Airline, Hotel and Rental Car Cancellation Refunds and Vouchers: How They Work

If your airline cancels or makes major changes to your flight — no matter the reason — you are eligible for a full refund under Department of Transportation regulations. So why do so many passengers end up with a voucher instead?

Airlines often try to skirt regulations by giving passengers the option to accept a modified itinerary, even if the changes are major. But for casual travelers who've found themselves entrenched in the confusing world of refunds and who are expecting to receive cash for cancellations, many travelers might be surprised to receive vouchers instead.

Whether it's airlines, hotels or rental cars, here's what you need to know about travel refunds and when you're entitled to one, as well as how to receive and use vouchers if you otherwise can't get a cash refund:

Although specific refund and voucher policies vary from situation to situation and airline to airline, some consistencies (and federal regulations) allow for a few broad generalizations. Here's the quick glance at what you're entitled to, based on type of travel:

• Air travel canceled by the customer more than 24 hours after booking will usually be compensated in the form of flight vouchers, which must be used within a certain period of time. Customers who book a more expensive "refundable" fare may be able to get a cash refund.

• Air travel canceled by the airline is eligible for a full cash refund, though the airlines will often try to avoid this.

• Hotel cancellations are often fully refundable if made more than 24 hours before check-in (except for prepaid/nonrefundable rates), but this varies by booking.

• Car rental cancellations are almost always fully refundable, except for prepaid reservations.

• Vacation rental (Airbnb, Vrbo) cancellations vary by property.

Now we'll break that down a bit deeper:

Air travel cancellation policies vary based on two factors: when the cancellation is made and who is doing the canceling.

Cancellations made within 24 hours

All flights starting in the U.S. that are canceled within 24 hours of booking are eligible for a full cash refund under Department of Transportation regulations. It doesn’t matter if you book directly through the airline or through a third party booking service: You are eligible for a refund to your original form of payment if your flight originates in the U.S. and you cancel it within 24 hours.

However, some airlines make the process of receiving these refunds cumbersome or confusing, sometimes suggesting you accept alternatives to the cash refund. If you are having trouble finding a way to get your cash back online, call the airline or travel booking service directly.

Cancellations made after 24 hours made by the traveler

If you want to cancel a flight more than 24 hours after booking, it is subject to the cancellation policy of that particular airline and fare:

• Refundable fares are generally eligible for a full cash refund.

• Some tickets, including many basic economy fares, simply cannot be canceled.

• Some tickets can be canceled for a voucher refund, minus a cancellation fee.

• Others can be canceled for free, but are available to travelers in the future as flight vouchers.

Now that most U.S. airlines have removed cancellation fees, the most common situation is the last one. You will be able to get a full refund for your nonrefundable flight, but not a cash refund. Instead, you’ll get a voucher or credit for future flights booked within a certain time frame. This isn't ideal, but it’s better than nothing. Just remember to use your voucher before it expires.

Cancellation made by the airline

If the airline cancels or makes major changes to your flight, for any reason, you are eligible for a full refund under Department of Transportation regulations. The definition of "major changes" isn't totally clear, but in general, any schedule change of more than 24 hours should be eligible for a full refund.

However, airlines will often try to skirt this regulation by giving passengers the option to accept a modified itinerary, even if the changes are major. Here’s an email from Singapore Airlines, with our highlight in red:

Because “accept” looks like a default option and the alternative is less prominent, a passenger may not be fully aware of their rights. Don’t fall for it: Always request a refund if the proposed changes aren't ideal.

Also note that sometimes airlines owe you money for delays or cancellations (or at least other forms of compensation, such as meal and hotel vouchers).

And if your flight was canceled at the last-minute by the airline, you'll have to move fast to minimize disruption for the rest of your travels. Make these moves fast if your flight was canceled. And while this won't help you now, bookmark this for next time: NerdWallet's guide to how to book a flight that's less likely to get canceled.

Hotel cancellation policies are generally more straightforward than airline policies, though there are no federally enforced cancellation rules. Hotel bookings generally fall into two categories:

• Fully refundable rates, which can generally be canceled within 24 hours of check-in for a full refund.

• Prepaid, nonrefundable rates.

Most hotel brands offer flexible rates as the default, which are generally more expensive but either are refundable or don't require upfront payment, period. Often though, travelers prefer prepaid rates purely because they tend to be cheaper. Before booking, consider how likely it is that your travel plans might change. Saving a couple bucks on the prepaid rate might not be worth it in the end if you had to cancel and now can't get your money back.

You should be able to see the terms of the cancellation policy for your booking during checkout. Read and understand them before committing.

One more reason why hotels tend to be more generous than airlines. Unlike airfare, the value of canceled flexible hotel bookings usually isn't offered in the form of credits or vouchers, but as a direct refund of the deposit amount to your credit card.

This one’s easy: Unless you specifically book a prepaid rate for a car rental reservation, you should be able to change, cancel or modify it without incurring a fee. The rules for cancellations on prepaid rates vary among companies and reservations, but they are often more flexible than nonrefundable airfare — and even more flexible than hotel bookings.

Vacation rental brands like Airbnb and Vrbo take a slightly different approach: They offer a range of cancellation policies, from extremely flexible to nonrefundable, and let the hosts (property owners) choose from these policies.

So when booking, look for the specific policy on each property. Here’s an example of Airbnb’s flexible policy:

Refunds from cancellations should come directly to your card — no credits or vouchers are involved.

» Learn more: Cancel For Any Reason (CFAR) travel insurance explained

Canceling travel is never a fun experience, but it can be made all the more challenging when confronted with a host of different rules and conditions for each type of booking. Thankfully, most hotel cancellation policies are fairly straightforward: You can either cancel your booking or you can’t, and you’ll get a cash refund if you do.