Many cruisers consider booking a refundable fare when reserving their cruise vacation, but is the added cost worth the flexibility?
As an avid cruiser and someone with a degree in actuarial science and statistics, I’m always interested in the math behind everyday decisions. I can't help that my mind is mathematically wired! As you might imagine, this curiosity extends to cruise pricing and travel planning. I love to strategize on the best and easiest ways to save money, and I always aim to make the most informed decisions.
This has included one of the most debated booking questions: Is a refundable cruise deposit worth it?
For many years, I only booked non-refundable deposits to save money. However, my life was a lot more predictable back then. For some context, my husband is in the military, which means our future plans are often very unpredictable. Deployments, cross-country moves, and training are constantly floating around our busy schedule.
Booking a cruise two years in the future with my husband carries a much lower probability of actually happening. In comparison, if I book a cruise with my parents, my sister, or friends, there is a higher likelihood that it actually happens as planned.
Because of that uncertainty, I almost always book refundable deposits when my husband and I are cruising together. As much as I’d love to plan trips years in advance with certainty, that just isn’t realistic for us.
However, I had never actually considered assigning real probabilities to my decision-making. Instead of just considering whether I’ll probably take the cruise or not, I realized I could try to determine the likelihood of a cruise happening. With this, I could make more informed decisions about whether a refundable fare was worth the added cost.
For example, we booked a Celebrity cruise to India that was scheduled for this fall, and we chose a refundable deposit. Luckily, our MEI travel agent was able to provide a refundable fare with the agency’s group rates, so the cost was minimal for a refundable fare.
But, India experienced some geopolitical tensions over the summer, so we decided the trip no longer felt like the best option for us. We canceled the cruise and rebooked a new sailing to New Zealand instead. Had we booked a non-refundable deposit, we would have either lost a $900 deposit or paid roughly $200 to switch itineraries (which is what most likely would have happened).
For our New Zealand cruise, we again booked a refundable deposit, even though we were only six months away from the sail date. However, this cruise went as planned (and it was amazing!). In the end, we paid a little extra for flexibility and peace of mind for this itinerary, but didn’t actually use the option to cancel.
Looking back, we probably could have booked a non-refundable deposit for our New Zealand cruise. However, we wanted to have the peace of mind that we wouldn’t lose money if we had to change our plans again.
When thinking more about this topic, I recently came across a fascinating thread on the Royal Caribbean Blog Forum where cruisers tried to answer this exact question using math and probability. It’s a great example of how thinking just a little more analytically can help you make a better booking decision. As a data analyst myself, I loved reading through everyone's theories!
So, if you’ve ever wondered whether paying extra for a refundable deposit is actually worth it, you’re in the right place. Here's how you can consider taking a more strategic approach to your decision-making process.
Taking a mathematical approach to non-refundable deposits
In the forum thread titled “Refundable or Non-Refundable Deposit: A Mathematical Approach,” JFCruise aimed to analyze whether a refundable or non-refundable deposit made more sense financially.
The poster wrote: “I think this might be one of the most common questions 'Is the Refundable Deposit Worth It'? And I was curious to see how 'worth it' it was, using math and probabilities. So, I fired up Excel and tried to figure out when it's worth it.”
Essentially, JFCruise was looking to determine the breakeven point where paying extra for the refundable deposit makes financial sense. Depending on a person's probability of canceling their cruise and the cost of the refundable fare, sometimes the math doesn't support refundable fares. Let's dig into this a little further!
How Royal Caribbean handles non-refundable deposits
Before diving further into the math, it’s important to clarify how refundable and non-refundable deposits work on Royal Caribbean.
Royal Caribbean offers both refundable and non-refundable fares, each with different pricing and flexibility. In general, non-refundable fares will be the cheapest option, but they come with risk.
If you cancel before final payment, your deposit is not returned and considered forfeited. However, you do have an option to change your sailing for a penalty, usually $100 per person.
On the other hand, refundable fares are more expensive, but provide you with flexibility and peace of mind. If you cancel your cruise before final payment, you get your deposit back in full and no money is lost.
Let’s look at an example
To determine whether a refundable deposit is worth the extra cost, JFCruiser introduced a simple idea borrowed from probability theory, known as expected cost. In plain English, this means looking at what a decision is likely to cost you on average, based on how likely you are to cancel your cruise.
One example in the thread looked at an 8-night cruise for two people with these numbers:
Non-refundable deposit (NRD): $250 per person = $500 total "at risk" if you cancel before final payment
Refundable option premium (RD): $250 more per stateroom (the “extra” you pay upfront for flexibility)
From there, the math is pretty simple at a high level:
- If you book non-refundable and later cancel, you lose $500.
- So the “risk cost” = ($500 × probability of cancellation).
- If you book refundable and don’t cancel, you pay $250 extra for flexibility you didn’t use.
- So the “wasted premium” = ($250 × probability of NOT canceling).
- The breakeven point is when those two expected amounts are equal.
- Our equation: $500 × (probability of cancellation) = $250 × (probability of NOT canceling)
Let’s simply assume the “probability of NOT canceling” = (100% − probability of canceling). With a little algebra, this equals a 33% probability of canceling, for this example.
In other words, once your chance of canceling is more than 33.33%, paying an extra $250 for a refundable fare starts to make sense financially. As you are more uncertain about taking your cruise, the added flexibility is more worth the cost. On the flip side, if your chance of canceling is less than 33.33%, non-refundable fares are usually the better option.
Let’s look at some other scenarios comparing the refundable and non-refundable logic
Royal Caribbean uses dynamic pricing for its cruise fares, meaning the price difference between refundable and nonrefundable options can change frequently.
