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One Year of Earning and Burning with the Southwest Premier Visa

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I often discuss how helpful credit card sign-up bonuses and spending can be for earning award travel, but some readers are intimidated by the idea of opening new accounts. So today, TPG Senior Points & Miles Correspondent Nick Ewen demonstrates how much a single card can offer you in travel rewards.

Award travel can be a daunting hobby to take up, especially when it comes to credit cards. If you don’t travel regularly for work, your everyday spending habits play a huge role in earning (and then redeeming) points and miles. However, with so many options, you may not know where to start.

In this post, I’ll continue my series looking at how easy it is to earn rewards by opening and using even a single card for one year. In previous posts, I’ve looked at the Chase Sapphire Preferred Card, the Citi Hilton HHonors Reserve Card, the Chase Ink Plus Business Card, the Citi ThankYou Premier Card, the Wyndham Rewards Visa Card, the Marriott Rewards Premier Card and the SPG American Express. Today, I’ll focus on another card with a limited-time offer: the Southwest Airlines Rapid Rewards Premier Card.

Southwest has the nicest cabin crew among domestic airlines in my opinion.
The Southwest Premier Credit Card is currently offering an increased sign-up bonus, for a limited time only.

Sign-up Bonus and Benefits

As we announced yesterday, the card is now offering an increased sign-up bonus whereby you can earn 50,000 points after you spend $2,000 in the first three months of opening your account. This bonus alone is worth $650 based on TPG’s most recent valuations and comes in addition to the standard benefits on the card:

  • Earn 50,000 points after you spend $2,000 on purchases in the first 3 months of opening your account.
  • Named 2015 Freddie Award Winner for Best Loyalty Credit Card
  • NEW – Chip-enabled cards with 24/7 fraud monitoring
  • Points Don’t Expire, No Blackout Dates, Bags Fly Free®
  • 2 points/$1 spent on Southwest Airlines® purchases and participating Hotel and Car Rental partners
  • 1 point/$1 spent on all other purchases
  • 6,000 points after your Cardmember Anniversary

The card does come with a $99 annual fee that is not waived for the first year. However, the 6,000 points you’ll earn each year for keeping the card will come close to covering that fee. Plus, you’ll enjoy two free checked bags on every flight and won’t page change fees if you need to modify or even cancel an award ticket.

You may fall above the national average, leading to even more point-earning ability!
If you spend more than the national average, you’ll earn even more than what I’ve outlined here. Image courtesy of Shutterstock.

So if you open the Southwest Premier Visa, earn the sign-up bonus and use the card exclusively for the first year, where does that leave you? Obviously, the answer depends on your spending patterns, so for this analysis I used consumer-expenditure data from the Bureau of Labor Statistics for 2013 and 2014 to estimate what an “average” household would spend (and thus earn) on the SPG Amex card in one year.

In doing so, I made the following assumptions:

  • 60% of “Housing” expenditures cover mortgages or rent, and thus can’t be paid with a credit card (unless you’re willing to pay fees by using a service like Venmo or ChargeSmart)
  • “Transportation” expenditures are split evenly between car payments (which typically can’t be paid with a credit card), gasoline and other transportation costs (parking, tolls, train/subway/bus tickets, etc.)
  • $500 of the “Transportation” category is spent on Southwest flights
  • All “Healthcare” and “Other” expenditures can be paid with a credit card
  • All “Personal insurance and pensions” expenditures can’t be paid with a credit card
  • $500 of the “All other expenditures” category are made with Rapid Rewards partners

Again, your situation may differ substantially, so feel free to adjust these assumptions in order to calculate your own earning potential.

Here’s a quick table that shows how these spending patterns in the first year of card membership translate to Rapid Rewards points:

Category Spending Earning Rate Points
Sign-up bonus n/a n/a 50,000
Food – At home $3,977 1 point/$ 3,977
Food – Away from home $2,625 1 point/$ 2,625
Housing $6,859 1 point/$ 6,859
Apparel and services $1,604 1 point/$ 1,604
Transportation (gasoline) $3,001 1 point/$ 3,001
Transportation (other) $2,501 1 point/$ 2,501
Southwest Flights $500 2 points/$ 1,000
Healthcare $3,631 1 point/$ 3,631
Entertainment $2,482 1 point/$ 2,482
All other expenditures $2,767 1 point/$ 2,767
Rapid Rewards Partner purchases $500 2 points/$ 1,000
TOTALS $30,447 n/a 81,447

As you can see, the “average” American consumer would earn 81,447 Southwest points in the first year. Not too shabby!

The Southwest Companion Pass: a staple in the diet of points and miles enthusiasts.
If you plan things out right, you could leverage the sign-up bonus to put you within striking distance of a Companion Pass.

What Does This Get You?

