2018 Southwest Credit Card Review – WalletHub Editors
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The Verdict: The Southwest Rapid Rewards® Premier Credit Card is like jet fuel for your travel budget, offering over $1,000 in free airfare from first-year rewards alone. You get 50,000 points for spending at least $2,000 during the first three months your account is open and another 6,000 on your first account anniversary. The secret, however, isn’t necessarily how many points you get – although that is important – but rather what each point is worth.
Unlike most travel rewards cards, whose points and miles tend to carry no more than one cent of value apiece (far less in the case of many hotel-branded cards, for example), each Southwest Rapid Rewards point equates to a bit more than 1.79 cents, on average, when redeemed for a free flight. In other words, 50,000 points are redeemable for over $895 and the 6,000-point bonus you’ll receive each account anniversary will nearly cancel out the previous year’s $99 annual fee. This puts the card’s ongoing earning structure – 2 points per $1 spent on Rapid Rewards-family purchases and 1 point per $1 on everything else – into a new light as well.
Aside from the annual fee, the obvious downside to this offer is that it restricts you logistically. You can only redeem points for flights on Southwest Airlines and through Southwest.com. You can’t simply find the best deal for your itinerary on a comparison site like Kayak.com or Priceline.com and pay for it with points, even if Southwest is the carrier.
Finally, it’s important to note that Southwest Airlines and Chase (a WalletHub advertiser) currently offer two different co-branded consumer rewards cards: Rapid Rewards Premier and Rapid Rewards Plus. This review focuses on the former, as we believe it to be the better of the two, but you can get a quick sense of their differences below.
- $895 Initial Bonus: Although you should never use an initial rewards bonus as an excuse to overspend, you only need to shell out an average of $334 per month for the first three months to score 50,000 free points from Southwest Airlines. Considering that the average household spends more than $750 per month on food and entertainment alone, qualification would appear to be easily attainable for someone with the excellent credit required for account approval.
- $90 Annual Anniversary Present: Each year, on the anniversary of the date you opened your account, you will receive 6,000 bonus points. That equates to a bit more than $107 in airfare but is all you need to book many one-way Southwest flights.
3% Back On Rapid Rewards Purchases: You won’t be earning cash back, but the 2 points that you will receive for each $1 spent through Southwest Airlines and its corporate partners – which include the Hyatt, Marriott and Starwood hotel chains as well as most of the major rental car companies – does equate to about 3.12% in Rapid Rewards Cash Back.
For example, buying $5,000 in Southwest airfare would earn you 10,000 points. Those 10,000 points would then equal roughly $179 — which is about 3.58% of $5,000 — when redeemed for a free flight, according to WalletHub’s analysis of Southwest fares and point pricing.
You’re therefore being paid quite the premium over most rewards cards in exchange for limiting your travel to certain providers.
- 1.79% Back On All Other Purchases: This card provides 1 point per $1 spent on purchases made outside the Rapid Rewards contingent of companies. Given that 1 point is worth about 1.79 cents, on average, spending $100 will leave you with $1.79 in points and spending $1,000 will yield $17.90. In contrast, the average cash back credit card has a base earning rate of only 1.04%.
- $99 Annual Fee: With all this card offers, it’s perhaps easy to overlook what it takes in return. A $99 annual fee isn’t all that egregious relative to other top-shelf rewards cards for excellent credit, but it will effectively cancel out your anniversary points bonus.
Potential For A Very High Regular APR: You will be assigned an interest rate from 17.49% - 24.49% (V), based on your overall creditworthiness. For context, the average good-credit credit card has an APR of 19.51% and the average excellent-credit credit card has an APR of 13.98%, according to our latest Credit Card Landscape Report. Southwest doesn’t compare favorably to either benchmark. The fact that the high end of its APR range is similar to the rate charged by the average store card (25.26%) similarly isn’t a good look.
So if you don’t want to see your capacity to earn free travel diminished by erosive finance charges, you’ll make sure to pay your Southwest Card’s bill in full every month.
