Timeshares vs. Vacation Clubs vs. Travel Clubs

These days, most people have heard enough horror stories about timeshares to know you should run for the hills whenever someone tries to sell you one.

When it comes to vacation clubs and travel clubs, though, things are a little different. Those programs have started popping up a lot over the last few years, and they’re billed as the way to achieve R and R. Resorts, airlines and other companies in the travel industry advertise these members-only clubs as great alternatives to timeshares and play up their discounted travel options.

But here’s the truth: Vacation clubs and travel clubs are, by definition, timeshares. There are some differences between them—but nothing that makes them any better. And in some ways, they’re even worse. You’ll get all the restrictions, money traps and sneaky fees of a regular timeshare—but wait! There’s more! You’ll get some extra ones too—including creative new ones you’ve probably never heard of. 

Now, all that might surprise you if you’ve heard only good things about these clubs or you’re thinking of buying a membership. So let’s dig into the details. We’ll show you how these clubs work, how they waste a ton of your money, and why you’re better off keeping your distance.

How Timeshares and Clubs Work

Timeshares

A timeshare is a single property you visit year after year. You purchase a time-sharing agreement, then pay maintenance fees. After all that, you own the right to vacation at the property during preset times, usually a week or two each year.

Not only does the insane cost of owning a timeshare make it a complete rip-off (thanks to a boatload of hidden fees and restrictions), but the timeshare industry is also full of fraud and often uses unethical sales practices. Stay far away.

Vacation Clubs

A vacation club is a type of timeshare. But instead of paying to use a single property, like a traditional timeshare, you get access to multiple properties in multiple locations. Don’t be fooled though: Vacation clubs stink just as badly as timeshares since they also come with a ton of fees and restrictions.

Travel Clubs

Travel clubs are a type of vacation club. They have a lot of the same expenses and destinations, but members of a travel club vacation together. The company gets them group rates, so they usually pay less for memberships and fees than vacation club members.

The Risks of Vacation Clubs and Travel Clubs

Timeshares, vacation clubs and travel clubs all sell people the idea of a fairy-tale vacation at a bargain price, but these “dream” vacations come with nightmarish problems. Here are some of the biggest:

• They limit where you can travel. A lot of vacation club companies make it sound like you can travel anywhere in the world using their plan, but it’s just not true. Sure, vacation clubs give you more options than a traditional timeshare, but you can only travel to locations where the vacation club company has a property. And even the biggest companies don’t have properties everywhere.
• They’ve got restricted travel dates. Even though you technically “own” a timeshare or club membership after you buy it, you can’t use it whenever you want. That’s because you have to work around the other owners’ schedules and any blackout dates set in place by the timeshare company. No thanks.
• They don’t always let you bring your family. Here’s an area where vacation and travel clubs are worse than timeshares. Did you know many clubs only give the membership to the person who paid for it? That means, unlike with a timeshare, you can’t bring anyone you want along for a trip to some club destinations. And depending on the club, these restrictions can also apply to your immediate family! 
• They’re hard to get out of. This one’s the kicker. It can be really difficult to get out of a timeshare or club membership if you decide you don’t like it. There’s a reason one of the first things you’ll see if you search the internet for “timeshares” is a list of companies dedicated to helping folks get out of them.

Vacation Club Costs

Not only do timeshares, vacation clubs and travel clubs have a bunch of confusing risks and restrictions, but they also charge a ton of fees! Let’s take a look at all the costs involved in owning a timeshare or club membership, many of which are totally ridiculous. They include:

• Initial purchase price
• Financing costs
• Closing costs
• Maintenance fees
• Point redemption fees

Initial Purchase Price

This is the actual cost of purchasing ownership in a timeshare, vacation club or travel club. It’s the biggest expense in owning a timeshare, but once you pay it, the timeshare is yours. Of course, there are plenty of other fees you’ll still have to pay even after dropping cash on the initial purchase price—more on those fees in a moment.

Pay off debt fast and save more money with Financial Peace University.

The average initial purchase price of a seven-day timeshare is $24,140.¹ With vacation and travel clubs, the price depends on the company you’re buying from. For example, Disney Vacation Club’s typical initial purchase price starts around $32,000.² A Hilton Grand Vacations membership averages $22,000.³ And some vacation clubs also charge an annual membership fee on top of the initial purchase price.

Financing Costs

Now, most folks who buy timeshares don’t have $20,000 just lying around, so they wind up financing the initial purchase price. That means they make a down payment and turn the remaining amount into debt that they pay off in monthly installments. It’s just like a car loan or a student loan—but way worse.

