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We’ve entered into the ‘Ber months — October, November and December — and with the chill in the air comes the anticipation of the Holidays. As millions of Americans start planning their holiday travels, costs are top of mind as inflation continues to impact prices.

If your funds aren’t cutting it this year, but traveling is a top priority, it may be tempting to use any funds at your disposal to cover the costs — including dipping into your savings or taking out a personal loan.

In almost every scenario, it’s not a good idea to take out a personal loan for travel expenses, especially in such a high rate environment. Thankfully, there are steps you can take to lessen the blow to your savings by reducing travel costs if the holidays sneak up on you or if your plans change at the last minute.

When to use a personal loan for travel

Reaching for a personal loan shouldn’t be your first instinct when it comes to financing travel expenses. However, due to demand and inflation, travel prices are still predicted to be high for 2023 so paying out of pocket may not be in the cards.

There are very few reasons to take out a loan for holiday travel. Personal loan rates are at record-high levels with an average of 11.43 percent. If you were to take out a loan strictly for holiday travel, you’ll likely be paying for the trip for years down the road in interest alone.

How to reduce your total loan cost

If travel is a necessity for this upcoming holiday season and you don’t have the savings built up, you technically can use a personal loan to finance the expenses. If you do take out a loan, there are ways to reduce the overall loan cost.

For example, go with a budget airline and opt for economy over business. Pack light, don’t check a bag, bring your own snacks and a water bottle to fill up after making it through TSA. While these may seem like simple factors that don’t matter, just taking these few steps can reduce your total travel by hundreds of dollars.

How to take out a loan for holiday travel

Calculate exactly how much you’ll need, down to the cent. Only borrow up to this amount and prequalify with at least three lenders to get the most competitive rate.

If you have less-than-stellar credit and there are absolutely no other options at your fingertips, consider a small dollar loan. A small dollar loan may not require a credit check, and is aimed at serving those who wouldn’t otherwise be accepted for a loan.

Small dollar loans are offered by select banks and credit unions and come with maximum amounts of $2,500. While some banks have maximums under this amount, the loans are regulated on a federal- and state-wide basis and have maximum rates of 36 percent.

When to use savings for travel

Planning out your holiday travels well ahead of time and setting aside some money from each paycheck is always a better option than taking out a loan. For one, there’s no interest attached to using your savings and you won’t incur a hard credit check like you would with a loan.

How to save up for holiday travel

It’s advisable to book your travel well in advance to get the cheapest prices, especially with airfare. However, plans change and you can’t always schedule your holiday months in advance. If this is the case and you’re unable to save slowly over time, implement a short-term, aggressive savings strategy.

Until you have the exact amount of money you need saved up, cut out most ancillary spending. Put a temporary hold on gym and health club memberships, pause subscriptions, reduce eating out and pause all mobile apps that charge a monthly fee.

Everyone’s financial situation isn’t the same and this isn’t a fool-proof method. It’s not guaranteed that cutting out these expenses will add up to the full cost of a plane ticket or a couple nights at a hotel, but it certainly can help.

Final considerations

Under almost every circumstance, using a personal loan to pay for travel-related purchases is not a good idea. It’s likely that you’ll end up paying off the holiday vacation well into the future in interest alone. Plus, you’ll undergo a hard credit check when you apply for a loan, which will knock your score down a few notches.

If possible, always use your savings to cover the cost of travel or consider a low-interest or small dollar loan if necessary.