Why do people prepay service charges?

[david_sobe]

Simple reason for me:

My final bill is not as high. With all the extras with a cruise it is nice to come home with a bill about $210 less. Last cruise I even paid extra towards the OBC to make sure I came home with a lower final bill ;)

[LMaxwell]

Simple reason for me:

My final bill is not as high. With all the extras with a cruise it is nice to come home with a bill about $210 less. Last cruise I even paid extra towards the OBC to make sure I came home with a lower final bill ;)

 

Honest question, can you explain the rationale because I just can't make sense of it

 

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[CruzLover80]

Honest question, can you explain the rationale because I just can't make sense of it

 

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I would presume the the poster is something like me, prepaying the items takes less out of your pocket at the time of final bill. Prepaying items and building up your onboard account prior to sailing makes cruising more affordable (for me). If it came down to paying a final bill of $500 or more, I'd freak out, but paying some of my items ahead of time (when I can afford the smaller amounts) makes it more manageable.

[SissasMomE]

Honest question, can you explain the rationale because I just can't make sense of it

 

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We don't carry credit card balances. They are all paid at the end of each month. Just less of a cruise bill afterwards to pre-pay certain things in advance. Plus we get nice points with Amex. Edited - we aren't living in the days of 10% returns on savings accounts, so it really is a non-issue to pay certain things in advance. Plus I am guaranteed my points in my account for when I want to use them.

Edited August 4, 2014 by SissasMomE

[CruzLover80]

we aren't living in the days of 10% returns on savings accounts, so it really is a non-issue to pay certain things in advance.

 

Oh you mean like the ding-dong who said I was pretty much dumb for paying NCL to hold my money interest free because I wasn't disciplined to save the money myself... Sigh! If everyone did like you and not carry credit card balances, we may not have had so much issue with Americans and credit card debt. I pay all my stuff with cash, but I can see why people use the cards for the points.

[SissasMomE]

Oh you mean like the ding-dong who said I was pretty much dumb for paying NCL to hold my money interest free because I wasn't disciplined to save the money myself... Sigh! If everyone did like you and not carry credit card balances, we may not have had so much issue with Americans and credit card debt. I pay all my stuff with cash, but I can see why people use the cards for the points.

 

Yeah, exactly :rolleyes: I'd rather pay up front and not worry about a bill later!! And I agree with the credit card issue, too. We only do it for the Amex points, but that bill gets paid right away!

[April7901]

Adding my voice to the "pure convenience" chorus. Just one less thing to have to think about. I don't do credit card rewards, and with the lousy interest rates, it's worth the (what's $120 times .001%? Oh, right - nearly a negative number) "cost" to just prepay the dumb thing. As I get closer, I'll likely prepay some OBC as well. I'm a bit more disciplined about my spending when I'm spending against a credit rather than something I'll pay at the end.

 

It's basically a mind game with myself :)

[Delawarealan]

I have way too many timeshares (anybody want to buy one or more?), and one of them (Diamond Resorts) allows me to trade in my points for cash to be used toward the cruise. I have enough points with them (see the first sentence!) so that it covers the cost of a decent cruise (not suite-level, but usually a balcony). It also lets me cover the service charges if I charge them then, but not if I pay them later (when I make the reservation, I trade enough points to cover the entire expected bill). Therefore, it's "free" (except, see the first sentence again!).

 

 

Delawarealan

[garycarla]

It looks like plenty of people prefer to do this.

 

Personally, I never give somebody money sooner than needed. I do not want the hassle of getting it back if there is a reason. Or spending time trying to prove that I paid it, etc.

 

My money is my money.

[pokerpro5]

It looks like plenty of people prefer to do this.

 

Personally, I never give somebody money sooner than needed. I do not want the hassle of getting it back if there is a reason. Or spending time trying to prove that I paid it, etc.

 

My money is my money.

 

100% agree.

 

Though I do admit the bill is pretty awful looking with 14 different DSC charges (more if your party is more than 2). Avoiding that messy looking statement is almost worth pre-paying.

 

But not quite.

 

I don't want to prepay DSC because it's still a tip, and I don't prepay tips. If the service onboard was horrendous, I would want the power to deduct the DSC.

 

This whole DSC prepay thing is a trivial issue, though. The interest on $168 over a short period of time is negligible (less than a dollar).

[clarkg]

Some European countries charge VAT tax of up to 20% for any cruises that go through their country. So if you wait to pay your daily service charge on the ship then you will pay a lot more than if you prepaid the charges and avoided the Value Added Tax.

[sparks1093]

100% agree.

 

Though I do admit the bill is pretty awful looking with 14 different DSC charges (more if your party is more than 2). Avoiding that messy looking statement is almost worth pre-paying.

 

But not quite.

