The Southwest® Companion Pass has long been lauded as the holy grail of travel perks.
For those unfamiliar, it’s this unparalleled benefit in the airline industry in which you have a designated travel “Companion” for the year who gets to fly. free. whenever. you. do.
If you’re married, this means you and your spouse can travel for the price of your ticket. And if you’re a single guy or gal, you can work out a deal with a friend you want to travel with and split the cost of your ticket to effectively make everything 50% off, constantly. Or if you’re married but your spouse is lame, YOU too can pick a friend and have wild adventures! No judgment here!
All Employees get an automatic Companion Pass for their standby travel, which is how Thomas and I fly everywhere for free. So far, we've done Phoenix, Cabo, Seattle, Atlanta, and San Francisco by plane fo' nothin' (jury's still out on whether or not this is why he dates me).
Here’s the big news:
Starting today (and only through February 11), Southwest is launching a promotion in which you get an automatic Companion Pass when you sign up for the Rapid Rewards® Credit Card and spend $4,000 in the first three months. Oh, and not to mention 30,000 flipping points (that's enough for round trips, plural).
I know I’m prone to dramatic statements, but you guys, this is the biggest thing since sliced plastic. I can’t wait to hear what the ChooseFI guys have to say about this one.
I don’t make commission or get any credit for you signing up for the card, I’m just genuinely excited about all the people who read my posts and ask for tips on traveling cheaply to get their hands on this offer.
It’s the best way for people to travel all over the domestic United States, Mexico, Central America and the Caribbean cheaply. Hands-down.
But if, for some reason, you don't fly Southwest (what's wrong with you?), may I suggest the Chase Sapphire Preferred card? I'm posting an update next week because I just got my 50,000-point bonus. As someone with a Companion Pass already, this makes more sense for me so I can use the points on hotels instead of flights. Apply here for the Sapphire card.
If you don’t already have a credit card or a good credit score, you may not be approved for the Southwest card, but I’m crossing my fingers for you. Good luck!
I’ve been a little late to the game with travel reward hacking.
One would think it’d be top priority for someone who already has free flights, but for some reason, my employee perks almost had the opposite effect. I was all, “My airfare is free, I don’t care about paying for a hotel!”
To some extent, this is still valid—but I realized I was leaving a lot of money on the table within the credit card game.
Everyone who regularly hangs out around here knows my favorite starter card is the Discover It card. This is ideal for someone who has no credit history. Another great option is the Chase Freedom card. (Classic no-annual fee cards with decent cash back perks.)
This article is for those of you who already use a credit card regularly and have a pretty good credit score (upper 600s or higher), but want to cash in on better rewards and get some free travel out of your regular spending (no brainer).
I’ve done a lot of research (both anecdotally and online) about the best travel cards. The Points Guy is the ultimate resource for this stuff; his blog-turned-media site has breakdowns of all the really complicated situations you can throw together with multiple cards to get thousands of dollars in free travel.
In the travel rewards world, credit card churn is the name of the game: signing up for the fat bonuses, using the bonuses, canceling the cards, and starting over. Not great for your credit score and requires a lot of planning and attention to detail, but excellent in terms of freebies if you're really good at it and space everything out appropriately.
That’s a wee bit advanced, though, and if you’re reading this article, I’m going to assume you’re a beginner, too.
Despite the allure of the American Express Platinum card during my research, its $550 annual fee was a little tough to choke down. I also looked into the Capital One Venture Card, but kept coming back to the Chase Sapphire products.
Regardless of where I looked, it seemed as though everyone held the Sapphire cards in high esteem—my wealthier, more-successful-than-me friends, the most basic blogs, and, of course, the Travel Rewards Czar himself, The Points Guy.
I even read through tons of comments on his site to see what die-hard AmEx people had to say, and still walked away feeling like the Sapphire products were probably my best bet.
Chase has recently changed the rules of the game with their Sapphire products. While you used to be able to hold both cards simultaneously (i.e., signing up for both and getting both sign-up bonuses of 50,000 points for a total of 100,000 points, or about $1,500 in travel), now you can only have one at a time. *tiny violin plays softly from my wallet*
This is a little bit of a bummer for those of us who are late to the game—it seems as though Chase caught on to the fact that savvy credit card users were hacking their system and getting a shit ton of value out of the cards, then closing them after cashing in.
While the bonuses aren’t as stellar, there’s still a lot of value to be derived from one or the other. Just note before you apply that Chase has this thing called the 5/24 rule—if you’ve applied for 5 new lines of credit in the past 24 months, it’s very unlikely you’ll be approved.
(Unless you’re opening new credit cards every couple months, this probably won’t affect you, but it crucial knowledge for people who are planning a credit card churn for travel rewards.)
After I settled on a Sapphire card, I had to pick which one.
There are two: the Sapphire Preferred and the Sapphire Reserve.
