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Everyone wants to have more money, less debt, and greater financial freedom, but very few will attain it. Simply telling yourself that youâll earn more cash and clear more debts isnât enough to realize those goals, but writing those tasks down, setting realistic targets, and steadily working towards them can significantly increase your chances.Â
Nothing is guaranteed, but someone with clearly defined financial goals has more chances of attaining financial freedom than someone without.
Types of Personal Financial Goals
Financial goals come in many forms, but they all revolve around money and acquiring as much of it as possible. Some of the most common short and long-term goals include:
Establish a Budget
The first step to fixing your finances is to create a budget. Itâs a short-term goal and itâs also one of the simplest, but that doesnât make it any less important. Many Americans underestimate how much they spend and overestimate how much they earn, making a budget essential for adding a little clarity.
Clear Credit Card Debt
Americans have an average of $38,000 worth of debt excluding mortgages. A small percentage of this is allocated to credit card debt, but it often carries the highest interest rate and has the worst terms. Clearing this debt is an honorable and sensible goal for anyone with mounting debts.
Save Money for a Big Purchase
The average American family under the age of 35 has between $2,500 and $4,000 in savings. Thatâs barely enough to cover a used car, let alone a mortgage down payment or college education, which is what most families are saving towards.
Save for Retirement
This is the ultimate long-term financial goal. Saving for your retirement will give you something to look forward to and make life easier as you enter your old age. Many retired Americans regret not saving more money, with some experts recommending that you have at least $1 million tucked away to cover you for an average of 18 years.
Thatâs a lot of money, but it comes from a lifetime of saving and means you can enjoy plenty of cruises and vacations when you call time on your career.
Fix your Credit Score
Next to your Social Security Number, your credit score is one of the most important numbers you have and one you need to pay close attention to. Build a good score and a world of opportunities will open for you, making it easier to get low-interest loans and secure high credit limits.
Create an Emergency Fund
You can never underestimate the benefits of an emergency fund. Itâs essentially a savings account without an end goal and itâs used to cover you in the event that youâre hit with an unexpected bill or expense. It will also help if you lose your job or become ill.
Improve your Financial Situation
This incorporates many of the goals discussed above, one can be both a short-term financial goal and a long-term one. The most common goal is simply to have more money for an easier life or an early retirement, but there are also those who save so they can move abroad, start a dream business or simply become a millionaire.
These goals are a little harder to achieve than simply clearing debt or have some extra money in your pocket, but theyâre not unreasonable. If you have a detailed plan and work hard to realize it, thereâs no reason why those lofty long-term financial goals canât be realized.
Why Should You Set Personal Financial Goals?
Goals give you direction and purpose. They provide a detailed outline of what you need to do, what you have achieved thus far, and what remains. This adds a sense of accountability that simply wouldnât exist without those goals.
If you simply tell yourself that youâre going to do something, youâre more prone to procrastinating and moving the goalposts whenever it suits you. If you write all your goals down and separate them into clear and manageable chunks, thereâs no room for denial or deviation.
Think of it as a visit to the grocery store. If you have a list, you buy what you need, donât forget anything, and are more inclined to focus on the purchases that are within budget and will actually be eaten and enjoyed. If you visit without a list, youâll end up with a bunch of unnecessary foods you bought just because they were on offer and will forget all the things you went there to buy.
Our minds need direction, purpose. When the road is long, itâs easier to traverse if there are milestones, checkpoints, and clearly defined borders; without all that, itâs just a chaotic mess and youâll never make it to the end.
Short vs Long-Term Goals
A short-term goal spans days, weeks or months; a long-term goal stretches things out over several years and even a decade. Itâs important to have both, but short-term goals should have priority as long-term ones can get lost and forgotten about.
As an example, letâs suppose that your goal is to save a lot of money for your retirement. A long-term goal would be as simple as:
- Save $500,000 before retirement
This doesnât really help. However, if you break it down into multiple short-term goals you can focus on each of these in turn, ticking them off as you go and motivating you to keep going. As an example:
Increase Debt-to-Income Ratio
- Cancel unused subscriptions
- Sell unwanted items
- Ask for a pay rise
- Get a part-time job
- Clear credit card 1
- Clear credit card 2
- Repay student loans
- Repay personal loan
- Open a savings account
- Save $500 a month
- Make a sound investment
You can break these debts down even further and focus on making extra cash every single day. If thatâs what gets you up in the morning and pushes you towards your long-term goal, thatâs what you need to do.
How to Track Your Progress
As the saying goes, there is an app for everything and where financial goals are concerned there are actually multiple tools and apps to help you out:
- Mint: Track activity in real-time after connecting bank accounts and credit cards. Monitor spending, create budgets, and learn how to manage your money. Mint is one of the highest-rated budgeting and financial management apps on the market and is well-deserving of the praise it has received over the years.
- Wally: A great little budgeting tool that can keep track of your savings goals and tell you when certain bills are due. Itâs free and if your goal is to save and cover your debts, it does everything you need.
- Every Dollar: A simple but useful app designed to help you escape debt and manage your finances more effectively. It literally lets you see where âevery dollarâ is being spent.
- Clarity Money: A useful app to help you manage your subscriptions. The average consumer has dozens of subscriptions and itâs easy to lose track, but Clarity Money keeps everything in one place.
- Spendee: Manage family finances with this shared budgeting app. Itâs ideal if youâre saving along with a partner or want to keep track of what everyone in your household is spending.
