Southwest Airlines is one of those companies that you either love or hate. Unlike all the major airlines, they offer only economy seating and no seat assignments. They are not concentrated in major metropolitan areas, and offer free checked bags and no re-booking fees.
It used to be that they only served a select number of smaller airports, so a large percentage of travelers did not even have a chance to try them. Today, they serve nearly every major city. Furthermore, as a result of their pending acquisition of rival AirTran, there will be no large or medium-sized markets that do not offer service from Southwest Airlines.
Like most airlines, Southwest offers a frequent flyer program and an affiliated Southwest Rapid Rewards credit card. The program has recently undergone some rather unpopular changes. Read on to learn the negative and positive effects these changes have had on their program.
The New Rapid Rewards Program
In true Southwest fashion, their Rapid Rewards frequent flyer program was never like the other airlines. Even after a complete overhaul, it is still unique in the airline rewards realm.
The previous program simply offered one Rapids Rewards credit per flight, with a free flight after 16 credits. Under that system, people could purchase eight inexpensive tickets to nearby destinations, then redeem their rewards for a longer, more expensive flight.
To the disappointment of many, Southwest now awards Rapid Rewards points based on how much you spend on your ticket. The formula varies depending on the class of fare purchased, but the lowest class of fare, called Wanna Get Away, credits you 6 points per dollar spent on purchased tickets. When it comes time to redeem, it will cost you 60 points to redeem a dollar’s worth of value towards the price of a reward ticket.
That 10:1 ratio of purchase price to redemption value is the same across the higher fare classes aimed at business travelers. Therefore, if you purchase $3,000 worth of tickets on Southwest, you will then have enough points for a reward ticket costing $300.
So, how does the program work in conjunction with the Southwest Airlines Rapid Rewards Visa?
Southwest Rapid Rewards Credit Card
The Southwest Airlines Rapid Rewards Visa from Chase Bank was actually a bit ahead of the curve when it was first introduced. For years, they had been offering 1 point per dollar spent, with 1,200 points being converted into a single Rapid Rewards credit.
Now that there are no confusing Rapid Rewards per-flight “credits,” the points earned by the credit card are simply converted directly to points in the new Rapid Rewards program. The end result is that each dollar you spend on your Rapids Rewards Visa ultimately earns you 1.67% back as a credit towards a purchase at Southwest airlines.
Available Programs
The card is offered in two versions, with minor differences:
- The Plus Version. With the Plus version, you have a $69 annual fee, but you receive 3,000 Rapid Rewards points, $50 worth.
- The Premier Version. The Premier version has a $99 annual fee, but gives you 6,000 Rapid Rewards points worth $100. In addition, the Premier card also offers 1,500 Tier Qualifying Points for each $10,000 spent in a calendar year in order to help you to qualify for their elite status called A-List.
Clearly, the Premier card is a better value as the annual fee is completely returned to you in the form of a credit towards any flight on Southwest.
If you like, or need, to travel often, this card may be just the choice for you. However, the new program does have some serious downfalls. Take a look at some of the advantages and disadvantages to see if it really fits your needs.
Advantages
- Unlimited Reward Availability
The main advantage to this new program and its credit card is that there is no such thing as reward availability. The credits are good for any seat for sale on any flight. - Good Value for Short-Haul Flights
People who want to redeem awards for shorter, less expensive flights will find themselves getting more value out of this program than the old version, where all rewards carried the same redemption price. The problem of a reward flight from Los Angeles to Las Vegas costing the same number of miles as LA to Boston has long plagued frequent flyer programs. Rapid Rewards provides a solution by basing their point system on dollars spent. - Faster Way to A-List
No amount of elite status on Southwest will earn you a first class upgrade, since they don’t even have a first class. That said, their A-List program offers priority security and priority boarding, as well as a 25% point bonus. Using the Premier version of this credit card for your daily spending will help you make A-List faster than you would have otherwise.
Disadvantages
- Uncompetitive Reward Rate
The effective rate of return for this card is 1.66 cents per dollar spent. This might have been seen as a good rate years ago, but it is merely average for today’s reward credit cards. There are many other cards offered, like the Starwood Preferred Guest American Express card, that earns more valuable rewards, redeemable from a wider variety of airlines. - Complex Reward Formulas
Southwest’s previous program had the advantage of utter simplicity. Pay for 8 flights, get one free. It can take quite a bit of time and patience to fully grasp the nuances of the current system, and I certainly could not adequately explain it within the scope of this review. In the end, you are being awarded at higher levels for purchasing more expensive airfares. This makes sense from their perspective, but customers are finding that figuring it out is almost as complicated as doing their taxes. - Not for People Who Carry a Balance
Like any rewards card, this card should only be used by people who use a credit card and rewards wisely (i.e. always pay credit card balances in full and on time). This card has a somewhat reasonable 15.24% APR on purchases and 19.24% APR on cash advances. If you are carrying a balance, you are far better off looking for a card with a lower APR, such as the Promise card from PenFed.
Final Word
Under the old program, the Southwest Airlines Rapid Rewards credit card used to be a great way to earn free flights. Unfortunately, that program is history, and the new version of this card is far less attractive. Nevertheless, if you are a dedicated Southwest Airlines fan who is trying to work your way up the ranks to A-List, the Premier version of this credit card could be your ticket. If you think it could be right for you, I would recommend the Premier program over the Plus version, since the annual fee pays for itself.
On the other hand, if you don’t frequently fly Southwest Airlines, and are seeking to maximize the reward earned per dollar spent, you should probably keep looking.
Do you have any experience with the new Southwest Rewards Program? What would you say – is it too confusing or well worth it?
