Editor’s note: As of December 2012, the offer described below regarding the Southwest Rewards card has expired and is no longer available.
A Money Talks News reader asks…
I have a Costco Amex that I try to put almost all of my charges on, mainly because once a year, they give me cash. Cash feels better than all of the miles I’ve accrued on my Frontier MasterCard – which I can’t keep up with and rarely use. (Years ago, my husband and I got a Frontier card because we flew often to a location they served well, but we no longer do so.)
With our oldest child going off to college this fall, I’ve been thinking about getting an airline-related credit card that would earn us miles that we could actually use to visit him. Because of the locations of the colleges he’s still considering, I’ve been looking at a Southwest Airlines card. We pay off our bill fully every month, so the interest rate doesn’t really affect us. Any suggestions?
Thanks for the question, Melinda. Here’s your answer…
I like the TrueEarnings Card from Costco and American Express. It offers a 3 percent cash-back bonus on gasoline (up to $3,000), 2 percent on travel and dining, and 1 percent everywhere else. On the other hand, the cash back only comes once a year (in February) and you have to be a cardholder in good standing at that time to receive it.
As a resident of Denver, the main hub for Frontier Airlines, I have a lot of experience with that company and its credit card offered by Barclay’s Bank. When the card first came out, it offered high sign-up bonuses with a low redemption rate of 20,000 per round-trip domestic award. Now they require at least 25,000 miles (and usually more) for the same award flight. Therefore, I know many people like you who no longer see much value in this card.
I have since found much better domestic-airline awards by using the Southwest Airlines Rapid Rewards card from Chase. This offer includes 25,000 bonus points after your first purchase, which is worth $416 toward award flights.
Since Southwest has lower fares than some other airlines, this can actually equate to even more than one award flight over shorter distances. And since points can be redeemed for any fare on any flight, finding award trips for your child to come home over Thanksgiving or spring break is far easier than it would be with other airlines’ miles.
I also like Southwest’s offer of two free checked bags and no change fees. These are vital features for students who travel to and from college with lots of stuff.
Finally, never forget this: Because you always pay your balances in full, the points you’re earning are free – icing on the cake. Those who pay interest on their purchases each month should be focused on finding a credit card with the lowest interest rate, not rewards.
Thanks for your question, Melinda. Good luck!
Sign up for our free newsletter
Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's '205 Ways to Save Money' as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.