How to Meet Your Financial Goals
Whateverâs on your to-do list, just set a goal and start working towards it. Take a look at these tips to help you:
Debt is crippling and the less you repay, the more damaging it becomes. Credit card debt, student loans, medical debt; it creeps into your life, it grows, and it never seems to go away. Before you focus on your savings and build towards a brighter future, you need to focus on clearing those debts.
Debt relief methods can help you with this, including consolidation, debt management, and debt settlement. In the first instance, however, you should try debt payoff strategies like Debt Snowball and Debt Avalanche, both of which rely on you generating extra money to meet more than your minimum.
Every time you meet the minimum payment on your debt, youâre paying a lot of interest and a little principal. The interest compounds, the debt grows, and if you keep sticking with just the minimum payments it will take forever to repay. When you repay more than the minimum, however, youâll clear more of the principal, reducing the compounding interest, amount, and term.
It doesnât matter how substantial your net worth is, how much money you have in the bank and what sort of long-term financial goals you have, it always helps to have an emergency fund.
An emergency fund is a sum of money put aside for a rainy day. Unlike a savings account, which might be used for retirement, a vacation or college tuition, an emergency fund has no predetermined purpose and is designed just to sit, grow, and wait for a rainy day.
An emergency fund can help you if you lose your job or have a medical crisis. We live in times of uncertainty and exist under one of the costliest healthcare systems in the world. A short stay in a hospital can bankrupt you if youâre not insured and even if you are, there are still costs to consider.
Budget to save and invest but keep some money aside to build an emergency fund and make sure youâre prepared.
Successful savings goals are built on careful planning and sacrifices. If you want a new home, you need to say no to luxury purchases, eating out, vacations, and other expenditures.Â
The average American family wastes about $1,500 a year on uneaten groceries, $3,000 on restaurants and takeout, up to $500 on gambling, and thousands more on vacations, smoking, unused subscriptions, and more.
You donât need to eliminate these expenditures entirely, just look for cheaper and more sustainable alternatives. Save on wasted groceries and dining out by going for a picnic; swap an expensive vacation abroad for a family fun staycation.Â
Once you eliminate these expenses, you can start saving towards whatever goal you have, be it a retirement fund, a car or the down payment on a house.
Achieving a Huge Net Worth
Itâs okay to scoff at this one as it does seem a little far-fetched. However, itâs a dream that countless Americans have and one that is very attainable. Of course, itâs easier if you have a talent or youâre young enough to develop one, but providing you have a good work ethic, donât spend your days procrastinating, and have the right mindset, you can build a sizeable net worth.Â
Itâs about making smart financial decisions, acquiring lots of knowledge, adopting careful investment strategies, and working endlessly. Here are some tips to help you accomplish this lofty goal:
Donât Spend Frivolously
The world of the rich and famous is awash with stories of people who adopt unbelievably frugal lifestyles despite having millions or billions in the bank. There are stories of Warren Buffet going to great lengths to use coupons to buy fast food, even though heâs one of the richest men in the world.
This kind of frugality is a little extreme, but it comes from the right place. Rappers, rock stars and sports stars like to throw money around when they have it, but theyâre the ones declaring bankruptcy and being arrested for tax debts when their careers enter a slump. Thatâs not a sustainable lifestyle for anyone, even the super-rich.
Learn how to manage money properly and accumulate as much as you can. Donât scoff at the end of saving a few dollars just because you have a few hundred; donât throw away a few hundred just because you have a few thousand.Â
Adopting this frugality will hasten your journey to becoming a millionaire. It will also allow you to manage your money effectively when you eventually make it, preventing you from being one of many sob stories of people who came into lots of money and then blew it.
Treat Life Like a Business
To become rich and successful in a way that doesnât rely on good fortune, you need to treat your life like a business. A business, for instance, is very wary of accumulating expenses and will instead try to invest additional cash into assets. These assets increase the value of the business, whereas expenses reduce it.
As an example, letâs assume that youâre 18 and have a talent for writing. A good investment would be an education in literature or creative writing, a laptop, a writing course, even a home office. An expense, however, would be a holiday, a flashy watch or lots of designer clothes. None of these things will grow your wealth and most will hinder it.
Take a look at our guide on good debt vs bad debt to learn more.
Read, Learn, Fail
Read as many books as you can on your chosen subject and on similar subjects. Youâll learn about the world, the English language, and more. All these will help to improve your reasoning, logic, and knowledge, which will help with your goals.
Learn New Skills
Knowledge doesnât just come from books and it shouldnât be limited to specific subjects. If you want to be rich and successful, you need to devote every minute of your spare time to working, learning, and acquiring new skills.Â
Learn a language, adopt a craft, research into a niche subjectâall these things can broaden your horizons and increase your earning potential.
Find a Specialty and Stick with It
While itâs good to read many different subjects and learn many different things, when it comes to actually making money, you need to stick with a single subject. The world is filled with wannabee millionaires who spend their days writing music, books, and screenplays, and their nights trying to juggle freelance careers and businesses.
Specialize in one thing, be the best you can be, and once you have the money and the success you can start venturing into other areas.
Stop Making Excuses
Generally, people who dream of becoming rich and successful will fall into one of two categories. In the first, there are those who spend their days dreaming, partying, and procrastinating. They assume that being rich is simply a case of having a great idea and then waiting for the riches to descend. In the other group, youâll find people who work every minute of the day and are always willing to take risks and make sacrifices.