 

I don't want to prepay DSC because it's still a tip, and I don't prepay tips. If the service onboard was horrendous, I would want the power to deduct the DSC.

 

This whole DSC prepay thing is a trivial issue, though. The interest on $168 over a short period of time is negligible (less than a dollar).

 

You may still adjust you service charges if you've prepaid them.

[sparks1093]

Some European countries charge VAT tax of up to 20% for any cruises that go through their country. So if you wait to pay your daily service charge on the ship then you will pay a lot more than if you prepaid the charges and avoided the Value Added Tax.

 

If you have to pay VAT on the service charge on a European sailing and can avoid it by pre-paying then that is a reason that everyone can understand.

[david_sobe]

Honest question, can you explain the rationale because I just can't make sense of it

 

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Sure.

It also takes me a good time to pay off my entire cruise prior to sailing. Once it is paid off then I look for ways to not come home with a giant bill. Lets be real. On vacation we tend to rationalize spending and having a good time. I remember my first cruise final bill :eek: Say what?

Our last cruise we had 5 in the cabin. We had $650 OBC. I paid all gratuities prior to boarding. I also added $300 more OBC. This cushion of expense made me come home with a bill over $1000 less. We got spa passes for everyone and ate at several specialty restaurants.

I guess it would be like pay off anything. If you have lots of money you probably have no reason to do this. But for many of us, we finance cars, houses, etc. Pay a little a time to pay it off.

I also rationalize spending more on the cruise since I know some expenses are already paid for.

Hope this ramble makes sense ;)

Edited August 4, 2014 by david_sobe

[jertom]

I was wondering: does the TA get a bigger commission if the service charges are prepaid?

[david_sobe]

Oh I forgot the best part.........

It is really fun to spend lots of money on the ship and after a few days pull up your account on the TV screen and see you are still in the negative :)

:)

[sparks1093]

I was wondering: does the TA get a bigger commission if the service charges are prepaid?

 

I don't believe so.

[cssc123]

Our biggest reason for pre-paying is that it can be 'lumped' in with your cruise fare as long as you have not paid in full.

 

We have to schedule our vacation time off at least 4 to 6 months in advance so we've booked as much as over a year in advance and had them add on the DSC to our reservation and lump it in with the total cruise fare and just make monthly payments on the cruise/DSC.

 

My basic math calculations on our current interest rates at our credit union we loose under $5 in interest by not keeping the money in the bank for a year. However we do make all our payments on credit cards with Cash back which rates are higher than the interest rate in our bank accounts so the losses are negated and even save a little.

 

 

We too buy OBC and pre-book any NCL run excursions - to lower the final bill and avoid 'sticker shock'.

[Tiggertastic]

^^^ THIS!! Plus I like knowing that the bill that appears like magic in my cabin on the last night, doesn't have QUITE so much reading on it!! :eek:

 

I agree, better exchange and less to keep checking on the TV or on the bill

[lawgator]

We are prepaying our NCL service charges for our POA Hawaiian cruise we booked for late next year because the travel agency (I found it by calling different ones listed here on the cc boards and seeing who would give us the best amenities offer) offered to give us some obc and also a choice of even more obc or pre-paying the gratuities for both of us. NCL is also giving us a small amount of OBC. I read on the boards that some onboard credit on NCL (such as the credit NCL is giving us) can't be used for pre-paid gratuities (the daily service charge), whereas the obc given by the travel agency can be used for them. So, in order to avoid confusion in applying the obc for pre-paid gratuities, we are having the travel agency apply what they are giving us towards pre-paid gratuities before we cruise.

[genevaraye]

No, they do not get paid commission on gratuities, port charges and government fees and taxes.

[Nisky18]

I pre pay for the samevreaspns as others wrote in this thread. It's one less charge to worry about on the bill. Also, when I find teally specisl service by cruise staff I throw a few dollars their way and reveal I've pre paid the gratuities but want to thank them for being amazing. It ensures they remember me the next time they serve me.

[cruiser12]

Are the Butler and Concierge - if you should be so blessed to have them -- in the villas and the Haven -- not to leave out the room steward -- they are exceptional -- in theses special cabins --

[Sizzlechest]

Is there an advantage to prepaying service charges? I see a lot of you do it.

 

As stated, there are reasons to do it that are financially sound like the VAT reason. Mostly, people who are generally bad at math make bad choices. There's lots of psychology behind this, and the companies who offer such "deals" know it.

 

http://www.bauer.uh.edu/vpatrick/docs/Paying%20Before%20Consuming.pdf

 

People react to prepaying differently depending on the kind of expense. For some reason, if they were paying for a washing machine instead of a cruise, they might very well act differently.

 

If you don't have a clear financial reason to prepay, then don't.