***Disney has announced the end of Disney Vacation Account. No new accounts may be opened, and Disney is in the process of refunding funded accounts.***
The Basics of Disney Vacation Account
Disney’s Vacation Account is a fun little idea. Disney wants people to be able to save for a Disney Vacation, so it put together a site that allows them to do just that. You select a trip, estimate your costs, and set up an FDIC-insured bank account (actually at Chase) through Disney. And you do it all on a handy Disney website:
Disney Vacation Account Doesn't Care Where and When You Want to Go
The first thing to know about Disney Vacation Account is that actually these details - which Disney destination you pick, when you want to go - don't matter. Disney uses these to help you setup a savings plan, but you can edit them at any time and you can use the funds for any of the allowable Disney vacations: Walt Disney World, Disneyland, Disney Cruise Line, Adventures by Disney, and Aulani. Disney's budget estimator and savings plan tools are worth playing with, but they're ultimately secondary to the real powers of Disney Vacation Account (which we'll get to in a bit).
How to Fund Your Disney Vacation Account
You can set up regular deposits by credit or debit account to fund the account. You can only deposit money by credit or debit card (or Disney gift cards). The money is always yours, and you can withdraw it (in the original form of payment) at any time. Keep reading to see the pros and cons of different ways of funding your Disney Vacation Account.
While this sounds straightforward enough, some of the perks of the Disney Vacation Account create some complexities when it comes to travel hacking. Here's what you need to know if you're considering using Disney Vacation Account for your next trip.
The Pros of Disney Vacation Account
1. The Disney Vacation Account Gift Card Perk
The Disney Vacation Account grants $20 in Disney gift cards per $1000 spent from your vacation account prior to December 31, 2017 (this date will presumably be pushed forward at year-end). The account must be active for 120 days prior to spending to qualify for the $20 bonus (this is to prevent people from just passing money through the Disney Vacation Account the day they book). That's why, if there is any chance you're going to take a Disney vacation in the future, you should set up a Disney Vacation Account today. You can do it with a refundable deposit of only $10, so why not get that account active to save 2% down the road!
Since the kickback is a $20 gift card per $1000 spent, you'll max out at 2% back (if you spent exactly a multiple of $1000) and the minimum is only 1% back (if you spent $1999.99).
2. Loading with Disney Gift Cards Allows "Stacking"
You'll occasionally find great deals where you can get 5% off Disney gift cards. Usually this is because a card or portal is giving 5x or 5% back for shopping at a specific store. Since you can put those gift cards into your Disney Vacation Account and get 2% further back, you could spend a net of $930 for $1000 on your vacation. Disney Tourist Blog also covers the Target RedCard stack, though your mileage may vary attempting that.
3. Disney Vacation Account Deposits Code as Travel on Some Credit Cards
If you're using a card that earns a high rate of return on travel expenses, anecdotal evidence suggests your deposits into Disney Vacation Account will code as travel. (Specifically, the below photo is from a deposit I made using my Chase Sapphire Reserve.) This means that even if you can't find gift cards at 5% off, you can still wind up with a nice amount back by getting 3x points back (using a Chase Sapphire Reserve or Citi Prestige) and 2% back with the gift cards.
The Cons of Disney Vacation Account
1. Don't fall into a credit trap
"Saving" using a credit card is a bad idea. If you are not paying your balance in full, and if you are not hacking Disney Vacation Account for all its worth, then you're just lending Chase money at an interest rate lower than you'll pay on your credit card. Do NOT use Disney Vacation Account if you have credit card balances you could be paying off!
2. The More you use Disney Vacation Account, The Fewer Other Hacks are Open to You
For every hotel stay you book using the Disney Vacation Account, you're missing out on a chance to use the Citi Prestige's "4th Night Free" benefit.
You're skipping deals you might find on Undercover Tourist. You're giving up the chance to rent Disney Vacation Club points. Similarly, by using the money for tickets, you'll miss out on discounts you could get on sites like Undercover Tourist. Disney is offering you 2% back, but there are lots of ways you might be able to beat that 2% using other means.
3. There's an "Opportunity Cost" to giving Chase/Disney that money
Let's say you put $1000 into Disney Vacation Account using a debit card because you want the 2% back (we'd advise attempting some sort of stack, but this example is to make a a point). You leave it there for 120 days to get the $20 gift card. What did you lose? Well, A 2% return in 120 days is only about a 6.1% return over the course of a year - less than you would expect to get if you invested that money. Obviously not every 120-day period will have a 2% return in the market, but this is important to remember, especially as you put larger amounts of money in the Disney Vacation Account for longer amounts of time.
A counter-point to this is that, besides the $10 minimum to start, nothing seems to require that you keep a certain amount of money in your Disney Vacation Account to earn the 2% back on spending. Rather, the rule states that your account has to be "active" for 120 days. Given that most people will be contributing small amounts over time, I would strongly expect (without hard evidence) that a $10 opening deposit followed with a $990 "pass through" deposit when you book 120 days later would earn you the $20 back. I hope to test this sometime.