While the sign-up bonus is the same, there are a lot of additional perks with the Reserve—a $300 travel credit, access to Priority Pass airport lounges, a $100 TSA Precheck/Global Entry credit, and more.
Here’s the kicker: The Reserve card has an annual fee of $450, whereas the Preferred card has an annual fee of $95 that’s waived for the first year (no such courtesy exists for the Reserve).
Here’s the official breakdown.
I really wavered on this one and took a few weeks to think about the difference in value. While I was hard-pressed to justify the Reserve’s $450 annual fee, I knew the $300 travel credit effectively dropped it to $150—only $55 more than the Preferred card.
I also knew I’d probably use the airport lounges, which usually have free food and drinks inside—I easily spend $55 on dinner at an airport when I’m stranded, especially when we buy a bottle of wine (shout-out to the Atlanta Hartsfield-Jackson bar crawl).
At that point, it just came down to the remaining $95. How do you justify that part upfront? Well, it’s pretty easy—50,000 points is worth either $625 with the Preferred card or $750 with the Reserve card in the Chase Ultimate Rewards portal, where you can book airfare, hotels, or buy products (not the best value, though—your money goes furthest with travel).
So there I was, effectively deciding between a card that would cost me nothing upfront for a year but be worth $625 in travel credit, or one that would cost me $450 upfront and be worth $750 upfront with a $300 travel credit and numerous other shiny premium perks (suffice it to say, I had visions of myself in a fluffy white hotel robe downing free margaritas in airport lounges).
The "travel perks" rabbit hole is an easy one to hurl yourself into—cards like the aforementioned AmEx Platinum (that competes with the Reserve card and carries a $550 annual fee) feature automatic upgrades at hotels. In other words, you book a hotel room, show up, and get a fancier one (if available).
All that to say: it's really easy to get tangled in a web of presumed luxury when trying to decide which card will give you the most value.
I knew my vacillating was wasting precious time. After all, I wanted these points for my early 2019 trips (anyone else keep a laundry list of hypothetical vacations and dates at all times? No?).
Decidedly, I smashed that Apply button on the Sapphire Preferred Card.
You may be surprised by this—I was even a little surprised myself, after becoming nearly convinced that the Reserve was the way to go.
Here's why I chose the Preferred and my plan for moving forward:
But let's say six months into 2019 I realize I should've gone with the Reserve...
The back-up plan
Although upgrading the Preferred card to a Reserve card is possible (if you change your mind), you're no longer eligible for the Reserve's sign-up bonus (i.e., 50,000 MORE points) after getting it on the Preferred. Upgrades aside, you also aren't eligible for a second Sapphire sign-up bonus within 24 months of opening your first Sapphire card.
In this way, they're limiting you to one 50,000-point bonus every two years.
Keep in mind you can't have two Sapphire products at once. So, you can't keep the Preferred and open the Reserve for the sign-up bonus, too (although you used to be able to). The audacity!
So here's the work-around and my plan moving forward if I decide the Reserve is for me:
The bottom line
I know there are a lot of perks being left on the table with the Reserve and that it's effectively only a $55 difference when you factor in the travel credit, so we can all point and laugh as I reason with emotion over math.
(The math is actually that you'd need to spend at least $3,660 on travel & dining per year to make up for that $55 difference in annual fee, if you're just looking at the purchases > points earnings.)
But for me, a travel rewards noob with a unique situation (free airfare), starting "small" made sense to me—especially since I have a plan to churn the cards if I decide to level up later (a couple 'stuck in the airport in need of wine' experiences would be enough to do it, most likely).
Think the Preferred card may be right for you? It's still a 50,000 point bonus right now!
And if you're feeling generous, use my "refer a Friend" link.
Credit is a non-optional, mandatory part of being an adult. My friend Ashley's parents (very savvy, Mark & Darja) knew that credit mattered, so they opened a card in Ashley's name when she was young (early college, I believe—Ashley, keep me honest). She told me I needed to open a credit card and begin paying it off so I could establish good credit early in life.
I didn't really think much of it at the time, since I was a snot-nosed, punk-ass, Budlight-drinking college student who figured I'd buy a house around the same time I bought a minivan and that I'd never see graduation day anyway (just kidding).
Now, I'm a money-obsessed amateur personal finance connoisseur #GREED! I'm reading Money Diaries right now, highlighting and doggy-earring the pages like it's an SAT prep guide. If you're reading this, it's probably safe to assume you care about getting your financial shit in order, so pick up a copy here.
During my first internship (i.e., when I started making money), I opened a credit account with Discover. Before long, I was putting everything on my credit card. Truthfully, I don't know how I ever lived without it.
So let's address some key points here, in case you:
(a) don't have a credit card (apparently this is an issue for Millennials because they're terrified of credit card debt, rightfully so) or
(b) don't know why you need one (I realize this is basic, but there's a lot of confusion surrounding credit within my own personal circles so I know it exists).
