When Credit Card Companies Fight, Travelers Should Rejoice

The following is a guest post by my friend, Craig Ford. Craig teaches people how to find the best travel credit card sign up bonuses so they can get free travel.

by Craig Ford

We all know competition is good. It’s good for we, the people.

I tend to closely watch credit card offers in an effort to get free travel. In the last 12 months, there have been some outstanding credit card sign up bonuses.

Consider some of the following offers from the last year:

  1. American Airlines had a 75,000 miles sign up bonus offer. That’s enough miles for three domestic flights in the USA.
  2. British Airways had a 100,000 miles sign up bonus offer. That’s enough miles for four domestic flights in the USA.
  3. Capital One had a sign up bonus miles match of up to 100,000 points. Those 100,000 points translate into $1,000 worth of travel.
  4. American Express has several targeted offers where they offered 75,000 – 100,000 American Express Rewards for signing up. That’s enough miles for four domestic tickets.

At the time of this writing, there are seven credit cards that offer a 50,000 point/miles sign up bonus.

As an example, there is a 50,000 point bonus Chase Sapphire Preferred. That translates into either $500 in gift cards or $600 worth of travel.

If you were to turn the clock back about five years, you’d find that people were getting excited about a credit card that offered 30,000 bonus miles.

A Reason to Celebrate

That means that anyone who is willing to use credit card sign up bonuses to get free travel has a lot of reasons to celebrate.

Around five years ago, a really, really good offer would get you just enough miles for a free flight. Today, the possibilities are outrageous. Getting up to four domestic tickets in exchange for a credit card application is crazy lucrative for travelers.

We can only hope that companies continue to try and one up each other.

Why do credit card companies offer these rewards?

Look; the people who run these promotions are smart. They wouldn’t be doing it if they were losing money.

They do it because what they get in return is normally more than what they are offering.

Here are some of the things the credit card company assumes:

  1. Many people won’t use their miles. I know a lot of people who have accumulated miles and then go to make a booking and get really frustrated. As a result, they vow to quit collecting frequent flier miles. This is unfortunate because the miles could be valuable if the person were willing to educate him or herself on the best ways to get reward flights.
  2. Some people will likely get the card and keep it, or forget to cancel it. This means they’ll collect annual fees even after the first year. Now the promotion starts to generate real profit.
  3. People will use the credit card. Duh. When you use a credit card, the credit card company gets paid. The vendor will pay a fee for the convenience of accepting the cards, and the credit card company is the one that gets paid.
  4. Some people (I hope that won’t include you) won’t pay their bills. When credit card companies can charge $39 for a late payment and have a 25% interest rate, it’s easy for them to make some serious cash.

If that’s how they make money, you’ll win if you outsmart the credit card companies. Pay your card on time. Pay your balance in full each month. Cancel the card after a year of usage to avoid annual fees. And take the time to use your air miles.

In the end, you win when credit card companies fight.

If one had decided to implement this strategy (signing up for credit cards to get the travel bonus) at the start of 2011, they could easily have earned over $4,500 worth of free travel this year with five applications.

For some people, this little game is not worth the time, effort, or hassle. However, if you want to learn how to travel cheaply, then this is a great time for taking advantage of credit card sign up bonuses.   It’s also a great way to start building your account balances for a free flight.

Photo Credit: Claudio Gennari

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