What Is Timeshare Banking?

In the timeshare industry, you bank time not money; and transactions are made in weeks, not dollars. But the basic idea is the same. You deposit timeshare weeks today so you can withdraw them later -- maybe next month, six months from now, even next year.

Developed by timeshare exchanges, banking (sometimes called space banking) allows timeshare owners to better manage their investment. A timeshare bank is a data base listing the availability of timeshares all over the world. Timeshare owners who don't plan to use their allotted week can deposit it in the bank. They may also make a deposit if they want to exchange their timeshare location or date for a different location or date. This allows someone else to withdraw and use your timeshare during your appointed week. For every week you deposit in the bank, you receive a credit on your balance sheet which allows you to use that week at some time in the future. Weeks you banked in a previous year that are available for use during the current calendar year are called accrued weeks.

For example: Say the timeshare you own is for the first week in September at a Caribbean resort. This year, however, that's the very week your daughter will be giving birth to your first grandchild. Of course you want to do the grandma thing, so you bank your timeshare. By banking it you allow someone else to withdraw your timeshare and use your allotted week in the Caribbean. You now have a week in the bank to use at another less hectic time in your life. Or perhaps you own a timeshare in the mountains but you prefer to go to the beach this year. You deposit your week in the mountains so you can exchange it for a week at the beach.

Sometimes owners new to timeshares misunderstand their banking and/or exchange rights. When you bank your timeshare, you give up your right to occupy your property for your given week. That right transfers to the exchange company (bank) which will offer it to someone else. If you sell your timeshare after it has been banked, the new owner will not be able to use the timeshare during the banked period. However, the new owner may have the right to the previous owner's exchange. That is, he may be able to withdraw a different timeshare location or time from the bank. Sometimes, however, the seller maintains his exchange right and does not transfer it to the buyer. This is an often misunderstood concept between timeshare buyers and sellers. When you purchase a timeshare, it is always important to clearly understand your rights and read the fine print. Owners typically have two years to use or exchange banked properties.

You may also hear the terms block or bulk banking. To ensure that their rooms don't go empty, some resorts will designate a certain number of rooms for timeshare exchanges. They deposit a large number, or block, of weeks into the timeshare bank early in the year. Their goal is to entice timeshare owners to select their resort when the owners make a withdrawal from the bank.