In 2016, a Bankrate study found that just 33% of Millennials had credit cards. Yikes. Here's why that's scary:
You need credit to make big purchases, take out loans, and even rent things like apartments, appliances, and sign up for utilities.
It's basically the only way a company or seller knows that you're good for the money you say you're good for. It's also sometimes used in job interview processes (YEAH, apparently they check that sometimes) and in other situations because it's thought to give an indication of your ability to be responsible. For better or worse.
Credit cards are the best, fastest way to establish credit while you're young.
I know a lot of people are apprehensive because of how often we talk about "credit card debt," but how much you spend on the card is up to you (paying it off is up to you as well). As long as you're paying off the statement balance every single month on time, you'll never incur any interest penalties. Plus, the cash back options with some cards are incredible—it's like getting free money. In that way, it's much better than a debit card.
I've gotten to the point where I put almost everything on my credit card, except for things like rent (which I pay directly out of a checking account to avoid fees with the leasing office). I'd only recommend this if you budget closely and have a very good idea of how much money you're spending every month—in other words, your cash flow.
The reason credit cards can become problematic for people is because they enable you to spend with a "I'll figure it out later" mentality, which can be dangerous if you don't know much about your cash flow.
Speaking of cash flow, I think my next post will deal with setting up a "net worth spreadsheet" to show how you can track your net worth every month and get a better idea of your cash flow (and why it's important in the first place).
But back to debit cards—they're less safe than credit cards.
Think you're better off only using debit? Think again. I've gotten to the point where the ONLY place I'll use a debit card is at an ATM. NEVER use a debit card for online shopping. I randomly sat next to a cybersecurity guy on a flight once, and he told me the safest way to pay for things is with Paypal, and the second safest way is credit cards.
He said you should never use debit cards online because if someone scrapes the page for your information they get direct access to your checking account. Anyone who's ever been frauded knows it's a scary feeling, but most credit card companies are fantastic about striking those purchases from your record immediately. Not all banks work the same way. Sometimes once that money's gone, it's gone.
So, let's say you're really, REALLY new to the idea of a credit card. Maybe you're 17 and it never occurred to you before, or maybe you're 25 and always felt a little unsure of the concept.
Here are a few basic "how-to" items, assuming you haven't had an issue with credit in the past (i.e., your credit score does not yet exist):
Find a basic starter card that doesn't require you to have credit already.
As I've mentioned before, my favorite card for starting out is the Discover It card. You earn 5% cash back on different categories every month (one month it was Starbucks and Amazon—I think I got $50 in cash back that month—i.e., free money) and I don't remember having any issues getting approved initially.
You'll just need basic information about yourself, like your social security number and income. Keep in mind the "limit" on the card (how much the credit card company will allow you to spend) will be based on your income and credit history, but as you establish credit over time and make more money, you should keep requesting credit increases.
Rule of thumb: Never utilize more than ~30% of your available credit line. E.g., if my credit limit is $10,000, I shouldn't carry a balance of more than about $3,000 to keep my credit score healthy.
Already a cardholding member of the credit card club? (I hate myself.) Nerdwallet is a great resource for comparing credit cards if you're already established and want to explore options that offer relevant perks (some American Express cards grant you access into airport lounges and other cards (like the Capital One Savor card) are specifically for cash back at restaurants and bars, for example).
Know the difference between your statement closing date and statement due date.
This seems self-explanatory so I apologize if I offend you by addressing the obvious, but I know it confuses people since it works differently than a debit card. Each month, the credit card company will record your charges for a set period of time (mine always ends and begins again on the 26th of the month) so it can charge you your credit card statement (or bill).
So, it accounts for all charges for a full month, but the money for that period of time is due almost a month later (my statement cycle is the 26th-26th, but my billing date is the 21st). That means I wouldn't pay for the charges I rack up between Sept. 26-Oct. 26 until Nov. 21. And so forth: Oct. 26-Nov. 26 gets paid for on Dec. 21.
Make sense? This explains why your statement balance and current balance can look really different sometimes, so make sure you're paying attention to the statement balance and due date.
Most cards offer 0% APR for the first year, which means even if you carry a balance on the card you won't be charged interest. While good-intentioned people are inclined to believe this is about forgiveness, I'm pretty sure they only do this to get people in the habit of carrying a balance from month to month (i.e., not paying off the statements on time and allowing charges to pile up) so once the year is up they can start charging you 25% on the total (yes, it's not unusual for that to be the interest rate!). Don't carry a balance. Just don't do it.
I think that about covers it for the basics. What questions do you have about credit cards? What confuses you or scares you? Let me know so we can tackle in a follow-up post.
The young woman's money guide for all the things you're too embarrassed to ask your friends. Build the life you thought you were too broke to afford through managing your spending habits, travel hacking, and simple, smart investing.
Full-time Brand marketer at Southwest Airlines, part-time Yoga Sculpt teacher, occasional Waffle House Model and reformed materialist.
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