If you want to accomplish great things, you need to work for it. Donât assume that all the rich and successful people you see on social media have it easy. If theyâre not working every minute of every day, thereâs a good chance they worked that much to get where they are.
Set Financial Goals for Yourself is a post from Pocket Your Dollars.
Learn how long to hold on to important paperwork, including credit card statements and tax documents, in this article from Lexington Law.
Multiple readers reached out about annual fee refund credits on their Hyatt card (legacy version). A lot of people are confused by this credit or thinking that it’s part of a pandemic credit program, but it seems to be related to the conversion that took place on January 11 of the legacy Hyatt card to the World of Hyatt card. Chase is apparently prorating the annual fee, and then presumably a new annual fee will post soon to the card, perhaps on February 1.
Hat tip to readers Mike S and B.
There’s nothing fun about declaring bankruptcy, but those who emerge from it can be thankful for the opportunity to rebuild their personal finances without the burden of debt. Unfortunately, bankruptcy also does damage to your credit, making it difficult to get approved for credit cards and other lines of credit. Since credit cards are a good way to build or rebuild credit, we have the details for some credit cards to get after bankruptcy.
Secured Credit Cards
Secured credit cards generally have lower credit score requirements and often can be obtained post-bankruptcy. While they do require an upfront security deposit to open, they otherwise work just like traditional credit cards and can help you rebuild your credit. When choosing a secure credit card, look for one that lets you build toward unsecured credit status and reports to all three credit bureaus so it helps you positively impact your credit.
Credit Cards for Bad Credit
Secured credit cards are often considered bad debt credit cards because they’re targeted to people with poor or no credit. But you can also find credit cards that are approved for people with less-than-stellar credit and don’t require a security deposit. In return for the chance to get positive reporting on your credit report via one of these cards, you might have to pay an annual fee or deal with a high interest rate.
Credit Card for After Bankruptcy
Thereâs no single best credit card to get after a bankruptcy, but there are many options to consider. Carefully review the details of relevant credit card offers before making a decision for yourself.
OpenSkyÂ® Secured VisaÂ® Credit Card
OpenSkyÂ® Secured VisaÂ® Credit Card
- No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
- The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
- Build credit quickly. OpenSky reports to all 3 major credit bureaus.
- 99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
- We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search âOpenSky Cardâ in Facebook.)
- OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
- *View our Cardholder Agreement located at the bottom of the application page for details of the card
Card Details +
Annual Fee: $35
APR: 17.39% (variable)
Why we picked it: This card helps you build credit while still offering a fairly low interest rate and a refundable deposit for as little as $200 (some restrictions apply; see cardholder agreement for details).
The details: There is no credit check necessary to apply, and you can apply in less than 5 minutes. Your responsible use of the card is reported to all three credit bureaus each month. And when you need extra credit, you may be eligible for a credit line increase.
Drawbacks: There is an annual fee, which isn’t necessarily bad in exchange for building credit.
First Progress Platinum Elite Mastercard Secured Credit Card
First Progress Platinum Elite MastercardÂ® Secured Credit Card
- Receive Your Card More Quickly with New Expedited Processing Option
- No Credit History or Minimum Credit Score Required for Approval
- Full-Feature Platinum MastercardÂ® Secured Credit Card
- Good for Car Rental, Hotels; Anywhere Credit Cards Are Accepted!
- Monthly Reporting to all 3 Major Credit Bureaus to Establish Credit History
- Credit Line Secured by Your Fully-Refundable Deposit of $200 — $2,000 Submitted with Application
- Just Pay Off Your Balance and Receive Your Deposit Back at Any Time
- Apply in just a few moments with no negative impact to your credit score; no credit inquiry will be recorded in your credit bureau file
- Nationwide Program though not yet available in NY, IA, AR, or WI * See Card Terms.
Card Details +
Annual Fee: $29
APR: 19.99% Variable APR for Purchases
Why we picked it: With responsible use, this card can be a good place to start working to rebuild your credit. There is no minimum credit score required for approval, and it also reports to all three credit bureaus each month.
The details: You can secure your credit line by putting down a fully refundable deposit of $200 to $2,000 during the application process. When you pay off your balance, you can receive your deposit back. Its expedited processing option lets you receive your card more quickly, and you can apply in minutes with no negative impact to your credit score.
Drawbacks: While the APR isn’t super high for a bad-credit credit card, it’s still high enough to run up hefty interest charges. You’ll want to pay the balance off as often as possible to avoid that extra expense. The card is not yet available in all states.
Milestone Unsecured Mastercard
MilestoneÂ® Unsecured MastercardÂ®
- Easy pre-qualification process which does not affect your credit score
- Choice of card image at no extra charge
- Less than perfect credit is okay, even with a prior bankruptcy!
- Mobile friendly online access from anywhere
- Accepted nationwide, wherever Mastercard is accepted
- Unsecured credit card, no deposit required
- Protection from fraud, if your card happens to be lost or stolen
Card Details +
Annual Fee: $35 – $99*
Why we picked it: It is possible to be approved with poor credit and a bankruptcy on your credit report, but you don’t have to start with a security deposit. Plus, you can choose your card image at no extra charge!
The details: Prequalification doesn’t require a hard credit inquiry, so you can find out if you’re a likely candidate for this card without impacting your credit. You can access your account via mobile to manage it, helping you stay on track with positive payment history and balance management, and the card comes with decent fraud protection.
