're more stressed than boomers.
Boomers often are a bit more financially secure anyway, But
it's those twenties and people in their twenties and thirties
who are bringing their kids.
Speaker 4 (04:18):
Back to mom and dads or grandma and grandpas. Those
are the people who are the most.
Speaker 3 (04:22):
Stressed by the cost of holiday travel.
Speaker 1 (04:25):
And so, yeah, I was going to ask about the
sort of the demographic makeup. It's younger folks and people
probably earning less money that are filling to pinch a
little bit more than older folks who maybe have a
little more cash on hand.
Speaker 4 (04:36):
That's true.
Speaker 3 (04:37):
But interestingly, even among households with incomes of one hundred
thousand dollars or more, even there about three quarters are
stressed by the cost of holiday travel and making changes
because of inflation. So it's not quite as high as
the eighty three percent overall, but it's still a strong majority.
And one of the real key findings here is that
(05:00):
people are still traveling, they're just traveling differently. I mean,
this is likely to finish off a record year. A
year to date, the TSA has screened about five percent
more passengers than last year's record pace. This whole revenge
travel thing following the pandemic has really had a lot
of room to run, more than I would have expected.
(05:23):
We're starting to see some changes though. Really around midyear
we started to see travel demand tail off a bit.
And people are still traveling, and they're still buying holiday gifts,
but they're being especially thoughtful this year, and inflation is
still a big deal, you know, it's affecting eight and
ten holiday travelers. It's affecting one in three holiday shoppers.
(05:48):
Even though prices have stabilized, the cumulative damage has been
done in the past few years.
Speaker 1 (05:54):
So you're saying so between twenty twenty and now, it's
just it's just worn on people over and over year
after year, prices steadily going up, inflation steadily going up.
We're not going up as or going up faster than
previously had thought it it's just it's starting to get
to people now after three four years post pandemic.
Speaker 3 (06:12):
Yes, it's that cumulative effect. And interestingly, travel prices have
really stabilized. We've actually seen year over year declines for
both hotel costs and rental cars. Airfares are only up
about one and a half percent year over year according
to the Consumer Price Index, So travel prices have not
been running away from us. But it's the stacking up
(06:34):
of everything else. It's a few years of higher housing
prices and food and childcare and medical care and just
about everything else, and travel pricing has actually been a
bit of the silver lining. It has largely come down
over the past year, but that's not enough to make
a difference for people that are just feeling strapped and
(06:57):
understandably so.
Speaker 1 (06:58):
And those those are the big expenses too, right, that's
you know, airfare, hotel, rental, car. It doesn't you know,
factor in a lot of other little things that go
into the price of travel as well. While I have you, Ted,
I wanted to ask you about mortgage rates. There's some
confusion here. Mortgage rates are kind of ticking up, and
they have been for the last couple of weeks. I
(07:20):
think we're looking at in the mid six range now,
but we just had a FED rate cut.
Speaker 2 (07:25):
Why aren't they going their other direction?
Speaker 3 (07:27):
Yeah, it's a good question. Mortgage rates behave differently than
some other financial products. They're tied more to ten year
treasuries than to the Federal funds rate, and tenure treasuries
involve long term interest rates. So investors kind of reading
the tea leaves of what's ahead, not just from the Fed,
but the state of the economy. And actually some of
(07:49):
what we're seeing here is that as the odds of
a soft landing increase, you know, as the odds of
the Federal Reserve bringing down inflation without causing a session,
that's actually leading some long term interest rates to go
up a little bit. It's a little bit of that
good news is bad news for mortgage seekers.
Speaker 4 (08:11):
At least, you know.
Speaker 3 (08:12):
It's also a little bit of the by the rumor,
sell the news kind of thing, where a lot of
the initial come down was already priced in. A year ago,
the average thirty year fixed mortgage rate briefly hit eight
percent for the first time since two thousand and it
came down to around six and now it's edged up
(08:34):
about half a point in recent weeks, So still more
affordable than it was a year ago, but definitely frustrating
for people that wanted that to continue to come down.
Speaker 4 (08:47):
It's kind of one of.
Speaker 3 (08:48):
These things where you look at where do investors think
interest rates are going to be for much of the
next ten years, and they've just started to creep up
a bit. You know, maybe the FED doesn't need to
as much if the economy is stronger.
Speaker 4 (09:04):
It'll be interesting to continue to watch this.
Speaker 1 (09:06):
Yes, and that we've gotten what two more FED meetings
left this year, one in the next month in November,
and then in December.
Speaker 2 (09:12):
Is that right?
Speaker 4 (09:13):
Yes?
Speaker 3 (09:13):
And the Fed is likely to cut at a quarter
point at each meeting. But like I said, that is
probably already priced into mortgage rates.
Speaker 4 (09:22):
For the most part.
Speaker 3 (09:23):
Credit card rates and auto loan rates have started to edge.
Speaker 4 (09:27):
Down, but not by that much.
Speaker 3 (09:29):
I mean, that's another key point is that the FED
pushed rates higher by five and a quarter points the
past few years, and so far we've gotten half a
point of cuts. You know, we're going to settle into
a new normal that's higher than we got used to
much of the past fifteen years, and it's just going
to take a while to unwind all these increases. They
(09:50):
may end up only unwinding something like half of it.
You know, we're not going back to zero interest rates
anytime soon, and that does have ramification longer term. Mortgage
rates could settle somewhere in the fives, you know, rather
than the three or four percent that we saw a
couple of years ago.
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