6 Myths About Travel Spending That Cost You Money

Traveler in airport
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Plenty of so-called conventional wisdom isn’t really wisdom, especially when it comes to travel spending.

The myth: Book your plane ticket as far ahead as possible.

The reality: The conventional wisdom that the early bird gets the worm was debunked last year when Airlines Reporting Corp. studied $82 billion worth of bookings and found that the sweet spot for prices is six weeks before the flight, when airlines start dangling deals to fill empty seats. In 2011, the study found that tickets were about 6% cheaper during this time frame, and the discount has been even higher in previous years. A more recent study published last week by CheapAir.com turned up similar results; it found that booking seven weeks out will let you score the best deals on airfare.

This holds true if you’re booking an awards ticket, says Gary Leff, who blogs at “View From the Wing.” Airlines don’t open award seats at the same time… This varies not just by airline but also by route and even day of week,“ he points out. If you want to cash in those miles, shoot for six to nine months out, and run some test searches a few weeks beforehand, he suggests. “Often times the patterns remain the same because far in advance airlines are usually working off a fairly generic playbook based on historical data.” That’s pretty good advice for people booking non-award tickets, too. Pricing out a few mock itineraries with similar specifications will give you a ballpark idea of the airline’s price ranges for that route.

(MORE: Study: The Best Time to Buy Cheap Airline Tickets is 6 Weeks Before a Flight)

The myth: You need the extra insurance on your car rental.

The reality: The associate at the rental-car counter will probably recommend — if not outright push you to get — the supplementary insurance for damage, theft or liability in the case of an accident. Don’t let the hard sell fool you, because there’s a good chance you already have this coverage. Many car insurance policies cover rentals, but the details vary, so it is a good idea to contact your insurance company before your trip just to be sure. Even if you’re not covered by your auto policy (or you don’t have a car), a wide variety of credit cards, particularly those in the “concierge service” premium category, also extend coverage for car rentals. You generally have to pay for the rental with that card and be listed as the primary driver on the rental agreement. In most cases, the credit card coverage is secondary insurance, which means you’ll still need to file a claim with your auto insurance company. And you’ll want to check if either your card or your policy will cover the “loss of use” fees many rental companies now charge. CreditCards.com has a chart that covers many of these details here.

The myth: You’ll get a better exchange rate overseas by paying in dollars.

The reality: Having a merchant in another country convert your purchase price from local currency into dollars won’t let you avoid a foreign transaction fee. On top of that, you’ll probably lose money on the exchange thanks to a practice called dynamic currency conversion. In general, the rule of thumb is that it’s smartest to use credit cards when traveling overseas. Some cards offer purchase protection if an item breaks or isn’t delivered as promised and all of them let you dispute a transaction. According to research conducted by CardHub.com, credit cards offer an exchange rate that’s about 8% better than what you’d get at a big American bank, and about 16% better than changing currency at the airport. The big “but” here is to make sure you’re using a card that doesn’t slap on a foreign transaction fee of around 3%; this will cancel out a favorable exchange rate.

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Beyond the foreign transaction fee trap, dynamic currency conversion can trip up even seasoned travelers, says Odysseas Papadimitriou, CEO of CardHub.com. It might make sense to assume that paying for something in dollars will get you the best deal, but the exchange rate the merchant uses is totally at their discretion, and Papadimitriou says many will take advantage of the opportunity to pad their bottom line. “You’re not getting the Visa or MasterCard rate. You’re getting an inflated exchange rate the merchant gives you,” he says. “It defeats the purpose of using your credit card.” Make sure your receipt is in the local currency, and don’t sign it if it isn’t, he advises.

The myth: Airfare prices are lowest late Tuesday night.

The reality: Christopher Elliott, a consumer advocate who focuses primarily on travel, calls it a “persistent myth” that the best airfares can be found after midnight on Tuesday. Sorry, night owls: Two new studies found that you’re not scoring a great deal just because you stayed up late. Researchers at Texas AM University studied tickets for the same flights bought on different days of the week and found that those bought on the weekend were about 5% less. The study’s authors speculate that the predominance of leisure travel that takes place over the weekends drives this difference. “This conjecture is supported by the finding that the weekend purchase effect is distinctly larger on routes with a mixture of both business and leisure customers than on routes that disproportionately serve leisure customers,” they write.

However, the jury’s still out on weekend purchases. CheapAir.com also looked at this question in its study and came to a different conclusion: That there’s really no day of the week when prices are significantly lower. Relying on the notion of a magic sale window doesn’t substitute for doing your homework and comparison-shopping to get the cheapest prices.

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The myth: The best hotel deals come from third-party sites.

The reality: A room rate on a third-party booking site might look like a steal, but don’t assume that it is. Call the hotel directly if you find a deal on another site, since a growing number have rate guarantees. According to the New York Times, Starwood Hotels Resorts, InterContinental Hotels Group, and Wyndham Hotel Group all now offer guarantees that you’ll get the best rate booking through them. Going to the hotel’s site might also turn up packages including other perks, like free parking or a complimentary drink in the lounge, that the third-party booking sites don’t have.

Then there’s the personal touch when it comes to customer service. “Executives at hotels and airlines said they can deliver a more personalized experience when travelers book directly. That means guests may have a better chance of getting the bed or room type they want,” the Times points out. No, this doesn’t save you money, but after a long drive or flight, saving yourself the annoyance could be priceless. Also, keep in mind that if you’re a member of a hotel loyalty program, you might not be able to accrue points for a stay booked through a third-party site.

Article source: http://business.time.com/2013/01/30/6-myths-about-travel-spending-that-cost-you-money/