How does your Southwest card rank now? Points are worth less in 2014
Southwest announced this week it will start charging more points for Rapid Rewards® tickets starting in April 2014. The change applies to ‘Wanna Get Away®’ fares booked with Rapid Rewards® points, the most popular and valuable redemption available for Southwest flyers.
Before, every dollar of airfare required 60 Rapid Rewards® points to buy a reward ticket.
Starting in April 2014 you will need 70 Rapid Rewards points to get a dollar in airfare value.
That’s over 15% more than before.
So before a $350 ticket could be had for 21,000 points. Starting in April it will cost 24,500 points.
But what about your credit card spending? You have lots of choices to earn rewards for your spending going forward, so should you keep spending on your Southwest credit card?
Let’s look at the most prominent card, the Southwest Airlines® Rapid Rewards® Premier Credit Card.
Every point will be worth about 1.4 cents toward Wanna Get Away® fares starting in April. This card earns 1 point per dollar (2 points for Southwest flight / hotel / car rental purchases), has a $99 annual fee, and offers a 6,000 point bonus each year you renew the card.
So if you spend $2,000 a month on your card you’ll earn about 30,000 points in a year, including the annual bonus. Before the change that earns you about $500 in reward value.
Those points will be worth $429 with the new points value, a loss of $70 in value from before. And those numbers are before deducting the $99 annual fee.
What are your alternatives?
We let the MileCards.com Card Finder tool run the numbers. Using an example family’s monthly spending of $2,000 total, $500 in dining, $200 in gas, $500 in groceries, and $200 in phone bills, you can see exactly how much that spending can generate in travel savings on Southwest flights:
|Card||Points earned||Rewards $ value|
(includes annual fees)
|Reward type||Annual fee?|
|U.S. Bank FlexPerks® Travel Rewards Visa Signature® Card||33,500||$454||Book on any airline||Yes, $49|
|Barclaycard Arrival World MasterCard||48,000||$439||Book on any airline||Yes, $89|
|Capital One® Venture (SM) Rewards Credit Card||48,000||$421||Book on any airline||Yes, $59|
|Blue Sky Preferred (sm) from American Express Card||30,000||$415||Book on any airline||$75|
|Bank of America Travel Rewards||39,600||$396||Book on any airline||None|
|Citi ThankYou® Preferred Rewards Card||30,000||$375||Book on any airline||$0|
|Chase Sapphire Preferred® Card||32,100||$354||Book on any airline or transfer direct to your Southwest account||$95|
|Chase Freedom®||33,600||$336||Book on any airline||None|
|Southwest Airlines® Rapid Rewards® Premier Credit Card||30,000||$321||Deposits into your Southwest account||$99|
The estimates factor in annual fees, and assume you use points for Southwest flights.
While the Southwest card can save you a lot of money on airfare, you can see there are cards that can save even more. In fact there is even a no annual fee card, the Bank of America Travel Rewards® card, that offers more travel rewards each year, and you can use points on flights beyond Southwest. That’s because it earns 1.5 miles per dollar spent on the card.
That’s not to say the Southwest card is bad. Only Southwest branded cards let you earn some points toward Southwest A-list or Companion Pass status. And with the exception of Chase Ultimate Rewards cards like the Chase Sapphire Preferred® Card, only Southwest branded cards let you add to your existing Rapid Rewards® balance to get you closer to your next reward.
It also costs a lot fewer Southwest points for domestic flights than traditional programs from American, United, and Delta.
But it’s worth trying the MileCards.com Card Finder tool to enter your own spending and give one of these other cards some thought.
You might end up with higher rewards and lower fees.
Looking for a Southwest bonus?
If you don’t yet have each of the Southwest cards introductory bonus offers can still be a great deal. From time to time Southwest offers a 50,000 point intro offer – you can check here to see if the 50,000 point Southwest credit card offer is currently available.