Drawbacks: The annual fee can be pretty high depending on the terms you’re approved for. The interest rate is also fairly high, so you might not want to carry over large balances between statements.
Indigo Mastercard for Less Than Perfect Credit
IndigoÂ® MastercardÂ® for Less than Perfect Credit
- Less than perfect credit histories can qualify, even with prior bankruptcy!
- Choose your card design with chip technology at no additional cost
- Quick pre-qualification available with no impact to your credit score
- Easy pre-qualification process with fast response
- 24/7 access to your account, even on mobile!
- Protection from fraud, if your card happens to be lost or stolen
- Accepted nationwide wherever Mastercard is accepted
Card Details +
Annual Fee: $0 – $99*
Why we picked it: You can prequalify for this card without impacting your credit, and thereâs no security deposit required.
The details: The APR is fairly steep, so you probably want to limit what balances you carry over each month. How much the annual fee is depends on your credit profile. However, it doesn’t require a security deposit.
Drawbacks: A potentially high annual fee and less-than-stellar APR make this a potentially expensive way to build credit.
Avant Credit Card
Avant Credit Card
- No deposit required
- No penalty APR
- No hidden fees
- Fast and easy application process
- Help strengthen your credit history with responsible use
- Disclosure: If you are charged interest, the charge will be no less than $1.00. Cash Advance Fee: The greater of $10 or 3% of the amount of the cash advance
- Avant branded credit products are issued by WebBank, member FDIC
Card Details +
Annual fee: $39
APR: 25.99% (variable)
Why we picked it: Thereâs no deposit required, no penalty APR, and no hidden fees.
The details: What you see is what you get with this card. With responsible use, you can strengthen your credit history.
Drawbacks: There is an annual fee and the variable APR can be a bit steep. You may also need fair credit to qualify.
Surge MastercardÂ® Credit Card
- All credit types welcome to apply!
- Monthly reporting to the three major credit bureaus
- See if youâre Pre-Qualified without impacting your credit score
- Fast and easy application process; results in seconds
- Use your card at locations everywhere that MastercardÂ® is accepted
- Free online account access 24/7
- Checking Account Required
Card Details +
Annual fee: See Terms*
APR: See Terms*
Why we picked it: All credit types are welcome to apply, and the pre-qualification process wonât impact your credit score.
The details: Surge can be used anywhere Mastercard is accepted. , and the card reports to all three major credit bureaus.
Drawbacks: You need a checking account to apply. Because the card is specifically for people with less-than-perfect credit scores, interest rates and terms may be a bit high.
How to Choose a Credit Card After Bankruptcy
After a bankruptcy, improving your finances and rebuilding your credit should be a priority. Do some research and pick a credit card that helps you achieve that goal. If you feel that you can’t responsibly manage credit right now, you should wait until you’re in a better place to submit a credit card application.
Since secured credit cards require an upfront security deposit, you’ll need to determine how much money you can afford. Most secured cards will give you a credit line that equals the amount of your original deposit.
While high APRs and annual fees are common with all of these credit cards, you should compare rates across several cards to find the ones that are best for your spending habits.
Some cards for bad credit are designed to exploit people using unfair terms or policies that make it difficult to rebuild your finances. You may even start receiving multiple credit card offers in the mail after your bankruptcy is discharged. Watch out for red flags to avoid getting burned.
And remember: A credit card can only build credit if you use it correctly. You should keep your credit card balance below 30% of the available credit limit and make all your payments on time to help build your credit.
The post Easiest Credit Cards to Get After Bankruptcy appeared first on Credit.com.
If youâre itching to voyage around the country and to bring a partner along on your adventures, the Southwest Companion Pass is an incredible deal. Believe it or not, with the Companion Pass, you can bring a friend or family member with you for free on every Southwest flight for up to two years.
You may have heard the news: On Jan. 1, 2020, Southwest officially boosted the points requirement for the Companion Pass to 125,000 points. This bump made the Companion Pass harder to earn for many less frequent flyers, though not impossible
With travel interruptions caused by the coronavirus pandemic, earning the Companion Pass for 2021 might seem completely out of reach. Luckily, Southwest is offering relief to those whose canceled plans throttled their hopes of achieving this coveted perk. Southwest has now twice extended statuses for Southwest Companion Pass members. Members who received an extension of their earned Companion Pass benefits through June 30, 2021, will have their benefits extended for another six months through Dec. 31, 2021. Additionally, Rapid Rewards members with an account opened by Dec. 31, 2020, are getting a complimentary boost of 25,000 Companion Pass qualifying points and 25 flight credits toward Companion Pass status. This shortcut, when combined with alternative ways to earn Companion Pass qualifying-points, means the benefit is still achievable in the current environment.
What is the Southwest Companion Pass?
The Southwest Companion Pass is a special benefit for elite members of Southwestâs Rapid Rewards programs. Once you earn 125,000 Rapid Rewards points or 100 qualifying flights in a year, you can designate a companion to bring with you for free (except for taxes and fees) on any Southwest flight that you purchase â with either cash or points. The earlier in the year that you earn the Companion Pass, the better because itâs good through the remainder of the year and the year after that.
The threshold for earning the Companion Pass is steep â amounting to thousands of dollars per month in airfare or multiple flights per week. However, you donât need to be a rabid Southwest flyer to earn the pass. In the following guide, weâll delve into the details of the Southwest Companion Pass and shortcuts to earning it.
