How To Prepare for Your Next Trip With a Vacation Savings Account

Plan ahead for that dream vacation

Laughing mother holding infant on summer beach vacation

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Between transportation, lodging, food, and activities, vacation costs can add up quickly. Vacations are meant to be fun, but penny-pinching and worrying about finances can put a damper on the whole trip. 

Using a credit card may be an option for some families, but taking on debt may ultimately add to your worries and prevent you from relaxing. Saving up beforehand is another option for financing your vacation.

You can set aside the cost of the trip months in advance in a special, dedicated vacation savings account to help eliminate a bit of the planning stress. It's relatively quick and easy to open a new account and to start saving for the next destination on your bucket list.

Key Takeaways

  • A vacation savings account allows you to save for a vacation separately from your emergency fund or other savings goals.
  • The psychological benefit of having a dedicated vacation fund is that it can help you stay motivated to reach your savings goal.
  • Choosing a high-yield savings account allows you to earn more interest on your balance.

What Is a Vacation Savings Account?

A vacation savings account is an account where you deposit money that you've earmarked for a future vacation. The added benefit of using a separate account for your vacation funds is that your savings have the opportunity to earn interest, depending on your balance and the interest rate.

Benefits of a Vacation Savings Account

Saving for bigger purchases takes time, patience, and dedication, but a designated vacation savings account benefits you beyond simply helping you save for your time away. It allows you to maximize the benefits of a getaway.

"There’s nothing more relaxing than taking a vacation you can actually afford," Kendall Philbrick of Babe on a Budget said in an email to The Balance. "That’s why I love using a designated account just to save for vacations."

Progress You Can See

Lumping all your savings into one account can make it hard to determine how much you've saved for vacation versus emergencies and other goals. "Keeping your vacation savings in a separate account is a great way to easily assess how much you actually have to spend on your vacation so you don't have to stress about going over budget," Philbrick said.

Small wins like adding $100 to your balance or reaching the halfway point can help you stay motivated to continue building your savings.

Specific Goals

Vague savings goals can be uninspiring because they lack the anticipation that a specific goal can bring. A vacation savings account has a clear goal from the start that can provide constant motivation to stay dedicated.  

Assigning a goal that's separate from your everyday spending means you don't have to think about the account as often, especially if you set up regular automated transfers. "[By] keeping that money out of sight and out of mind, you’ll be less tempted to spend it on other things and more likely to actually reach your vacation savings goals,” Philbrick said.

Maintain a Safety Net

You’ll be less likely to skim from your emergency fund to pay for your vacation if you keep a separate vacation savings account as part of a well-planned budget. An emergency savings account is an important part of a healthy budget because it allows you to handle unexpected expenses without going into debt. Not having one can make it difficult to recover from emergency costs like medical or car repair bills.

You can avoid building a habit of dipping into your emergency savings for non-emergency expenses when you have a separate account for your short-term savings goals. You can instead develop the mentality that taking money from an emergency fund to pay for non-emergency expenses is off limits.

Avoid Vacation Debt

Rather than putting your vacation on a credit card and paying interest, you'll have the advantage of funding your vacation in full. Better yet, you can put your vacation on your favorite travel rewards credit card to earn rewards and enjoy travel perks. Just be sure to use the money in your vacation savings to pay off the balance right away.


Using the money in your savings account to pay the balance on your travel rewards credit card as immediately as possible will let you avoid paying interest or creating new debt.

How To Open a Vacation Savings Account

You can open a savings account with your existing bank or take advantage of a high-yield savings account from another bank. Just follow a few simple steps.

Compare Account Fees and Features

Check the fees, services, and interest rate on the account you're considering whether you're opening it with a new bank or your current one, Some savings accounts require that you place a minimum deposit, or they may require that you maintain a minimum balance to avoid paying a monthly fee.

Some savings accounts have features like goal settings or the ability to name your account. This can add more enthusiasm and motivation to saving.


A high-yield savings account allows you to earn more interest on your savings than you would with a traditional savings account.

Apply and Provide Identification

You'll have to provide your personal information and proof of identity if you're opening an account with a new bank. This includes your name, Social Security number, and a copy of your driver's license or passport. Most banks will allow you to open a new savings account online in just a few minutes if you have the proper documentation.

Make Your Initial Deposit

You'll be able to link a checking account and make your first deposit after you've opened your new account. Some banks require a minimum deposit amount. You can set an automatic transfer from another existing account, such as checking, into your vacation savings account to save a certain amount at regular intervals automatically. This will help you achieve consistent savings.

The Best Vacation Savings Accounts

Some banks offer savings "clubs" that are specifically designed to help you save for a vacation. They're similar to Christmas Clubs in that you can't withdraw the money until your balance has hit your designated savings goal or before a certain date. This can be a handy advantage for savers who aren't particularly disciplined. You can take your money out early, but you'll most likely pay a penalty.

Otherwise, look for a bank that offers a savings bonus after you've held the account for a designated period of time, usually a few months. The bonus might be as little as 0.1%, but that can still contribute to a sunset cocktail while you're away. You might also want to look for an account that limits your ATM withdrawals so you're not tempted to touch the money before vacation time.

A high-yield savings account is a great place for vacation savings because it pays a higher yield than a standard savings account. But it doesn't come with the long-term commitment of a certificate of deposit (CD).

The Bottom Line

Vacations are intended to relieve stress, not add to it. And your pleasure will no doubt increase tenfold when you finally get away and enjoy something that's been on the horizon for months and months without stressing about the cost. It takes discipline, but it's doable with the right tools and proper planning.

Frequently Asked Questions (FAQs)

When should you create a savings account for vacations?

It's never too early to open a savings account for your vacation. The more time you have to save, the bigger the budget you'll enjoy. You can determine a more precise time frame by estimating the cost of the trip and dividing that by the amount you can realistically save each month. The result is the minimum number of months in advance of the vacation you should begin saving. 

How much money should you have in savings before you go on vacation?

The amount you should save depends on your destination, the time of year, the number of people going on the trip, and the length of your stay. Americans saved an average of $3,444 for vacations in 2021, according to an Expedia report. But there are ways to travel on a budget that would require less savings. For example, traveling during an off-peak season or driving rather than flying can reduce costs.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Expedia Group. "2021 Travel Trends Report," Page 8.

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