Payment Plans for Airline Tickets: Smart or Not?

Read the fine print before buying airline tickets in installments

Airfares have been inching downward in recent months, thanks to lower fuel costs and more seats on new planes. The new lower prices are tempting many consumers to consider once-in-a-lifetime trips that would have previously been out of reach for them.

Those same would-be travelers are now facing temptation from a trend that lets people book their flights and pay for them in installments. Basically, you can now put your plane tickets on layaway.

The idea of layaway has been making a comeback lately. When you want to make sure you get an in-demand, big-ticket item, layaway allows you to claim it for a fraction of its final price, and then make small payments over time. When you’re done paying, you take your purchase home. It’s a concept popular with parents planning for holidays and couples shopping for engagement rings.

But does it make good financial sense?

CheapAir.com lets you take out a loan for your flight and pay it back over three, six or 12 months. The business model is aimed at people who don’t use credit cards, but it’s also for those who just can’t afford that flight to France all at once. A similar philosophy is in place at startup site Airfordable.com, where travelers pay a third of their ticket costs up front, then pay the rest off in monthly or biweekly installments.

Major carriers like American Airlines have had layaway-esque programs for years, but they usually require travelers to apply for an airline credit card to qualify.

These new offerings open air travel up to people who couldn’t – or wouldn’t – charge their fares in the past, usually because of bad credit. Buying tickets well in advance is usually a surefire way to get the best deals, too – even if you can’t pony up for the whole amount at the moment.

But when you look a little more closely, paying in installments has its drawbacks. A CheapAir loan is based on your credit history, with interest charged between 10 percent and 30 percent. Airfordable doesn’t charge interest, but it tacks on a flat 20 percent fee. In the end, the average traveler might not be much better off paying in installments than putting tickets on a credit card and paying them off that way.

An even better option is to squirrel away the funds for trips using a targeted savings account. You can even set up your direct deposit to direct a set amount from each paycheck, keeping your travel money separate and insulated from your everyday spending while you watch it grow.plane-airplane-airliner-passenger-sky-sky-cumulus-clouds-clouds-flight-flight-aircraft-wing-wing-morning-bright-sun-beautiful-background-blur-bokeh-wallpaper

That way, when you do purchase tickets online, you can pay your card off immediately and avoid taking that interest hit. You might have to put off your trip for a while if you want to get early-bird fares several months before takeoff. But it means you’ll have more spending money – or even more nights in a hotel – when you get there.

Paying for airfare a little bit at a time is a great idea when it’s earning interest for you. It’s not so great when you’re tied into a high-interest loan or paying more than you have to for your seat.

 

7 Things 20-somethings Should Know

Jobs you don’t leave at the end of summer. Real bills to pay. Planning for life beyond next weekend. If you’re an average 20-something, life’s probably getting serious. And if you feel like you don’t know what you’re doing, you may be right. Or you might just need some time to figure it out. Here are few pointers.

Everybody Is Confused

No one has it all figured out and people who tell you they do, don’t. This shouldn’t concern you. After a mistake, and you will make many, keep moving forward. You can’t make all the right decisions but you can make your next decision the right one.

Just Say Yes

Don’t turn down opportunities to gain experience. You may think you know where your career’s going, but you’re probably wrong. Saying “no” to a task or responsibility you don’t think will be useful is missing the point. Saying no is saying no to the opportunity. Saying yes expands your skills and simply helps you be a better you (which always pays off).

Failure Is Part of Success

You will not be a complete success at everything you try. But if you keep trying you will succeed more and more often.

Unless You Master Money, Money Will Master You

Spend less than you make. Always. Don’t become house- or car-poor. Put something toward retirement now, no matter how small. Learn about investing before you try it on your own. Avoid easy credit card pitfalls and loans that can lead to issues that take decades to fix. Learn how to make your money work for you. (MCU members have access to our Dollar Dashboard with scores of helpful budgeting and planning tools.)

You Will Have to Work With People You Don’t Respect

You’ll interact with a wide range of personalities and some you won’t like very much. In short, however, bite your tongue and get the job done. You don’t have to be friends but you do need that paycheck as well as the valuable experience of dealing with difficult personalities.

Find a Balance Between Work and Life

You’ve probably already heard the advice to be the first to arrive and the last to leave at work, and it is crucial that you demonstrate hard work and commitment to your job. But it is also important that you don’t overdo it. Leave time to be you outside of work and you’ll be a better, happier and smarter employee.

More Books, Fewer Texts

Reading skills are still important, especially when it is done in bursts beyond 140 characters. Reading books cover to cover will increase your creativity as well as your thinking and analytical skills. You’ll tell better stories too.

One final piece of advice: Enjoy the ride and good luck.

 

Protect yourself from debit card fraud

Debit cards – which require a personal identification number (PIN) and deduct money straight from your checking account – offer convenience without the debt-related downsides of credit cards. That convenience can be a double-edged sword, though, because debit cards are tied to your checking account, which most people think of as their everyday spending cash. img_4297

If someone uses your credit card illegally, you won’t take a financial hit while you’re getting the situation resolved, and most major card companies have a zero-liability policy on fraudulent transactions. Financial institutions are offering more protection for debit cards, but it’s far less stressful to protect yourself from fraud in the first place.

Follow these tips to keep your debit card use under wraps.

Protect your PIN.

The first and most important rule to follow is to always protect your PIN. Don’t share it with anyone. Memorize it instead of writing it down somewhere. Never give it out over the phone, and always cover keypads with your hand when entering the code.

Whenever possible, use only ATMs associated with your card issuer, and do it during regular business hours. Don’t use an ATM if other people are milling around.

Choose ATMs wisely.

Stay away from ATMs that seem to be in disrepair. Be wary of card machines at convenience stores and gas pumps as well. It’s easier to set up “skimmer” devices on them to steal your information when you swipe or insert your card. To spot skimmers, look for different-colored materials on the façade of the ATM, partially obscured lights, misaligned on-screen graphics, protruding parts on the card reader and sluggish keypads.

Keep balances lower.                                         

Think twice about keeping a large balance in checking or savings accounts that can be accessed via ATM. Check your account charges and balances regularly, and sign up for daily bank alerts if offered. Use debit card controls on your financial institution’s mobile banking app. Many users are now able to activate and deactivate their debit cards as many times as they wish. Compare monthly statements with your receipts.

Write down contact numbers for your checking account holder and credit card companies and keep them separate from your cards. Alert your bank or credit union immediately if your card is lost or stolen, and let them know if you plan on traveling out of state, to prevent potential blocks on your card. Always have other forms of payment on hand when you travel in case this happens.

Like cash and credit cards, debit cards deserve a place in your wallet. They can be a great way to track your spending and keep debt from getting out of control. Just remember that you need to use extra caution to keep your funds safe.