Caught in Southwest Airlines' holiday meltdown? Credit card insurance benefits could come to your rescue

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If you're stranded in the middle of the Southwest Airlines crisis, your wallet may be feeling the impact of your upended travel plans. Luckily, it may also contain a possible solution.

For more than a week, Southwest has suffered through a historic meltdown that's wrecked both its reputation and the travel plans of passengers. Mass cancellations and delays have sent hundreds of thousands of people scrambling to rebook flights and accommodations. To add insult to injury, many have also been separated from their luggage.

The airline might reimburse passengers some of the costs they’ve incurred as a result of disrupted travel plans. But if you’ve booked your Southwest flight with a credit card that offers travel insurance, you may have better chances of getting your money back. Here’s what Southwest may agree to cover — and how your credit card might help if the airline falls short of your expectations.

Before you reach out to your credit card issuer for help, make sure you get in touch with Southwest first. Federal law requires the airline to offer you a refund on a flight that they've canceled, so you should be able to get your money back for your ticket.

“Southwest is refunding canceled flights, but travelers may have been hit with other costs,” says Bobbi Rebell, CFP and author of “Launching Financial Grownups.” The airline says it “will honor reasonable requests for reimbursement for meals, hotel, and alternate transportation.” But there's no definition of what’s considered "reasonable" or any timeframe for when travelers may expect to hear back about their requests. 

"In other words, there are no guarantees," says Rebell.

Any Southwest passenger affected by a flight cancellation or significant delay between Dec. 24, 2022, and Jan. 2, 2023 can submit receipts for additional expenses via email on the airline's website.

If you don't have any luck with Southwest, check which credit card you’ve used to pay for the flight and extra expenses. Depending on the travel protection benefits it offers, you could still get back some money.

Travel insurance can keep you covered when your travel plans go awry for reasons beyond your control and you incur additional expenses as a result. Some premium travel credit cards offer this type of coverage as a benefit.

A credit card can come with several types of travel protections, but the following three can be especially helpful in the Southwest crisis (or a similar one):

• Trip delay insurance, which can reimburse you for meals and lodging when your trip is delayed.
• Trip cancellation and interruption insurance, which can cover eligible travel expenses if your trip is canceled or cut short.
• Baggage insurance, which can cover damage or loss of your luggage or select items, such as toiletries or clothes, or if your luggage delayed.

The cards that offer all three of these travel protections include the Chase Sapphire Preferred® Card (see rates and fees), the Chase Sapphire Reserve® (see rates and fees) and the Bank of America® Premium Rewards® credit card. So, if Southwest fails to reimburse you for lost luggage or for lodging expenses while you’re stranded, one of these cards can help.

To use travel protections available with your credit card, make sure you purchase your airplane tickets with that card. Otherwise, the coverage won’t apply.

Next, check your credit card’s benefits guide. This will have all the information on the type and amounts of insurance available to you, as well as how long you have to submit a claim.

“There are big differences in coverage depending on which card you have, so it's essential to read the fine print ahead of time and understand what is and is not covered,” Rebell says.

For example, in the case of trip cancellation or interruption, the Chase Sapphire Preferred or Reserve cards can reimburse you for up to $10,000 per person and $20,000 per trip for eligible pre-paid, non-refundable travel expenses, including transportation, tours and lodging. The Bank of America Premium Rewards, on the other hand, can only cover up to $2,500 for non-refundable passenger fares.

You can also call your credit card issuer and talk about your specific situation to ensure that coverage will apply.

Once you know what coverage you're entitled to, get your documentation in order. Gather up all the receipts for purchases you want to receive reimbursement for. You also should have records showing any loss that has occurred and communication with the travel provider proving it has failed to reimburse you.

With your documents ready, you can file a claim. This usually involves getting in touch with your issuer's benefits administrator and filling out a claim form you can submit with all the evidence you’ve gathered. Sometimes, you can also begin the process online. Check your benefits guide for specific instructions and contact information.

After you submit the claim, all that’s left to do is to wait for the issuer’s decision. If all goes well and the bank approves your claim, they’ll be in touch to explain how you’ll receive the funds.

The holiday travel season has been especially messy this year, with the Southwest crisis still affecting countless passengers. If a canceled flight or delayed luggage has put a strain on your budget, and you’re worried the airline won’t help, your travel credit card might offer a solution.

If your credit card doesn’t offer travel insurance but you travel often, it might make sense to look into cards with this benefit for your future trips.

“We’ve all learned that when it comes to an airline meltdown such as this one, there's only so much we can control,” Rebell says. “While some travel credit cards with insurance can be pricey, the peace of mind... can be priceless.”

Information about the Bank of America® Premium Rewards® has been collected independently by Select and has not been reviewed or provided by the issuer prior to publication.