Paying off early a bad idea?

[RCIfan1912]

I got a pretty big bonus last week and I'm gonna get a second one next month too. I know strange to get a second one in January but that's how it works. I paid some of our cruise off that isn't till October. Should I not pay off the rest next month or should you always carry a balance much closer to sailing in case there is a price drop? I thought I read that somewhere? Usually we wait wl till the last minute to make the full payment so it's not a problem but we have two booked right now and both are due around the same time so we are paying off the first cruise earlier than usual. Thanks for any advice or info. 

[smokeybandit]

Unless that money is eating a hole in your pocket and you fear spending it on something else in the mean time, there's no reason to pay a cruise off early. In fact there are negatives in that you can't get any price drops.

[WAAAYTOOO]

I definitely recommend that you leave at least a small balance (it can be just $100) until close to final payment date.  Pay off the biggest chunk of the balance but leave a small final payment.  

[twangster]

You can still get price drops before final payment due date when paid in full, it's processed as a refund.

When there are travel agencies involved it isn't as clean for them.  

A lower fare means lower commission.  If you booked through a big internet agency or box store they don't want their payout to go down.  Some may have given you a big OBC or gift card that comes out their commission.  If you reduce the price and their commission goes down it can make these types of agencies underwater on your booking so they may flat out refuse or make it very difficult to get a price adjustment done.  

Some agencies have full time employees as agents who may have less total compensation originating from the commission.   Some agencies use independent contractors.  Different agencies split the commission between the company and the individual agent differently.  There is no single business model.  

Given all the nuances sometimes dealing with a price drop isn't welcome at all agencies.  

MEI Travel on the other hand has software that automatically seeks out lower prices. Even if you find a drop that the software didnt you won't find MEI dragging their feet or fighting you on the price drop.  It's part of their culture in hopes of building a long term relationship over a one time score.

Commission is paid by Royal once you make final payment so there is that.

The problem with price drops for an agent is that their commission goes down.  When you do a price adjustment before final payment has been made Royal hasn't paid out the commission yet so it's cleaner for everyone.  Once Royal has paid the commission upon a price drop Royal recalls the difference in commision since the agency and agent have now been overpaid.  This can mean the agency has to pay back Royal and the agent has to pay back the agency.  It's a lot of number tracking and fixing of data so tax forms are correct sort of thing.

Most people pay at or near final payment due date so it's cleaner all around.  That doesn't mean you can't pay in full at any time, or hold back $100 just in case.  Just remember to make that final payment if you hold back some amount.  

[Pooch]

Unless you can’t control the urge to spend it on something else, put it in an account & pay when final payment is due.  I never give anyone my money before I have to.

[twangster]

Then there's the... " what if Royal charters the ship or cancels my cruise? "

The more you paid out prematurely the more you have to fight with Royal to get back.   "I paid them $3,954 yet they've only refunded $3,123". ...  Where's the rest?

[steverk]

I used to pay off early, but then discovered another issue with doing so.  If you book Air2Sea, and don't pay off your cruise until final payment date, then your airfare remains unticketed.  This has a few drawbacks, but 2 really big advantages.  First, you can cancel the flight at any time without penalty.  The seconds is related. You can reprice the trip without penalty.  These advantages go away once you make final payment.

[RCIfan1912]

51 minutes ago, WAAAYTOOO said:

I definitely recommend that you leave at least a small balance (it can be just $100) until close to final payment date.  Pay off the biggest chunk of the balance but leave a small final payment.  

Thanks, and that's exactly that I'm thinking of doing but was thinking 500. If 100 is good enough then that is good too. I think that's what we'll do. 

I'm not worried on the least we are gonna spend it on something else or stupid. I'm just thinking because we owe 1,500 on this cruise and 1,400 on another that final payment are somewhat close that I'd pay the first off a bit earlier than normal. We'll leave just a tad on. 

My TA actually calculated 2 price drops that I didn't even know about until I got an email from him that price has dropped so my TA is on top of things. He emailed me that if there is a price drop after the cruise is paid off you get a refund. I'm still gonna leave just a bit. I like the 100 bucks idea. 

[Pattycruise]

After seeing Covid unfold and all the issues with refunds I don’t think I would put down more than my deposits.

additionally, if you decide you don’t want this cruise -something better comes along, family wedding, job change etc, your $ is tied up.  Royal has a bad reputation of not refunding $ quickly.

Maybe invest in a short term CD or put it into a travel account. 

