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When our financial planner first sat down with Mike and I to discuss our long-term goals, travelling the world was up there on our list. It was the one common ground we had. A future home? Maybe. Kids? Not sure. Interests? Cars. Art. Travel? YES! ABSOLUTELY!
All of this was learned before we decided to change gears and pay back the student debt, full-force. Unfortunately, a $6,500 monthly student payment for ten years does put quite a damper on the travel. So, we found another way.
It’s no secret that we travel the world by travel hacking. Using credit card sign-up bonuses to rack up free flights was something we started doing last November. It has been a little over six months, and we have been able to buy the following flights for 2018:
Mexico City, San Francisco, Portland, Calgary, Sydney, and Christchurch. Also on the list, Costa Rica, for which we have the points, but are waiting for a few of our travel hacking friends to catch up so that we can all travel together!
Now I know that with travel hacking, one may not need to pay money for these flights, but they do still pay for them in points. What if I told you that I was able to fly to Mexico (and San Francisco, and Portland, and Costa Rica) for COMPLETELY FREE? As in, I did not spend any points at all to fly there, nor did I spend money. How, you ask? Southwest Airlines!
Southwest Airlines has an awesome program that grants a person a Companion Pass. The Companion Pass allows you to take someone with you on any flight, for free. Since Mikey has the Companion Pass, I (his companion) can fly with him wherever he goes for zilch. For those of you without a permanent significant other, no worries! You can change your companion up to three times in one calendar year. So take multiple friends on multiple vacations and voila! Problem solved!
How to get Companion Pass:
There are multiple ways to get Companion Pass. Mike and I were lucky enough to strike a deal in November of last year, which we shared with all our friends, who also got in on it. The deal was an automatic Companion Pass until the end of December the FOLLOWING year (2018) as long as you open a Southwest Airlines card. This is the one we opened in particular, although there are other options to choose from. Additionally, you receive $40k bonus points if you hit a minimum spending of $1,000 in the first 3 months. This was very easy to do since Christmas time was around the corner from when we signed up. So we used our new Southwest Credit card to pay for upcoming gifts and events that came hand in hand with the holidays, and planned to hit the minimum spend by January of 2018! Free 40,000 points, to spend however we want!
If you missed the deal, there IS another way. Reach 110k points in their rewards program in one calendar and receive the Companion Pass until the end of December the following year from when the points were unlocked. It is crucial to note that all 110k points must be reached in the same calendar year. You may be saying, “This seems like a lot! How am I ever going to reach 110k?” The answer lies in opening multiple Southwest cards. Opening one personal SW card and one Business SW card will give you 40K bonus points and 60K bonus points respectively! Additionally, everytime you refer one friend to their credit card, you will receive 10k bonus points. So referring one friend on top of opening two cards will lead you to the grand total of 110k points in one calendar year!
Since the Companion Pass lasts until December of the FOLLOWING year, you can see how the best tactic would be to hit the 110K points in the beginning months, such as January and February. If you do this, then you can get close to 2 years of Companion Pass privileges. In order to do this, you may want to consider opening the credit cards before the holidays and spending as you regular would on the cards WITHOUT hitting the bonus in those last few months. Once January hits, spend the little additional amount necessary to hit the target minimum spending in order to get your two bonuses, and refer a friend. Simple! It is very important you DO NOT hit your bonus before January, otherwise it counts for the previous year. All the points for the 110k needs to be in the same year. It is crucial. The worst that can happen is you divide the bonus points between two years (December and January), thus disqualifying them from counting towards the same Companion Pass.
Why Choose Southwest?
Undoubtedly, there are a lot of credit cards out there that one can choose to start with, but we decided to make Southwest one of our first ones because Companion Pass is just too good to pass up. We do not know of other cards that will give you a free flight for every flight you take. With the Chase 5/24 rule, we knew that 2 Southwest cards have to make up 2/5 of those 5 cards. (The Chase 5/24 rule states that you will only be approved for a Chase credit card if you have opened less than 5 credit cards in the last 24 months. Which means that if your tactic is to open two Southwest credit cards in order to get Companion Pass, the sooner you open them, the less likely that you would accidentally violate the 5/24 rule prior to achieving Companion Pass.)
Another great perk is that Southwest flies all over the United States, as well as to international destinations such as Bahamas, Mexico, and Costa Rica, to name a few. Love Hawaii? Rumor has it that Southwest will be opening up flights to Hawaii sometime this year too!
Any hidden costs?
It is important to note that while there are two Southwest personal credit card options, Southwest has recently disallowed the application to both personal credit cards for one person. You must apply to a personal card and a business card in order to gain points that can combine. Also, it is important to note that there are annual fees associated with some of the credit cards that we use. These fees could be considered as a “cost” toward the flights. However, the bonus points rewarded to you after hitting the minimum spending offsets these fees, since they can be used to redeem flights that add up to much more than the single annual fee. Because annual fees are charged at every anniversary, it is important to remember to close the credit card prior to the anniversary date, to prevent being charged a renewal fee for another year.
Lastly, if you purchase flights with points, there may be taxes associated with the purchases. For example, Mike used points to buy flights to CDMX, San Francisco, and Portland, but he was taxed with roughly $11 for SF and Portland and roughly $25 for CDMX. These prices are minimal compared to the price of the flight, but they do still exist, and as a firm believer in full disclosures, I think it is imperative that this is stated in this post.
If travel hacking is something you are new to and would like to try, I really recommend starting with the Southwest Airlines credit card. Especially if you have a travel partner with you at all times! If you feel like you need to learn more about travel hacking first before committing, I suggest starting here.