It seems credit-card companies have decided to make it tougher for folks like me, who like to take advantage of their generous offers but never pay them interest.
Just a year or so ago it was common to see promotional offers where, in order to receive a valuable incentive such as airline tickets, all a person had to do was sign up, possibly pay an annual fee, and “activate” the credit card by using it one time to buy something.
That meant a person didn’t really need to use the card, other than maybe to buy a cup of coffee to “activate” the account.
With no further obligation, a person was basically exchanging the annual fee they paid, if any, for whatever the sign-up incentives were.
Now, many credit-card offers are requiring to collect an incentive, a new account holder must first charge hundreds or thousands of dollars to the card within the first several months.
That’s a big difference, and it complicates the deals.
I love credit-card incentives, but they aren’t worth pursuing if it means taking on new debt, or paying credit-card interest.
But those minimum-use rules don’t have to be a deal-breaker.
Let’s look at a real example.
One of the best credit-card offers I have ever seen — one that I and my friends and family have taken advantage of — is a deal Southwest Airlines offers from time to time. The offer, when it’s available (and it was as of July 10) is that you can get 50,000 airline points by signing up for their credit card.
What are 50,000 Southwest points worth? They can be exchanged for plane tickets worth up to $833, and if you have Southwest’s credit card, you could alternatively exchange 50,000 points for $500 in gift cards for a variety of businesses.
So, by signing up for that credit card and paying a $69 annual fee, you get $500 in good-as-cash gift cards or airfare worth more than $800 back. That’s an amazing deal.
(TIP: When signing up for an airline credit card, first make sure you have a frequent-flier account with that airline.)
For most middle-class folks I know, $500 to $800 is not an insubstantial amount of money.
But to get those 50,000 Southwest points, you also would have to charge $2,000 to their credit card during the first three months.
That may not be a concern if you regularly charge most of your purchases and then pay the credit-card bill on time, in full, to avoid interest charges.
Otherwise, here’s a strategy that could make sense if you have a comfortable amount of savings.
Last year I took advantage of a credit-card offer by charging roughly a year’s worth of electric bills with SCE&G.
I paid off the credit-card bill to avoid fees and interest charges, then replenished my savings during the next 12 months when I had no payment due on my electric bill.
Unlike some businesses, SCE&G doesn’t charge a fee for paying with a credit card.
Another option would be to meet minimum-spending requirements by purchasing gift cards for things you regularly buy, like gas and groceries.
That way, you’re not buying anything you wouldn’t have bought anyway.
I mention the Southwest deal because it’s so exceptional, but other offers now tend to carry spending requirements.
Hyatt hotels, for example, will give you two free nights at any property they own worldwide if you sign up for their Visa card. There’s a $75 annual fee and you must spend $1,000 within three months.
There are still some good deals with no fee for the first year, but they also have minimum-spend components.
You used to be able to get 25,000 Starwood hotel points for signing up for their American Express card (no fee the first year). Now, you get 10,000 points for signing up, and only get the other 15,000 if you spend $5,000 within six months.
With Starwood, 10,000 points is enough for up to three free nights at a hotel such as the Aloft Charleston Airport, or one at the The Westin Hilton Head Island Resort & Spa.
Delta Airlines will give you 30,000 airlines miles, enough for one round-trip Delta ticket, if you sign up for their American Express card. There’s no fee for the first year, but you have to spend $500 with the card within three months.
I’m giving lots of examples here, but it’s a bad idea to sign up for multiple new credit card accounts. One or two shouldn’t hurt your credit score, in my experience, but don’t go crazy signing up for new accounts.
If you do spot an offer that looks terrific, see if there are requirements for making lots of purchases with the card, and figure out how you would handle that before signing up.
Reach David Slade at 937-5552 or Twitter @DSladeNews.