[CruiseGus]

32 minutes ago, steverk said:

If you book Air2Sea, and don't pay off your cruise until final payment date, then your airfare remains unticketed.  This has a few drawbacks, but 2 really big advantages.  First, you can cancel the flight at any time without penalty.  The seconds is related. You can reprice the trip without penalty.  These advantages go away once you make final payment.

I rarely use Air2Sea, and agree with the listed advantage.  The biggest disadvantage to being "unticketed" your seat assignments are not solid and you can be easily moved along with you can't purchase a upgraded seat until after you are "ticketed".  While the advantages do usually out way the disadvantages, personally, a lot of times I like to pay for that better seat.

[PL8SWPR]

Some online savings accounts are up to 3% or more interest.  No reason to pay it off early, just bank it until they need it.

[Reigert2008]

4 hours ago, RCIfan1912 said:

Thanks, and that's exactly that I'm thinking of doing but was thinking 500. If 100 is good enough then that is good too. I think that's what we'll do. 

I'm not worried on the least we are gonna spend it on something else or stupid. I'm just thinking because we owe 1,500 on this cruise and 1,400 on another that final payment are somewhat close that I'd pay the first off a bit earlier than normal. We'll leave just a tad on. 

My TA actually calculated 2 price drops that I didn't even know about until I got an email from him that price has dropped so my TA is on top of things. He emailed me that if there is a price drop after the cruise is paid off you get a refund. I'm still gonna leave just a bit. I like the 100 bucks idea. 

I mean, if you’re set on getting the money out of your bank account, I’d recommend putting it into a 3 or 6 month CD and at least get some interest on it.  Using it to pay the cruise early gets you no added benefit. 
 

I do this frequently when I have the money for a trip that isn’t for a a ways out.  I might as well get some interest on the money.

 

good luck.

[Traveling Mike]

I pay my cruises up to 2 years in advance.  I do it not because the money is burning a hole in my pocket but because it makes me feel better.  I have 6 cruises booked right now and am looking at booking two more.  I have done price drops with fully paid cruises and have not had any issues.  I am not rich, and it makes me feel better about booking my cruises when I know they are paid for.  There are lots of reasons people do things and different lifestyles.  You just need to decide if it makes since to you to pay it off double check with your travel agent to make sure there is not an issue that could come up.

[Xaa]

Like @Traveling Mikesays, this is an emotional decision.  If it makes you feel better, that's the only advantage.  From a financial perspective there is nothing good about it.  You lose the ability to earn from those funds, you give up liquidity, you no longer have possession in case of dispute with RCL etc.

[ChessE4]

Keep in mind that the likelihood of a significant price drop depends on the type of room and price you initially booked.  We generally get Ocean View or Balcony rooms 18 months in advance, so the price rarely goes down -- only up as demand increases.   I have been known to pay off cruises early, but usually no more than two weeks or a month early.  I usually just wait for the payment reminder from my Travel Agent.  As others have stated, I wouldn't tie up a large amount of money several months in advance.  You never know when Royal will cancel a cruise.....

[RCIfan1912]

16 hours ago, Xaa said:

Like @Traveling Mikesays, this is an emotional decision.  If it makes you feel better, that's the only advantage.  From a financial perspective there is nothing good about it.  You lose the ability to earn from those funds, you give up liquidity, you no longer have possession in case of dispute with RCL etc.

Yeah but like I said we have 2 booked and final payment for both are relatively close so paying off the first or leaving just a tad is ideal this time around. 

[WoodsTravels]

I was going to do the same thing but I got great advice from my TA. She said you should never pay it off early. Wait until a few days before pay off date. Heaven forbid something happens and you cannot go on your cruise, it is easier to get refunds of smaller amounts than waiting for the whole amount.

[Temeculaguy]

On 12/10/2022 at 6:59 PM, Traveling Mike said:

I pay my cruises up to 2 years in advance.  I do it not because the money is burning a hole in my pocket but because it makes me feel better.  I have 6 cruises booked right now and am looking at booking two more.  I have done price drops with fully paid cruises and have not had any issues.  I am not rich, and it makes me feel better about booking my cruises when I know they are paid for.  There are lots of reasons people do things and different lifestyles.  You just need to decide if it makes since to you to pay it off double check with your travel agent to make sure there is not an issue that could come up.