For starters, assuming that these purchases all happened in a calendar year, you’ll be almost three-quarters of the way to one of the most lucrative benefits in the frequent flyer world: the Southwest Companion Pass. This perk allows you to designate a travel companion and then bring him or her on all of your Southwest flights. It’s even valid on award tickets! You’ll just need to pay any applicable taxes & fees on the companion’s ticket.

In order to earn the Companion Pass, you’ll need to pick up 110,000 qualifying points in a calendar year, but there are several ways to hit that threshold. You could consider opening another Southwest credit card (like the Southwest Rapid Rewards Plus card). You could also look at making purchases with the array of Rapid Rewards partners or use the Rapid Rewards shopping portal. There’s also the option of Marriott’s Flight + Hotel awards. TPG actually used this to earn a Companion Pass for his dad back in 2014.

However, keep in mind that not all Southwest points you earn will count towards qualification. Generally speaking, points earned on Southwest flights, Southwest credit cards and purchases with Southwest partners will count, as will points transferred from hotel programs. However, transfers from Chase Ultimate Rewards and transfers from a friend or family member will not count; neither will points you purchase directly from Southwest.

For more detailed information on this benefit, check out Jason Steele’s post on 16 things to know about the Companion Pass.

Screen Shot 2015-09-05 at 11.19.11 PM
Southwest may not be the most luxurious carrier, but its extensive US route network gives you many options for traveling around the country.

Of course, earning points is one thing; knowing the different ways to use them is a completely different story. Unfortunately, the Rapid Rewards program is revenue-based and was recently devalued to make the redemption values more dynamic. As a result, it’s much harder to truly maximize this haul of points, since you’ll be getting at most 2 cents of value per point.

Instead of going through a variety of redemptions, I’ll highlight several of Southwest’s most popular destinations and give you an idea of how many free flights you’d be able to get from six major Southwest cities using your 81,447 points: Atlanta (ATL), Baltimore-Washington (BWI), Chicago-Midway (MDW), Dallas-Love Field (DAL), Denver (DEN) and Phoenix (PHX). Here’s the criteria I used:

  • I only looked at round-trip, nonstop flights. Many of the city pairs did have cheaper options, but who wants to fly from Dallas to Orlando via Washington, DC? Just be aware that you may be able to extend these points even further if you don’t mind adding a stop or a connection.
  • I looked for the lowest price that was regularly available. I did find a handful of dates with incredibly discounted fares. I’m talking about a one-way flight for $41 (or 1,751 points) when the usual price is more than triple that amount. However, to keep the analysis more realistic, I looked only at flight prices that are readily available on multiple dates.
  • I removed the September 11th security fee from the revenue prices. This government-imposed fee is incurred on both paid and award ticket flights, so in calculating the value you get from each redemption, I removed this amount from the paid ticket price.

Again, though, remember that if you redeem points for a Southwest flight and the price then drops after ticketing, you can rebook and get the difference in points back into your Rapid Rewards account, all without paying a change or cancellation fee.

Here’s a sample of what you can get from one year of using the Southwest Visa:

Take the whole family to Universal Orlando after just one year of holding the Chase Sapphire Preferred!
Take the whole family to Universal Orlando after just one year of holding the Southwest Visa!

1. Flights to Orlando (MCO)

It’s not surprising that one of Southwest’s most popular destinations is the home of Mickey Mouse and Disney. The carrier has a large presence in Orlando, with nonstop flights to over 40 destinations. This includes all six of the above cities. Orlando does tend to have relatively inexpensive flights, and here’s what I was able to find for the next couple of months:

Departure Airport

Lowest Price (round-trip)

Points Required

Value (cents per point)

Possible Round-Trip Flights

Atlanta (ATL)

$86.82

4,546

1.91

17

Baltimore/Washington (BWI)

$136.80

7,800

1.75

10

Chicago-Midway (MDW)

$198.80

11,838

1.68

6

Dallas-Love Field (DAL)

$312.80

19,262

1.62

4

Denver (DEN)

$310.80

19,132

1.62

4

Phoenix (PHX)

$367.79

23,590

1.56

3

As you can see, you can earn up to 17 round-trip flights to Orlando, though that number tends to drop as you get farther away. Still, you can actually earn enough points with the sign-up bonus and a year of spending to get a family of four to Disney World from five of the six airports above.

image cou
Planning a trip to Vegas? Southwest is a great option for award flights. Image courtesy of Shutterstock.