The best card for Southwest flyers
Southwest Rapid RewardsÂ® Priority Credit Card
Why should you get it?
The Southwest Rapid Rewards Priority card is by far the best value for a frequent Southwest flyer, thanks to its $75 travel credit and 7,500-point annual bonus. Plus, the sign-up bonus of up to 80,000 points can help you toward the Southwest Companion pass.
|More things to know:
Southwest Companion Pass rules
- You must earn 125,000 qualifying points or fly 100 qualifying one-way flights each year to qualify.
- Qualifying points include: revenue flights on Southwest, credit card points, base points earned through Southwest partners.
- Qualifying points donât include: purchased points, points transferred from other members, points converted from hotel and car loyalty programs, e-rewards, e-miles, Valued Opinions, Diners Club, points earned from program enrollment, tier bonus points, flight bonus points and partner bonus points.
- You should designate a companion at least 21 days in advance to receive a Companion Pass card before your flight. Youâll need the card to board your flight, and itâs nontransferable.
- You may change your designated companion up to three times each calendar year.
- Once you qualify, you can begin booking flights with your Companion Pass immediately, and it is good through the remainder of the year and the next calendar year (up to two years, depending on when you qualify).
- You must pay for your flight with cash or points before you book your companionâs pass.
- Your companion canât fly without you â they must be booked on the same flight and dates. If you cancel your ticket, their ticket will also be canceled. Also, he/she will be charged for the fare if you donât make the flight.
- You have to pay for your ticket to bring a companion (i.e., you canât use a companion pass to fly with a partner also using a companion pass).
How to get the Southwest Companion Pass
You may be surprised to learn that Southwest flights arenât the only way to earn points. In fact, there are faster ways to rack up the points that you need for the pass. Here are some of your best options:
Credit card bonuses
The best way to earn a lot of Rapid Rewards points all at once is to sign up for a Rapid Rewards credit card and earn the cardâs sign-up bonus.
However, you should be aware of Chaseâs rules on applying for Southwest credit cards before you hit submit. Due to Chaseâs 5/24 rule, your application likely be denied if youâve opened more than five credit cards (with any issuer) in the past 24 months. You canât earn the bonus on a particular Southwest card if youâve earned a bonus with that card in the past two years. Also, youâre prohibited from owning two consumer cards at once â which means you canât sign up for, say, the Southwest Rapid RewardsÂ® Plus Credit Card and the Southwest Rapid RewardsÂ® Premier Credit Card to earn two bonuses in a single year.
However, you can own a consumer card and a business card at the same time. If you can qualify for a business card (which is not as difficult as you may think â any sort of side income may qualify you), signing up for a business card along with another Rapid Rewards card will give you most (or all) of the points you need to earn the Companion Pass â you can earn up to 180,000 points with two cards combined.
|Southwest Rapid Rewards Plus Credit Card||50,000 points if you spend $2,000 in first 3 months; plus 30,000 points if you spend $10,000 in first 9 months|
|Southwest Rapid Rewards Premier Card||50,000 points if you spend $2,000 in first 3 months; plus 30,000 points if you spend $10,000 in first 9 months|
|Southwest Rapid Rewards Priority Credit Card||50,000 points if you spend $2,000 in first 3 months; plus 30,000 points if you spend $10,000 in first 9 months|
|Southwest Rapid Rewards Premier Business Card||60,000 bonus points if you spend $3,000 in first 3 months|
|Southwest Rapid Rewards Performance Business Credit Card||70,000 bonus points if you spend $5,000 in first 3 months; plus 30,000 points if you spend $25,000 in first 6 months|
Note, Southwest changes the sign-up bonuses on its cards frequently throughout the year. Before you sign up for a particular card, you should check the history of the bonus on that card to make sure itâs at its peak.
Referral bonuses are another great way to rapidly accumulate points toward the Companion Pass. Chase offers 10,000 points per each friend who is approved for a Southwest card, up to 50,000 points per year. Even better, Chase recently updated its refer-a-friend offer for Southwest so that you earn a bonus on any card that your friend chooses to apply for, including the business cards, even if you don’t own that particular card. You can log into the Chase site to grab your Refer-a-Friend link to share with friends, family, and of course social media.
Besides credit card bonuses and referral bonuses, flying frequently on Southwest Airlines is your next best bet for stacking up Rapid Rewards points. Depending on the fare, you can earn between 6 and 12 points per each dollar that you spend on Southwest airfare. You would need to spend between $9,167 and $18,333 on airfare to earn enough points for the pass.
|Rapid Rewards points earned|
|Wanna Get Away fares||6 points per dollar|
|Anytime fares||10 points per dollar|
|Business Select fares||12 points per dollar|
Rapid Rewards partners
Southwest has several travel and shopping partners through which you can earn Rapid Rewards points. For instance, many of Southwestâs car rental partners offer 600 Rapid Rewards points per rental. Also, the Southwest hotels portal is a great way to earn up to 10,000 Southwest points per night – all of which qualify for the Companion Pass.
Credit card spend
Your spend with the Southwest credit cards also earns points that count toward the Companion Pass. Most of the Southwest cards offer the same earning rate: two points per dollar on Southwest purchases (on top of your base point earnings), Rapid Rewards hotel purchases and car rental partner purchases, and one point per dollar on everything else.