Points That “Don’t Expire” But Really Do: One of this card’s primary attributes, as listed on Chase’s website, is the ability to “earn unlimited points that don’t expire*”. The first part is certainly true, as there is no overall cap on the number of points you can earn, but that asterisk at the end is pretty revealing as far as expiration goes. If you follow it down to the corresponding subscript and click the link that says “Offer Details,” you will find the following:
“Points don’t expire as long as you have flight or Partner earning activity every 24 months.”
The claim of non-expiring points is therefore disingenuous and saving up points for future use is somewhat dangerous, especially if you don’t intend for the Southwest Card to be the only credit card in your wallet.
Other Things To Consider
- Shifting Initial Bonus: Like most travel rewards credit cards, the Southwest Rapid Rewards® Premier Credit Card is something of a shapeshifter, as its promotional offers – most notably, the initial bonus – change every so often. In the past, two free round-trip flights or 25,000 bonus points have been offered in place of the current offeer. This is certainly worth noting, as such incentives are only available to applicants who haven’t had an open Southwest Airlines Credit Card for at least 24 months, but there’s also no telling whether the next promotion will be any better (or worse) than the existing one.
No Foreign Transaction Fee: In the past, this would have amounted to a largely empty benefit because Southwest only flew domestic routes and someone in a position to rack up a lot of foreign transaction fees likely would have chosen to open a credit card affiliated with an air carrier operating in their destination of choice.
But now that Southwest has added flights to Mexico and the Caribbean, “no foreign transaction fee” is an essential feature. If the Southwest Card continued to charge foreign transaction fees, consumers who travel to the airline’s newly-added destinations would have a more complicated decision in terms of becoming brand-loyal Southwest Airlines passengers. Sure, the airline is known for low fares and the card offers solid rewards on tickets booked, but is seeing every purchase you make in your destination get inflated by 3% worth restricting your ability to comparison shop for flight deals? That would have been a tough sell considering the other lucrative no foreign transaction fee travel rewards credit cards that are available.
- 2 Free Checked Bags Per Flight: This is a perk of flying Southwest regardless of whether you have its eponymous Premier Card. So while this feature will certainly save you money, it’s not an outright reason to submit an application.
- No Seat Restrictions, Change Fees or Blackout Dates: Southwest Airlines doesn’t have assigned seats, so seating restrictions for reward flights are kind of a moot point. The same is true of change fees because Southwest Airlines simply doesn’t charge them. And while you don’t need to be a cardholder to avoid blackout dates either – a free membership in Rapid Rewards will provide that – it is nice to have the reassurance that red tape won’t derail redemption.
Compared To The Competition
Air travel is a competitive business. The same can also be said of the travel rewards credit cards that help you lift off more often at less of a cost. Any analysis of the Southwest Rapid Rewards Premier Credit Card therefore is not complete without consideration of other popular offers.
Southwest Rapid Rewards® Premier Credit Card
Southwest Rapid Rewards® Plus Credit Card
JetBlue Plus Card
Capital One® Venture® Rewards Credit Card
|Annual Fee||$99||$69||$99||$0 for 1st yr, $95 after|
|Rewards Bonus||40,000 points||40,000 points||40,000 points||50,000 miles|
|Rewards Rate||1 - 2 points / $1||1 - 2 points / $1||1 - 6 points / $1||2 miles / $1|
|Purchase Intro APR||Not Offered||Not Offered||Not Offered||Not Offered|
|Transfer Intro APR||Not Offered||Not Offered||0% for 12 months|
Transfer Fee: 3% (min $5)
|Regular APR||17.49% - 24.49% (V)||17.49% - 24.49% (V)||17.49% - 26.49% (V)||14.49% - 24.49% (V)|
|Editors’ Rating||4.4 / 5||N/A||4.5 / 5||5.0 / 5|
|Details, Rates & Fees||Learn More||Learn More||Learn More||Learn More|
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