I'm with you, I just pay them off. I've always booked directly with Royal and only book suites. I've only seen them go up or sell out. I have a few booked but I do have one booked that I feel is overpriced given the itinerary not being in demand and what I paid. I was going to carry a balance until the deadline but after what twangster posted I may just pay it off off and re-book if it drops. The rest I ave booked for 2023 and 2024 are either sold out for my room type or went up, so no regrets on paying them off. I had a bad experience on a lift and shift on a coveted itinerary, after two lift and shifts on an Alaska cruise, almost missed the minimal tax increase on a paid off cruise deadline, had I missed it, the price would have doubled for my same room.

[WAYNO]

I also like to have them paid up-front.  One less thing on my to-do list.

 

Although I'm certainly not a travel agent, I arrange the packages...  cruise, air, food, ground transportation, hotel, etc., for friends and relatives traveling with us.  It's comforting to have as much of the planning as possible, behind us.   

 

[DoomSlayer]

I usually don’t book more than 6 months out mainly because I can’t really plan that far in advance with my wife’s and my jobs. Depending on the price, I usually just pay about 3/4 up front and the remainder at around the payment date - keeping an eye on going rates and potential upgrades.  Comp cruises I just pay taxes and fees up front because I can get that back 100% if I cancel anytime and because you kind of have too - there’s no point in repricing comp cruises in my opinion. Comp cruises also become good Royal Up candidates, which I try to win with low ball offers. I do usually prepay gratuities, but do that about a month out.  To me it’s more about budgeting and cash flow.  Ultimately, I look at repricing opportunities as a nice bonus, but I never book and commit to a trip unless I am happy with the going rate at the time I initially book. 

[mk-ultra]

My take on it: book, pay deposit, and (if you're good about setting the $ aside) -- hold off on final payment until near the deadline.

Two reasons:

1. If you have to cancel, you aren't sitting around waiting for that $ to get credited back to your original method of payment.  This isn't the big deal it was during the early COVID days (i.e., doesn't take months any longer)... but if you have a life event where you need that money, you aren't waiting for it.  And,

2. If you have a credit card that occasionally has really good travel spending rebates (looking at you, AMEX Plat)... if you're already fully paid off you can't take advantage of it if an offer pops up between booking and final payment due date.  I snagged a $250 credit a couple of months after putting a deposit down on a Princess cruise.  Offer came after I booked.

[RCIfan1912]

Except for the original deposit we don't use a CC to pay for the cruise. Just the deposit is on a CC, the rest is debit card/cash. Next month we are going to pay off a big portion. I just feel better about it. Plus we still have 800 bucks in cruise planner things to pay for too. That will go on my CC in bits over the next 7 months or so.

[Pooch]

If you have a CC that provides rewards of some kind for use, pay using that then immediately pay it off with the funds.  Yes, this can be a slippery slope but I put EVERYTHING on a CC that I can then pay it off at the end of the billing cycle. I haven’t paid for a flight on SWA for years using this method and my daughter’s college tuition paid for a nice little trip to Disney.  I am “creatively frugal” and want as much as I can get for my money.  Heck yesterday I went to 3 different grocery stores as each was offering 20% off $100 gift cards.  I needed the cards anyway, the stores were within blocks of each other, I got points on my CC for the purchases and saved a total of $60.  Hubby will tell you I can squeeze a dime into a quarter better than anyone!

[DoomSlayer]

8 hours ago, RCIfan1912 said:

Except for the original deposit we don't use a CC to pay for the cruise. Just the deposit is on a CC, the rest is debit card/cash. Next month we are going to pay off a big portion. I just feel better about it. Plus we still have 800 bucks in cruise planner things to pay for too. That will go on my CC in bits over the next 7 months or so.

You have a lot more risk not paying with a credit card as a lot of cards offer some protections like travel insurance and provide a way to dispute charges if needed.  My general rule of thumb for all major purchases, not just cruise fares, is to use a credit card even if I have the cash on hand.  If you do have the cash, just use it to pay your credit card balance before it accrues interest and hopefully collect some rewards in the process. 

[RCIfan1912]

On 12/17/2022 at 4:20 PM, DoomSlayer said:

You have a lot more risk not paying with a credit card as a lot of cards offer some protections like travel insurance and provide a way to dispute charges if needed.  My general rule of thumb for all major purchases, not just cruise fares, is to use a credit card even if I have the cash on hand.  If you do have the cash, just use it to pay your credit card balance before it accrues interest and hopefully collect some rewards in the process. 

I hadn't thought of that and just looked my Amazon Visa offers travel insurance if you use it to pay for a cruise. I think I will use it and immediately make the same exact payment on the card. I like this idea. Thanks for that info and suggestion.