Unfortunately, the overall earning rate with most Southwest cards is very low â amounting to around 1.08-percent per dollar for the average cardholder. At that rate, youâd have to spend around $101,851 on average on a Southwest card to earn the pass just through credit card spending â not a very realistic amount for most cardholders. Still, using your Southwest credit card is a good way to add incrementally to your earnings, especially for purchases that earn double points.
Additionally, the Southwest Rapid Rewards Performance Business Credit Card has a slightly higher earning rate than the rest of the airlines co-branded offerings. The Performance card earns 3 points per dollar on Southwest purchases, 2 points per dollar on social media and search engine advertising, internet, cable and phone services, and 1 point per dollar on all other purchases. That means small business owners who spend a significant amount in these areas can get a bit more value.
Southwest Rapid Rewards Dining
The Southwest Rapid Rewards Dining program is another good way to add incrementally to your point balance. You can earn up to two Rapid Rewards points per dollar by eating at qualified restaurants.
This is an especially valuable option for those who cannot travel right now due to current restrictions. You’ll still earn points for purchases made with qualifying restaurants when you order takeout or delivery from the restaurant itself.
Rapid Rewards shopping portal
You can earn Rapid Rewards points that stack on top of your credit card points (as well as other deals and discounts) by clicking on a retailerâs link through the Rapid Rewards shopping portal. The Rapid Rewards site includes many major retailers, such as Best Buy and Bed Bath and Beyond. The number of points that you earn varies quite a bit by retailer, but tends to range between one to four points per dollar. For instance, Bass Prop Shops is currently offering four Rapid Rewards points per dollar on online purchases. At that rate, youâd have to spend around $27,500 to earn 125,000 Rapid Rewards points.
Earning the Companion Pass on a moderate budget
While 125,000 points seems like a daunting number, when you add all these earning opportunities together, itâs actually quite feasible to earn the Companion Pass with a moderate amount of spend.
For instance, consider you earn the up to 80,000-point sign-up bonus and refer two friends to Southwest credit cards. Those two actions alone can earn you 100,000 points â a significant portion of the way toward the pass. To earn the other 25,000 required for the pass, you can leverage high-earning categories like Southwest flights and purchases in the shopping portal â putting all spend on your credit card to ensure you earn as much as possible.
Additionally, you can maximize your Southwest points by using your Southwest card on planned, recurring payments like select gas purchases or certain utility bills.
How to use the Southwest Companion Pass
Register your companion
As soon as you qualify, go to the Southwest website and designate a companion for your next flight. Make sure you register your companion well in advance of your flight â your companion needs the pass to board the plane, and it takes up to 21 days to mail. You arenât stuck with one flying companion â you can change your designated companion up to three times per year. (You can do this online or instantly over the phone.)
Book a flight
To book a free flight for your companion, first, go to the Southwest Airlines website and book your own airfare with cash or points. Once your ticket is booked, you can add your companion to your reservation by clicking on the âAdd Companionâ option on Southwest.com. (Or you can call Southwestâs reservations line to book your flight and have a companion added over the phone.)
Check in at the airport
You must bring your Companion Pass to the airport to check in. Youâll be asked to present a photo ID for yourself and your companion. Be sure not to stand your partner up at the last minute â if you donât show up at the airport, your companion will be charged the full price of the fare.
Tips for earning the Southwest Companion Pass faster
- Sign up for credit bonuses when they hit a peak â Wait until the bonus on a particular card hits a peak, and then apply for it.
- Sign up for two Southwest credit cards â Consider signing up for both a Southwest business and consumer card within the same year to earn all the points you need from sign-up bonuses.
- Look for special deals â If you keep an eagle eye on the Rapid Rewards program, you can find some incredible deals that can allow you to get a large influx of points or even earn the pass with a much lower threshold. For example, Southwest sometimes offers additional points on airfare purchases. Also, in 2017, Southwest ran a promotion in California that allowed residents there to immediately qualify for the pass if they signed up for a Southwest credit card.
- Take advantage of all your point-earning opportunities â Stick to flying Southwest Airlines (even for business trips) and make every car rental, credit card expense, online shopping experience and hotel stay count toward earning the pass.
That Southwest Companion Pass is in closer reach than you think, even while travel is currently restricted. The points boost for Rapid Reward members in 2020, plus earning options like the online shopping portal and dining program, keep the perk within reach for Southwest flyers. By keeping a keen eye on credit card sign-up bonuses and taking advantage of all the earning opportunities, many Southwest enthusiasts successfully earn the pass each year.
See related: What are Southwest points worth?, Southwest credit cards, Best ways to earn Southwest points, Best ways to redeem Southwest points, Southwest Airlines partners, Southwest A-list status, How to book a Southwest Rapid Rewards flight, Rapid Rewards Shopping guide
Perhaps counterintuitively, consumer credit card debt has fallen since the beginning of the COVID-19 crisis. Federal reserve data shows that the total amount of revolving consumer credit, which primarily consists of credit cards charges, fell below one trillion in April 2020 for the first time in close to two years. Data from Experian tells a similar story. Between the end of Q2 2019 and Q2 2020, the average credit card balance of borrowers fell by about 11% from $6,629 to $5,897.
