Peter Greenberg: Understanding "No-Refund" Policies

Q: Peter, my cousin and I are taking the trip of our lifetime to London and Paris in October. We've tried to do our homework to get the best prices on everything, as money is VERY much an issue! However, we are quite frightened by the "no refund" policies we seem to be agreeing to on both flights and hotels. Are we being too skittish? Are there any ways of handling this so we can cancel or change reservations without losing everything? That would be a financial disaster for us. Thanks so much for any guidance!

–Claudia Kell, Leland, N.C.

A: Claudia, you do indeed make a trade-off when you buy the lowest-price hotel fares and plane tickets, because these rooms and seats generally come with a no-refund policy. However, there are some things you can do to mitigate the potential financial ruin that would occur were you to cancel your trip (or change your plans) at the last minute.

First, many airlines will offer you credits toward future flights, even for the cheapest, nonrefundable tickets. You just have to check the fine print in the fare rules when you are booking. Second, most hotel rooms have cancellation policies that allow you to get a refund if you back out at least 48 hours before you're due to check in. Again, you have to check the rules for the individual hotel because they vary widely.

Having said that, refunds are NOT available if you book your plane tickets or hotel rooms through an "opaque" service on a Web site such as Hotwire.com or Priceline.com, where you don't know what company is serving you until after you make your purchase. These kinds of budget fares are almost always nonrefundable—and you can't reschedule, either.

So to give yourself peace of mind AND save money, avoid booking online, and especially avoid opaque sites if you think your plans will change. Book directly with a hotel or airline, and ask specifically about the cancellation policies and penalties for each one. If you've already booked your trip, consider buying travel insurance, which will reimburse the entire cost of your trip if you cancel for covered reasons, such as illness, death in the family, or the like.