Saving to Travel This Summer? Consider This Unexpected Place to Store Your Vacation Fund

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The average American aims to take three vacations a year, with their average vacation budget coming in at $2,743 per trip (according to data from Go City). That's a lot of money to spend, and it often makes sense to stick money in your savings account throughout the year in order to be able to cover those costs.

If you're planning an epic vacation this summer, ideally you're well on your way to saving up enough to cover the costs. And if you are, there's an unexpected place you may want to put your travel funds.

Could this be the right place for your vacation savings?

If you have money set aside for your upcoming summer vacation, you probably have it in a basic savings account or maybe even a high-yield savings account. The national average savings account rate is just 0.46%, but high-yield accounts can pay upward of 5% right now, so they aren't a bad place to put your vacation funds until you need the money.

There could be a better option though. Rather than just leaving your money in savings, you may want to buy a 3-month certificate of deposit instead.

Most CDs are FDIC insured like savings accounts are, so you won't be putting your money at risk if you use your vacation fund to buy one. And you can easily find CDs at a huge number of banks and other financial institutions and buy in without any investing knowledge at all.

Now, CDs require you to commit to leaving your funds invested to avoid penalties -- but there are a variety of different term lengths (often ranging from three months to five years) available. So you don't have to make a huge time commitment.

Since summer vacation is coming up pretty soon, you'll most likely want to choose a 3-month CD, which would enable you to withdraw your vacation fund right around the time summer is getting underway.

Why is a CD an ideal choice for your summer travel fund?

A CD can make good sense for your travel funds for a few key reasons.

First, CDs generally tend to offer even higher yields than the best savings accounts. So you can earn a little bit of extra money over the coming months compared with if you have your cash in savings. Once you buy your 3-month CD, your rate is also locked in and guaranteed for the duration, while savings accounts have variable rates. You won't have to worry about earning less interest than you thought you'd get (which could be an issue if savings account rates fall).

Perhaps even more importantly, though, since CDs require you to lock up your money, buying one should help to ensure you don't tap your vacation fund ahead of schedule. The fact you'd face a penalty for taking out the money can serve as an added deterrent, so you aren't tempted to withdraw it to cover today's expenses instead of saving it for your upcoming vacation as you planned.

Since CDs offer all these benefits, it's worth considering whether you should buy a 3-month certificate of deposit with your vacation savings. Doing so may be just the ticket to ensuring you have the funds you need for a truly memorable summer vacation experience.

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