Though average credit card debt is decreasing nationally, it remains high in some states and may increase during the holiday season. In this study, SmartAsset looked at states where residents tend to rely on credit the most. Using data from Experian and the Census Bureau, we ranked all 50 states and the District of Columbia based on five metrics relating to credit card debt. For details on our data sources and how we put all the information together to create our final rankings, check out the Data and Methodology section below.
This is the 2020 edition of our study on where residents most rely on credit. Read the 2019 version here.
- Credit card debt is high in Southern states. Seven of the 10 states where residents rely most on credit are in the South: Oklahoma, Louisiana, Texas, South Carolina, Alabama, Georgia and Florida. In all seven states, average credit card debt exceeds $5,600 and makes up more than 10% of the median household income.
- 13 states saw one-year increases in average credit card debt. Though Experian data shows that national average credit card debt fell by 11.04% over the past year, certain states still saw increases. Average credit card debt increased by more than 3% in two states â Idaho and North Dakota â and rose by 1% or more in six additional states â Oklahoma, Hawaii, Mississippi, West Virginia, South Dakota and Iowa.
Oklahoma ranks as the state where residents most rely on credit. Experian data shows that though average credit card debt fell in many places between the end of the second quarter in 2019 and 2020, it rose by 2.00% in Oklahoma, from about $5,800 to almost $6,000. With that rise, we estimate average credit card debt for Oklahoma residents makes up 10.96% of the median household income â the fourth-highest percentage for this metric in our study.
Though average credit card debt in Louisiana ranks toward the middle of the study at 24th, it makes up the second-highest percentage of median household income, at 11.25%. Additionally, credit card debt may build up in Louisiana, as the state has relatively high poverty and unemployment rates. Data from the Census and Bureau of Labor Statistics shows that Louisiana also has the second-highest poverty rate (14.3%) and 15th-highest September 2020 unemployment rate overall (8.1%).
3. Alaska (tie)
Average credit card debt in Alaska fell by close to 5% over the past year, but it is still the highest in our study, at close to $7,700. Additionally, Alaska ranks in the worst half of the study for two other metrics, average credit card debt as a percentage of income and September 2020 unemployment rate. Average credit card debt makes up 10.15% of the median household income (the 10th-worst rate for this metric overall). In September of this year, unemployment stood at 7.2% (the 23rd-worst in the study).
3. Nevada (tie)
Nevada ranks in the bottom half of the study for all five metrics we considered. It has the 11th-highest average credit card debt, the 22nd-worst one-year change in average credit card debt and the 17th-highest average credit card debt as a percentage of median household income. Census Bureau data from 2019 shows that Nevada has the 20th-worst poverty rate of all 50 states and the District of Columbia, at 8.7%. Moreover, in September 2020, the unemployment rate (12.6%) was the second-highest in the country, behind only that of Hawaii.
3. Texas (tie)
Texas ties with Alaska and Nevada as the No. 3 state in the country where residents rely most on credit. Though average credit card debt in Texas fell by almost 5% over the past year, it remains elevated compared to other states. Experian data shows that at the end of the second quarter in 2020, average credit card debt was $6,423 â the seventh-highest of any state. Additionally, Texasâ poverty rate is the ninth-highest in the study, at 10.5%.
6. New Mexico
Credit card debt in New Mexico is high relative to average incomes. We found that average credit card debt as a percentage of the median household income was third-highest in our study, at 10.98%. New Mexico residents may also struggle with credit card debt more, as unemployment and poverty rates are high. In 2019, the unemployment rate was 9.4% (eighth-highest in the study) and in September 2020, the poverty rate was 13.7% (the third-worst in the country).
7. South Carolina
South Carolina actually has the lowest September 2020 unemployment rate (5.1%) of any of the 10 states where residents most rely on credit. However, the state ranks relatively poorly on the other four metrics we considered. It has the 18th-highest average credit card debt, 14th-worst one-year change in average credit card debt, eighth-highest average credit card debt as a percentage of income and 11th-highest poverty rate.
Using Experian and Census Bureau data, we found that average credit card debt for Alabama residents makes up almost 11% of the stateâs median household income. Additionally, Alabama has the sixth-highest 2019 poverty rate (11.2%) of all 50 states and the District of Columbia.
At the end of the second quarter of 2020, average credit card debt in Georgia stood at roughly $6,200. This debt may affect residents more in Georgia, as debt makes up more than 10% of the median household income in the state. In addition, almost 10% of individuals fall below the federal poverty line.
Florida has the 12th-highest average credit card debt (about $6,100) and ninth-highest average credit card debt as a percentage of median household income (10.31%). In September 2020, the unemployment rate in Florida was the 20th highest in the country, at 7.6%.
Data and Methodology
To determine the states where residents rely most on credit, we compared all 50 states and the District of Columbia across five metrics:
- Average credit card debt. Data comes from Experian and is for Q2 2020.
- One-year change in average credit card debt. Data comes from Experian and is from Q2 2019 to Q2 2020.
- Average credit card debt as a percentage of median household income. This is the average credit card debt (per borrower with credit card debt) divided by median household income. Data for average credit card debt comes from Experian and data on median household income comes from the Census Bureauâs 2019 1-year American Community Survey.
- September 2020 unemployment rate. Data comes from the Bureau of Labor Statistics.
- Poverty rate. This is the percentage of the population below the federal poverty level. Data comes from the Census Bureauâs 2019 1-year American Community Survey.
