Ep.52- The Best Way to Save for Couples That Travel (4 Minute Read)
Read Time: 4 Minutes.
Southwest Airlines's companion pass is widely known as the most valuable perk any airline in the U.S offers. It could easily be valued over thousands of dollars throughout its valid period (ranges from 1-2 years). In fact, in April 2018 Credit Karma ranked Southwest's companion pass as #1 of all companion passes.
I'm excited because I just received mine in April 2018! The companion pass allows me to bring a person to fly with me for free for this year and next year, effectively the next 21 months.
There are a ton of generic blog posts out there that explain how to get the companion pass, but not all of the authors have earned it themselves. What my article adds is my actual experience, which will help you maximize the benefit from 1 to 2 years, and show you a practical way to overcome a common challenge.
WHY IS SOUTHWEST'S COMPANION PASS SO VALUABLE?
Most airlines have companion passes. But Southwest's companion pass is SO valuable for two reasons: its price and its length.
- Fly for Free: Southwest's companion pass lets a person fly for free, not at a discounted price.
- This is huge. In my personal experience, I've received the companion pass from Virgin America before, which was a disappointment because it's a one time discount code of $150. My flight was more than that, so I had to pay the difference...
- Good for at Least 1 Year, Possibly 2: With this pass, you can repeatedly have a person fly with you for free for at least 12 months. I will show you how to maximize it for 2 years in this article.
- By comparison, Virgin America's companion pass was only good for one time, not 12 months.
Southwest's website also makes it fairly clear themselves.
STEP 1: EARN IT THROUGH CREDIT CARD BONUS POINTS
Southwest states that you can get the pass either by flying 100 times or accruing 110,000 points within the same calendar year. In reality, the 110,000 points is the only option. PERIOD. Now the question becomes how to earn 110k points in one year.
The fastest way to earn 110,000 points is by signing up for two of the three Southwest Credit Cards within the same month.
- Tip: Very rarely, you can simply get 110,000 points with the two signup bonuses, after meeting the spending threshold. More often, together these two cards can help you get to 100k points, which means you need to spend another $10k to make the 110k goal. In fact, the latter one is my experience.
Which two cards do you need?
- First Card: It needs to be a personal credit card, which means either Southwest Rewards Plus, or Southwest Rewards Premier.
- Tip: I picked the plus card, because it has a lower annual fee, yet the same bonus.
- Second Card: The second one needs to be the Premier Business one.
- Tip: You don't necessarily need a federal tax ID, you can sign up with your social.
For example, below are the current offers as of April 2018.
STEP 2: WAIT UNTIL OCTOBER TO MAXIMIZE THE BENEFITS FROM 1 TO 2 YEARS
Southwest's companion pass is valid starting from the year you get it, and the entire following year. In order to maximize the duration, you would want to earn it as early on as possible in the year, ideally January.
In my own experience, I earned it in April 2018, so I can use it from April to December 2018, and all of 2019. But how do you do it?
These two steps on timing ARE key!!!!
1: Apply to Two Southwest Credit Cards between October 10th and October 31st.
Why? You have 3 months (90 days) to meet your spending limit. Applying during this window ensures 2 things.
- First, you have time to meet the spending limit, because $4k (for 2 cards) is a lot of money to spend in a short amount of time.
- Secondly, your last bill statement ends in the new calendar year, so your bonus points will count towards the pass first thing in the new year.
- TIP: To be extra safe, I signed up for both cards on October 14th, which means my last bill statement before I can reach my spending limit is 1/13/2019, safely in January 2019.
- 2: You need to only reach the spending limit in the third month before your statement closes.
- Why? Because you won't want to earn 110k points in November or December, which means you will have the shortest length, which is simply the next calendar year to enjoy the perk. Or even worse, you earn 100k points by December, and it resets to zero in January, so you just wasted all the effort for nothing.
- TIP: I spent up to $900 out of the $1,000 limit on one card, and $2,900 out of the $3,000 on another in the first two months, but only spent the last $100 on each between December 14th and January 13th.
STEP 3: PRO TIP ON MEETING THE SPENDING LIMIT
There are two ways, Venmo or Paypal. The concept is the same.
Concept: If you have already earned 100k points, but are struggling to earn the remaining 10k by spending $10k in a short amount of time, you can pay a close friend of yours with Paypal/Venmo, and then ask them to give the money back to you.
There is a Decent Cost: There could be a decent amount of transactional cost, which is 3% on Venmo, and 2.9% on Paypal. On a transfer of $1,000, you are throwing away $30. It's a relatively small price to pay for the ultimate reward.
Both Venmo and Paypal Have a Spending Limit: Depending on if you have already verified your Venmo/Paypal account, you may not be able to transfer a lot of money. For example, if you did not verify your account on Venmo, you can only transfer up to $299/week. With a verified account, you can transfer up to $3k on Venmo. Paypal is similar. So plan ahead if you are thinking about this method, because you may have to repeat many small transactions, or verify your account in advance.
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