Is This Your Last Chance to Score a Big Bonus Signing Up for a Southwest Card? Really???

By Robert McGarvey

I laughed out loud as I read the AFAR Magazine headline: “This Is Your Last Chance to Score a 75,000-Point Bonus With Southwest’s Credit Card Offers.”

Rubbish.

Yes, that particular initiative expired but there will be more. Very possibly better.

The reality is that US consumer debt keeps trickling ever higher – it’s now $17.29 trillion, according to the Federal Reserve Bank of New York.  That number is fed by home mortgages, student loans and credit cards.

Now dig into those numbers.  Home mortgages have dipped substantially as consumers flee from >7% rates on 30 year fixed rate paper. As I type this the rate is 7.44% for a consumer with good credit.

That number has triggered a halt in trade up transactions as homeowners with >4% loans just say no to trading up to a new, bigger home because that would entail maybe a doubling of their mortgage interest rate.

Student loans, meantime, have edged up but just a bit and there’s also rising anxiety that this market may go bust as more people decide to forego a college degree. College enrollment has dropped by 10% in the past decade.  

And then there’s the story in my mailbox.  At least once a week I get a “pre-approved” credit card offer, nowadays frequently a cashback card with promises of maybe $300 in cash after spending around $3000 in the first 90 days.  Call me skeptical but I have taken two of these offers, just to see if the money was that easy to earn. It was.  

I am not accepting offers of new cashback cards because the two new cashback cards I have are now stashed in a wallet I don’t use (it’s a storage case for unloved credit cards).  

That’s because Venmo just (temporarily) raised its top cashback rate to 6%!  I have that credit card and am now using it a lot more. No other card in my wallet hits that number. Venmo wins.  For now.

The point of all this: banks are tossing out ever sweeter offers in order to prop up their cashflow as mortgage monies slow and skepticism about student loans rises.  Credit cards suddenly look like the safest bet for bankers who want to keep their income flowing.

As for airline mileage cards, this year I opened two such cards – Southwest and Delta.  I already used the Southwest miles and will use the Delta miles in a month or so. I don’t much use either card anymore because I get better returns on the cashback cards (6% vs 1 or 2% on the airline cards).

So, yes, I am beginning to eye new airline cards because I am a follower of the Brancatelli Law that the only way to win the airline mileage game is by scoring tasty signing bonuses. The bonuses are easy money.

Which brings me back to the Afar commentary on the Southwest card.  The bonuses – understand – are funded by and driven by the issuing banks. They want their cards in more wallets so they can hope to earn more swipe fees. (And they also hope their lobbyists can strangle the Credit Card Competition Act which big retailers are trying to push through Congress and the bankers are fighting back because it would lower swipe fees.)

For now, the bankers are operating on the assumption that the swipe fees will continue to flow in — and that means, by the way, that it isn’t banks that are funding those welcome bonuses but rather consumers who pay in cash (and thus get no rewards).

The bankers are bribing us with what amounts to free money from their perspective and if we actually begin using the cards that will produce more swipe fees for them so they win again.

Right now I am pretty sure I will soon see a generous bonus on an Alaskan Airlines card – one arrives seemingly monthly but I haven’t bitten. But with just a few more miles to sweeten their offer I will.

I almost took a 60,000 mile TAP card bonus last week.  But I didn’t because I know better is coming.

I just need to be patient.

Right now we can wait because, honestly, a better welcome deal is coming.

But watch the mortgage market. If rates dip below 5% and volumes go up…our card welcome bonuses may get pinched. But that day isn’t in view.

Wait for the right card deal. It will come.