Back to square one: Lowered credit limits foil some vacation plans

Retailers across the country report trouble moving big-ticket items because of newly reduced credit limits, but vacation sellers are truly screwed by them. Have you ever heard of a vacation that wasn't a big-ticket purchase? Budgeting just $100 a day for a week-long vacation would be considered miserly.

Even when people want to spend money on a trip, they're increasingly finding their credit card issuer won't let them. On Tuesday, I wrote about the effect that payment slowdowns are having on our abilities to get medication at pharmacies. Pauline Frommer, who edits her own series of guide books (and for whom I write sometimes), turned me onto severe handicaps that travelers are facing over newly-lowered credit limits.

"Younger people are finding that the credit limits on their credit card may not be enough to pay for a vacation," says Pat Webb, who runs cruise broker out of Pomona, CA. Since around October, Webb told me, about 30% of customers under 40 have been declined by their credit card issuers when their cards were run through the machine. As we've reported on WalletPop before, people aren't always clearly warned when their limit has gone down."It's predominantly an issue for people who are aged 21 to 40, [have] two kids, and they're both working," said Webb, who attributes the problem to the fact that younger people tend to have more regular payment obligations such as mortgages and tuition. "If the client is over 40 or 50? Never happens."

But because, as Webb says, "people don't want to stay in their cave forever," they're still booking. In fact, because of lower prices and bigger incentives, his inquiries are up. To make things work, vacationers are getting creative and cobbling together payments using multiple credit cards, a combination of credit and debit cards, and smaller deposits. Webb also reports seeing a lot more customers making regular payments on upcoming vacations, as opposed to recent times when they would just wait until near the departure date to pay everything off. Similar problems were reported by a Miami seller of getaways to beach resorts.

It's not like vacationers can simply pay cash for their travel. It's not always a smart idea. In certain cases and with certain trusted retail chains, you might actually gather together enough cash to buy that TV or appliance. But I wouldn't recommend anyone does that with travel because of the buyer protections that credit cards supply against shysters and bankruptcies.

Have you encountered your own vacation: fail? Tell us about it.
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