More often than not, purchasing goods and services for travel seems to be a gamble, as rates and prices can fluctuate wildly at any time with no notice. Although flexibility is often preferred, 2 reasons why paying in advance may be a good idea — and please note the use of the word may.
2 Reasons Why Paying in Advance May Be a Good Idea
First, paying for airfares, lodging, or rental vehicles in advance initially yields lower rates that can cost you less money than flexible rate options which allow you to cancel your reservation free of charge. The company is willing to offer you a lower rate on a product or service when you pay in advance in exchange for having longer use of your money, from which the company can profit — especially with its cash flow…
…but the problem with this option is if the company offers a lower rate — whether it is flexible or restricted — than the one with which you have already committed. Although some companies may grant a “one-time courtesy exception” and grant you the lower rate if you contact the company — especially if you are a good customer or have earned elite status — chances are highly likely that you are stuck with the rate for which you paid in advance.
Second, you can potentially benefit from the fluctuation of currency exchange rates. If you believe that currency exchange rates will be less in your favor by the time you are scheduled to consume the product or service, locking in a rate at the time of booking a reservation could save you some extra money…
…but if the currency exchange becomes more in your favor after you paid the rate which you paid in advance, you may wind up losing some — or all — of the value which you originally had.
Final Boarding Call
Paying in advance is usually not a good idea because you have no recourse if rates become less expensive — or your plans change — after you book your tickets or reservations. The value which you may have originally perceived may suddenly become of no value at all. Rates which are paid in advance usually offer no refunds or cancellations.
The ideal scenario of paying in advance is if you:
- Save money through the time you consume your reservation or ticket — especially if:
- Rates increase afterwards
- The currency exchange rate becomes less in your favor afterwards
- Both of the above occur simultaneously
- Know with the most certainty that your plans will not change
Photograph ©2017 by Brian Cohen.
