Travel Rewards Credit Cards

Jun 02

Travel Card Mania

Last night, I was reading a piece that talked about incrementality and tolerance levels. In particular, it discussed the fact that, as a person becomes more exposed to stimuli, they need increasing amounts of it to generate the same “high,” whether it’s gambling, alcohol or iPads.

Credit Card Bonuses

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While my discussion last night was actually in regard to media consumption, it occurred to me that I saw a lot of these same patterns with credit card offers. Ten years ago, 25,000 miles was considered a great sign-up bonus. Now, many people wouldn’t even consider that level. The better bonuses usually start at 50,000, with frequent promotions that drive the numbers higher. Customers have simply become more demanding, and the banks have responded. A high-spending customer, particularly one that carries a monthly balance, is extremely profitable, and the issuers are willing to bear the upfront cost of acquiring the customer.*

What’s interesting is that the promotions are becoming more frequent. Right now, Southwest is running an all-time high 60,000 point sign-up bonus (worth about $850 in travel), American is at 60,000, Delta is at 60,000 and Virgin Atlantic is at 90,000 (although those 90,000 points are worth less than other promos offering fewer points, particularly considering the requirements to earn the entire bonus). And those are just the ones that I can think of off the top of my head.

Of all of them, Southwest is the most interesting, for a couple of reasons.

  • Southwest makes any seat available for points, and the cost of the seat in points is based on the underlying cost of the ticket, with each point worth about 1.4 cents. For example, a ticket that costs $350 would be available for 25,000 points ($350/.014). Since every ticket is for sale for cash, every ticket is also available for points.
  • Those 60,000 points count toward Southwest’s Companion Pass. You’ll pick up the CP if you earn 110,000 Southwest Rapid Rewards points in a year, meaning you’ll only need to pick up the remaining 50,000 another way (flying, using a partner, or something else). The Pass is exactly what it sounds like: For at least a year (the year in which you earn it, plus the entirety of the following year), you’ll get to fly a companion for free (minus a few dollars for taxes) when you fly, and the companion is confirmable at the time of booking.

The banks have given in there are some true premium offers available in the market. Might as well take advantage of it.

You can visit the Credit Cards for Charity page to access a list of available cards through the banner at the bottom. Remember, all proceeds go to charity.

 


*Beginner’s Hint: Credit card companies can’t force you to spend any more than you need to get the bonus on the card, but they can make it difficult to get the bonus in the first place. Application rules vary among companies. Citibank says that it won’t give you a sign-up bonus if you’ve cancelled the same card in the past 24 months. American Express says that sign-up bonuses are once in a lifetime. Etc. I have found, however, that those rules are occasionally overlooked.

And remember: If you are carrying a balance, you should not have a rewards card. The interest rates will more than offset any rewards you get.

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And finally, you can apply for credit cards through the Credit Cards for Charity link above. All card proceeds are donated to charity, so please do well by doing good!

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