First, we ranked each state in every metric, giving a double weight to both of the average credit card debt metrics, a single weight to the change in average credit card debt metric and a half weight to September 2020 unemployment rate and poverty rate. We then found each stateâs average ranking and used the average to determine a final score. The state with the best average ranking received a score of 100. The state with the lowest average ranking received a score of 0.
Tips for Managing Credit Card Debt During the COVID-19 Downturn
- Contact your credit card company. Many credit card companies are offering financial relief to their customers during the COVID-19 pandemic. The Consumer Financial Protection Bureau recommends that the best first steps in receiving relief are contacting your credit card company, telling them youâve been affected and asking questions about the relief packages they offer.
- Create a plan to pay it off. Credit card debt can be incredibly stressful, especially during a recession when jobs are less secure and employment opportunities are more limited. Our credit card calculator is here to help. By adding your credit card details, you can calculate the total interest and time it will take you to pay off your debt.
- Consider a financial advisor. A financial advisor can help you make smarter financial decisions to be in better control of your money and get previous debt under control. Finding the right financial advisor doesnât have to be hard. SmartAssetâs free tool matches you with financial advisors in your area in five minutes. If youâre ready to be matched with local advisors that will help you achieve your financial goals, get started now.
Questions about our study? Contact us at email@example.com.
Photo credit: Â©iStock.com/bernie_photo
The post States Where Residents Most Rely on Credit â 2020 Edition appeared first on SmartAsset Blog.
Chase has announced the 5% cash back categories on the Chase Freedom Flex℠ and the retired Freedom card for the first quarter of 2021.
From Jan. 1 through March. 31, 2021, Freedom and Freedom Flex cardholders can earn 5% cash back on select streaming services, internet, cable and phone services and wholesale club purchases (up to $1,500 in combined purchases) after activation.
Besides that, the new Flex card offers 5% cash back on travel booked through the Chase Ultimate Rewards portal, 3% on dining and drugstore purchases and 1% on everything else. All other purchases earn 1% cash back.
See related: Chase to launch new Freedom Flex card, add new categories to Freedom Unlimited
Activation for first-quarter categories on both the Freedom and Freedom Flex launched on Dec. 15, 2020, and will be open until March 14, 2021.
Hereâs what you need to know at a glance:
- Activation of first-quarter bonus categories begins on Dec. 15 for both the Chase Freedom and Chase Freedom Flex.
- Cardholders must activate by March 14 to earn the bonus rate.
- From Jan. 1 to March 31, Freedom and Freedom Flex cardholders can earn 5% cash back on eligible streaming services, internet, cable and phone services and wholesale club purchases.
- The 5% cash back bonus is capped at $1,500 in combined purchases per quarter.
- As of Jan. 12, 2020, Chase Freedom cardholders earn 5% cash back on Lyft rides through March 2022.
Chase 5% cash back calendar 2021
|January â March
(Activation closes on March 14)
|April â June
|July â September
|October â December
Chase only releases its quarterly bonus categories one quarter at a time, so we canât yet predict what will be offered in the rest of the quarters in 2021. Hereâs a quick look at some of the categories Chase has offered in the last year.
Chase 5% cash back calendar 2020
|January â March||April â June||July â September||October â December|
What is included and excluded in the ‘Select streaming services’ category?
In this category, you can earn 5% cash back on select streaming services, including music and video streaming.Â The eligible services include Disney+, Hulu, ESPN+, Netflix, Sling, Vudu, Fubo TV, Apple Music, SiriusXM, Pandora, Spotify and YouTube TV.
What is included and excluded in the ‘Phone, cable and internet services’ category?
You can earn cash back on your monthly bills, such as your cable, internet and phone services. To earn 5% cash back in the category, make sure to pay these bills with your Freedom or Freedom Flex card.
Equipment purchases don’t qualify in this category. You may also not receive the bonus cash back if you pay for your phone, cable or internet service at a merchant’s store that’s not classified in the applicable services category.
What is included and excluded in the âWholesale clubsâ category?
In this category, you can get 5% back when youâre shopping at wholesale clubs, including Samâs and BJâs. You can also use your Chase Freedom (no longer available for new applications) to earn bonus cash back at Costco. Since Costco only accepts Visa cards, the new Freedom Flex, which is a Mastercard, wonât be accepted. Mastercards are, however, accepted on Costco.com.
See related: Best credit cards for Costco purchases
earn 5% cash back on up to $1,500 in combined spending in rotating categories each quarter, upon enrollment, then 1%.
Chase vs. Discover cash back categories 2021
Chase Freedom Flex℠
Discover it® Cash Back
|January â March||Select streaming services, phone, cable and internet services, wholesale clubs||Grocery stores, Walgreens and CVS|
|April â June||TBA||Gas stations, Uber, Lyft and wholesale clubs|
|July â September||TBA||Restaurants and PayPal|
|October â December||TBA||Amazon.com, Target.com and Walmart.com|
Which card offers the best deal?
The best card for you depends on where you plan to spend your money in the first quarter of 2021.
Discover it® Cash Back offers bonus cash back at grocery stores at the beginning of the year. Since groceries are regular expenses that can get rather high, especially if youâre grocery shopping for a family, this category can be pretty lucrative.
At the same time, if you have a wholesale club membership, it can be very easy for you to meet the spending cap in this category with your Chase card. This can make up for the other two underwhelming categories.
For the rest of 2021, we canât predict which card will be best for you, as while Discover has announced its categories for the next year, Chase only releases bonus categories one quarter at a time.