To make this easier to visualize, here are a few simplified scenarios using real-world numbers. It’s important to consider that the deposit itself isn’t a “loss” if you take the cruise, as it’s applied to the fare. The only money at risk with a refundable booking is the extra amount you paid for flexibility.
Example 1: Very high chance of canceling (80%) | Low chance of sailing (20%)
- Deposit at risk with non-refundable: $500
- Extra cost for refundable: $250
Non-refundable expected loss: (0.80 * $500) = $400
Refundable expected loss: (0.20 * $250) = $50
Conclusion: If there’s an 80% chance you’ll cancel, booking a non-refundable fare means you’re very likely to lose most of that $500 deposit. Paying $250 for a refundable option dramatically reduces that risk. In this case, refundable clearly makes the most financial sense.
Example 2: Very low chance of canceling (5%) | Very high chance of sailing (95%)
- Deposit at risk with non-refundable: $500
- Extra cost for refundable: $250
Non-refundable expected loss: (0.05 * $500) = $25
Refundable expected loss: (0.95 * $250) = $237.50
Conclusion: If you’re almost certain you’ll take the cruise, the refundable option becomes more of an unnecessary expense. You’re far more likely to sail than cancel your cruise, meaning you’ll almost certainly pay extra for flexibility you won’t use. Here, non-refundable is the smarter choice.
Example 3: Refundable costs are very similar to the non-refundable deposit at risk
- Deposit at risk: $500
- Extra cost for refundable: $550
Break-even probability: (Cancellation probability x 500) = (1 - Cancellation probability) x 550
This equals: 550 / (500+550) = 52.38%
Conclusion: In this scenario, you’d need more than a 52.38% chance of canceling your cruise for the refundable option to make sense. If your plans are fairly solid, booking a non-refundable fare is usually the better option. If your plans are truly uncertain, refundable may still be worth it. Moreover, if you're someone who wants peace of mind with your deposit, the added flexibility and protection could be worthwhile.
Example 4: Refundable premium is much higher than the deposit
- Deposit at risk: $500
- Extra cost for refundable: $1,000
Breakeven probability = (Cancellation probability x 500) = (1 - Cancellation probability) x 1000
Equation: 1000 / (500 + 1000) = 66.67%
Conclusion: In this scenario, the refundable option only makes sense if there’s a very high chance of canceling. Mathematically, you’d need roughly a two-thirds (about 67%) or greater likelihood that you’ll cancel before final payment for the refundable option to break even.
If your plans are even moderately solid, you’re paying significantly more for flexibility than the amount you’re actually protecting. This makes the non-refundable option the more practical choice in most cases.
A simple mathematical way to think about refundable fares
Spreadsheets might not excite you in the same way they do for me, and that's totally fair! So, if you’re not looking to get your calculator out every time you book a cruise, here’s a simplified approach to determine if a non-refundable fare is worth the potential savings for you.
At a high level, you'll want to ask yourself three questions:
- How much is the deposit I could lose?
- How much extra am I paying for a refundable fare?
- How likely am I to cancel before final payment?
Here’s a simple example. Let’s say your non-refundable deposit is $500 and the refundable fare costs $600 more.
In this case, you’re paying more to protect less. From a purely mathematical standpoint, the refundable option only makes sense if there’s a high chance you’ll cancel (more than 54.50%)
Now flip the numbers. If the non-refundable deposit is $500 and the refundable premium is $200, the math is more favorable towards a refundable deposit. In this case, the breakeven point is 28.60%, and you’d only need to believe there’s a 28.6% chance you’ll cancel
In this case, the math becomes much more favorable toward refundable, especially if you’re booking far in advance or dealing with uncertain schedules.
What caveats should we consider?
Many cruisers in the comment section were intrigued by the analytical approach to the discussion of non-refundable vs refundable fares. In fact, many also provided some helpful caveats and real-world considerations.
To start, several people noted that the fare difference between refundable and non-refundable cruise fares matters more than the deposit itself. Paying an extra $200 to protect a $500 deposit is very different than paying an extra $800 on your cruise fare to protect the same amount.
Others pointed out that timing plays a role during the decision-making process. As cruises get closer to final payment, the price difference between refundable and non-refundable fares often shrinks. As the sail date approaches, most people have a better idea of whether they'll be able to sail.
A few commenters also mentioned the role of travel insurance, noting that many policies reimburse non-refundable deposits for covered reasons. For travelers who always carry insurance, non-refundable fares can feel like the better choice.
For example, my annual travel insurance policy with Allianz has reimbursed me for nonrefundable deposits in the past. When my husband was deployed and I had to cancel a trip, his deployment qualified as a covered reason under the policy.
Of course, there is also an emotional aspect to making this decision. Even when we try to rationalize our decisions, our emotions can take precedence. For example, even if the math favors choosing a non-refundable deposit, some people simply prefer the peace of mind with refundable fares to protect their deposit.
Is a refundable deposit worth it?
There’s no universal rule for whether a refundable deposit is worth it. It ultimately comes down to the details of your travel plans and personal situation.
For cruisers with predictable schedules and high confidence they’ll be able to sail, non-refundable deposits often make the most sense. If you have a travel insurance policy, this will also provide extra protection for covered reasons.
For those booking far in advance, choosing a refundable deposit can be the best option. This is especially true if you’re juggling uncertain work schedules or have a more unpredictable life (like me). For some, the peace of mind is always worth the added cost for a refundable deposit, even if the math doesn't support the decision.
Although I’ve typically booked non-refundable deposits in the past, I’ve definitely leaned towards refundable fares in recent years. I’ve discovered that booking refundable group rates with my MEI travel agent is only marginally more expensive than the cruise line’s price.
For instance, I was able to book a refundable group rate with drinks and internet included on my last Celebrity cruise. The price I paid was only a few hundred dollars more than Celebrity was offering directly online. The small cost was absolutely worthwhile in this case!
