My $800 Decision: Winning on the Airlines Awards Merry go round

By Robert McGarvey

Call this my Brancatelli moment.

A trip for two from Phoenix to Dallas loomed on my horizon and, suddenly, I found myself grumpy about the $800 or so I’d be out of pocket for the airfare.  That seemed downright exorbitant. And then my Brancatelli moment happened.

I was looking at my email inbox and, lo, there was an offer for a Southwest credit card.  $69 annual fee and the perks are meager – Basically 2x points on Southwest purchases and two EarlyBird check ins yearly (valued at $15 to $25 apiece).

But the kicker is a bonus of 50,000 points after spending $1000 in the first three months of the card. Use that for the Dallas fares as well as applying the EarlyBird check in and that’s around $840 in value (-$69 = $771).

I already have spent about $500 on the card – paid for my wife’s Southwest ticket for a business trip. That adds 1000 points to my tally.

Yeah, I’m probably forfeiting around $25 in cash back on other cards – round it off as $745 in savings.

Where Brancatelli comes in is with his standard advice that really the only way to win the points and miles game today is with signing bonuses.  In January he wrote this: “Get a new credit card, score the increasingly large acquisition bonuses, then get the next card for its acquisition bonus. Assuming you don’t roll over and pay interest, the strategy is the best and cheapest way to roll up masses of miles and points. It’s the equivalent of found money since you’re not spending anything you otherwise wouldn’t spend and you earn far more miles and points than you would by flying and staying in hotels–or charging to your existing cards.”

Before signing with SWA I’d found myself noodling the bizarre idea of getting an Alaska AIr card with a 70,000 mile signing bonus and what made that thinking so strange is that Alaska flies to pretty much nowhere that I am likely to go to so the card would be inert plastic in my wallet. 

Then the Dallas trip popped into my mind and, sure, SWA has the worst reputation of just about any domestic carrier and apparently the problems are rooted in an ancient computer system.  But an identified problem is a fixable problem so call me optimistic.

For some months I have preached the need for a fast spend of miles because the probability is high that they will be worth less next year. As airlines mint more miles to sell to credit card issuers they use the other hand to devalue the very same miles. Burn ‘em when you get ‘em. That’s what I’m doing with the Dallas trip.

Will I cancel the card a year from now when the $69 fee arises? Probably. You may have heard credit card “experts” saying that canceling a card will lower your credit score but if it’s true it’s only a minimal impact – unless it’s a card with a large and unused credit limit. That’s because percentage of credit used is indeed a key metric in credit scores. My SWA card has a small credit limit. It’s disappearance won’t matter to my credit score.

Don’t hard pulls on your credit – in account openings – lower your credit score? Again, it’s a marginal ding unless there are lots of new accounts.

So no worries. Last year I canceled a United card and saw no impact on my credit score.  I opened two cashback cards and an REI card and, again, no significant impact on my score. If you have prime credit (a FICO score >660) there’s scant reason to fret about these matters.

Next year I imagine I will nab a Delta Gold card – currently offering 60,000 bonus miles; $99 annual fee. That’s issued by Amex and that’s good because I think I am maxed out on the Chase 5/24 rule which denies issuance of a new Chase card if the applicant has opened five or more new credit card accounts in the past 24 months across all banks.

This merry go round will keep on spinning.  Grab the bonuses and use them fast. That – to repeat – is the only way to win in the rigged airline awards game.