Why? Because timeshare financing usually carries a ridiculous interest rate. Take Disney Vacation Club as an example. While they advertise interest rates that start at 10% (which is still terrible, by the way), the fine print will tell you that some members could get slapped with an 18% interest rate!⁴ That’s almost as bad as credit cards—which, for comparison, have a 20.4% average interest rate.⁵

So, while a monthly payment of $400–500 may not sound like a big deal, you’ll be racking up interest the whole time. That’s a huge part of how these companies make money.

Closing Costs

Are you ready to pay your initial purchase fee and jump into vacationing? Hold your horses, partner. There’s still more money to fork over.

Next, you’ll pay closing costs to finalize the sale of the club membership or timeshare. And closing costs aren’t cheap—close to $1,000 in some cases. For example, Disney Vacation Club sometimes charges over $850 for closing costs.⁶

There aren’t even this many hoops to jump through at the National Dog Show!

Maintenance Fees

One of the “perks” of owning a timeshare or club membership is that, even though you technically own part of the property, you don’t have to worry about cleaning or other maintenance when you’re not using it. It seems like a great benefit, but don’t think for a second you won’t pay for it.

Maintenance fees are timeshare and vacation club companies’ way of charging you for the upkeep of their properties, and these suckers are expensive. The average timeshare annual maintenance fee is a whopping $1,000.⁷

Here’s the kicker with maintenance fees: You have to pay them as long as you own the timeshare. That’s right—even if you pay cash for your timeshare or membership, or pay off your loan, you’ll still owe annual maintenance fees.

Alicia, a member of our Ramsey Baby Steps Community on Facebook, found that out when she paid off her vacation club membership in 2021. She called the club company after making her final payment and asked if she’d still owe her $875 maintenance fee. Spoiler: She did.

“I paid it off two years early, then I asked, ‘Do I still have to pay the maintenance fees?’ And they said yes,” Alicia said. “I get irritated when we have to hit ‘submit’ on the payment.”

Point Redemption Fees

Somehow, there’s still another fee left to go over, and this one is the most ridiculous of them all. A lot of vacation clubs operate based on a points system. Each year, members are awarded a set number of points. Then, when a member wants to take a vacation, they redeem those points to book time at a property.

Here’s the problem: Sometimes, vacation clubs charge their members a fee to redeem their points. That’s right—you have to pay even more money just to use the points that you already paid for! It’s complete nonsense, right? And yet, plenty of people sign up for these plans year after year. 

This is just dumb, folks. Don’t fall for this garbage.

Are Vacation Clubs Worth It?

No! One more time for the people in the back: No! One more time for everyone else who still didn’t hear: No!

Even if you stumble onto a timeshare or club that isn’t a scam, it’s still a horrible financial decision. Let’s take a look at why.

For this example, we’ll say you bought a vacation club membership and agreed to pay a $400 monthly payment over 15 years with a $1,000 annual maintenance fee. Over the course of a year, that comes out to $5,800.

What if, instead of sending $5,800 to the vacation club company, you just bought a $3,000 vacation yourself and kept the remaining $2,800? That $3,000 would probably buy you a pretty nice vacation, and you’d have a ton of extra money to put toward other important financial goals like getting out of debt or saving for retirement.

In fact, $2,800 invested annually for 15 years in good mutual funds with a 10% rate of return comes out to nearly $100,000, according to our investment calculator. So, if you bought a vacation club, you’d be wasting almost $100,000 of investment potential on nothing.

Do you see how the math just doesn’t make any sense here? Especially when you consider that those numbers didn’t include membership fees, point redemption fees, closing costs, or interest. And don’t forget, clubs and timeshares almost always cover only your lodging—your costs for food, travel and attractions will likely only be discounted (not free) with these programs.

At their worst, timeshares and vacation clubs are fraudulent scams. At their best, they’re complete rip-offs. This is a lose-lose scenario if we’ve ever seen one.

The Better Way to Pay for Vacations

Like we just talked about, saving up and paying cash for your vacations is a much better way to travel than buying a timeshare or club membership—and it’s not close. But saving money isn’t always easy, and it can be super difficult if you aren’t living on a budget by making a plan for your money at the beginning of every month.

If you’ve never made a budget before—or if you want a tool that makes it a whole lot easier—downloading the free EveryDollar app is a great place to start. EveryDollar lets you set up a budget in minutes so you can get a jump start on saving up for that next big trip. Plus, the premium version allows you to connect your bank account to the app so it automatically tracks your transactions.

So, instead of dealing with these timeshare and vacation club companies, give them the cold shoulder by getting on a budget and saving up to pay for vacations without them.

Download EveryDollar today!