All it takes is two credit cards and your usual purchases.
November 26, 2014 | Jason Steele
There’s a vocal group of travelers who are fed up with airline loyalty programs.
Why? They earn miles from an airline and then find no available award seats when it comes time to redeem them. They have a good point, since most airlines are playing a game of bait-and-switch — they purposely make award flights at the lowest mileage levels incredibly scarce.
But there are still some valuable ways to earn free travel, so let me introduce you to my favorite…
Right now, you can earn more than $3,000 of free travel by signing up for just two credit cards.
Chase offers both personal and business versions of its Rapid Rewards card from Southwest Airlines, each with a 50,000 point sign-up bonus. These cards have just a $2,000 minimum spending requirement to earn those bonus points.
How this adds up to over $3,000 of free travel
Each point in Southwest’s Rapid Rewards program is worth 1.4 cents towards any ticket in their “Wanna Get Away” fare class, with no blackout dates or strict capacity controls found on traditional frequent flier mile rewards.
So 100,000 points is worth $1,400 in flights. Not bad, but not enough to get me excited either. (I do a lot of free travel.) To get me jumping up and down, you have to realize that Southwest offers their Companion Pass to those who earn 110,000 points in a calendar year.
With their Companion Pass, travelers receive unlimited free tickets for a designated companion on both paid and award tickets. So by the time you’ve spent the $2,000 on each card necessary to earn the sign-up bonus, you’ll be only 6,000 points away from earning the Companion Pass — 110,000 points is worth just over $1,500 in airfare, and the Companion Pass doubles that value.
But remember, I claimed that this deal is worth over $3,000 in airfare. So how do we get beyond that number?
First, I’d argue that Southwest’s award tickets are worth more than the tickets you pay for with cash. I love Southwest because when you book a ticket, it’s fully refundable with no change fees. On the other hand, tickets purchased with cash are refunded as credits towards future travel — but only in the name of the person listed on the original ticket. Yet tickets purchased with points are refunded as points that can be used by anyone.
In addition, having the Companion Pass allows you to book unlimited tickets with your designated companion added for free (not including required TSA fees and government taxes). That means a couple who flies back and forth every week could potentially receive many more thousands of dollars worth of free travel each year from this benefit, for nearly two years.
Timing is everything
If you want to get in on this deal, the best way to do it is this: Earn the Companion Pass in early 2015 because it will be valid until the end of 2016, giving you nearly two years of this benefit. It’s OK to sign up for the cards now, but it’s vital that you not meet their minimum spending requirements before January 1, 2015. The Companion Pass is award-based on points earned in each calendar year, so any points earned in 2014 won’t count next year.
Since cardholders have three months to meet the minimum spending requirement for these cards, they can make just shy of $2,000 worth of purchases on each card in 2014, and then go over the top in the new year, plus spend another $6,000.
Just be careful
There’s another group of vocal skeptics in the personal finance world who think that it’s terrible to apply for new credit cards just to earn rewards. Certainly, those who will use these cards to make unnecessary purchases and incur debt shouldn’t try earning free travel this way. But for those who avoid interest by paying their balances in full each month, this strategy is your ticket to at least $3,000 worth of free travel through the end 2016.