2. Flights to Las Vegas (LAS)

Another popular Southwest destination is Las Vegas, and again, all six of these cities offer nonstop service to Sin City. Here’s a breakdown of flight prices and how many trips you could take with this haul of Rapid Rewards points:

 Departure Airport

Lowest Price (round-trip)

Points Required

Value (cents per point)

Possible Round-Trip Flights

Atlanta (ATL)

$358.80

22,258

1.61

3

Baltimore/Washington (BWI)

$186.80

11,058

1.69

7

Chicago-Midway (MDW)

$196.80

11,708

1.68

6

Dallas-Love Field (DAL)

$186.80

11,058

1.69

7

Denver (DEN)

$96.80

5,196

1.86

15

Phoenix (PHX)

$190.80

11,318

1.69

7

As with Orlando, the price you’ll pay for flights to Las Vegas (both in cash and points) is largely dependent on your departure airport. I was actually surprised that flights from Denver were significantly cheaper than those from Phoenix, but still, having enough points for at least six round-trip flights (as you would from five of the six departure gateways) means a lot of opportunities to enjoy an adult’s version of Disney World.

3. Flights to New Orleans (MSY)

It seems hard to believe that Hurricane Katrina ripped through “The Big Easy” more than ten years ago, and if you haven’t been to New Orleans since, now’s a great time to check out the food, the jazz and (of course) Bourbon Street. New Orleans is a secondary Southwest city, with nonstop service to 21 different destinations. Six of them happen to be the cities under consideration in this post. Here’s what I found for these routes:

 Departure Airport

Lowest Price (round-trip)

Points Required

Value (cents per point)

Possible Round-Trip Flights

Atlanta (ATL)

$192.80

11,448

1.68

7

Baltimore/Washington (BWI)

$246.80

14,964

1.65

5

Chicago-Midway (MDW)

$278.80

17,048

1.64

4

Dallas-Love Field (DAL)

$70.80

3,502

2.02

23

Denver (DEN)

$244.80

14,834

1.65

5

Phoenix (PHX)

$328.80

20,302

1.62

4

New Orleans also has a wide range of prices; you could get a whopping 23 round-trip award flights from Dallas-Love Field with this haul of points, but you’d still be able to snag at least four such trips out of the other destinations.

4. Some combination of the three

Of course, the idea of visiting the same city multiple times may not appeal to you. Fortunately, you can utilize a combination of these awards, and in all cases, the 81,447 points you’d earn on the card within the first year would be enough for round-trip tickets from each city to the three destinations above. In fact, you’d even have points left over! Here’s how that would work out:

  • From Atlanta: Total points required = 38,252
  • From Baltimore: Total points required = 33,822
  • From Chicago-Midway: Total points required = 40,594
  • From Dallas-Love Field: Total points required = 33,962
  • From Denver: Total points required = 39,162
  • From Phoenix: Total points required = 55,210

Notice that from the first five cities, you could actually take a travel companion on these trips and still have points left. Unfortunately, from Phoenix, you’d need to make at least two of the trips by yourself.

Screen Shot 2015-09-05 at 11.27.41 PM
Southwest now offers flights to Mexico, Costa Rica and the Caribbean from multiple US gateways.

5. International flights

The final redemption to consider is one (or more) international flight(s). Southwest has begun expanding to destinations outside the US, and currently offers nonstop service to 10 international cities from a variety of gateways:

  • Cabo San Lucas/Los Cabos (SJD): From Austin, Baltimore, Denver, Houston-Hobby and Orange County
  • Puerto Vallarta (PVR): From Denver and Houston-Hobby and Orange County
  • Mexico City (MEX): From Houston-Hobby, Orange County and San Antonio
  • Cancun (CUN): From Atlanta, Austin, Baltimore, Chicago-Midway, Denver, Houston-Hobby, Milwaukee and San Antonio
  • San Jose, Costa Rica (SJO): From Baltimore and Houston-Hobby
  • Montego Bay, Jamaica (MBJ): From Baltimore, Chicago-Midway, Houston-Hobby, Milwaukee and Orlando
  • Nassau, Bahamas (NAS): From Baltimore
  • Punta Cana, DR (PUJ): From Atlanta, Baltimore, Chicago-Midway and Milwaukee
  • San Juan, Puerto Rico (SJU): From Baltimore, Fort Lauderdale, Houston-Hobby, Orlando and Tampa
  • Aruba (AUA): From Baltimore, Houston-Hobby and Orlando

The carrier also recently announced new service to Belize and Liberia, Costa Rica, both of which will begin this fall.

All of these routes represent valuable redemptions using your Rapids Rewards points, though keep in mind that they will incur additional taxes and fees beyond the usual amounts on domestic flights. Here are some sample itineraries (with the point requirements for a round-trip award ticket):

  • Orlando to Montego Bay, Jamaica: 10,220 points + $116.18 (1.82 cents per point)
  • Houston-Hobby to San Jose, Costa Rica: 11,760 + $47.41 (1.77 cents per point)
  • Orange County to Cabo San Lucas/Los Cabos: 16,240 + $85.85 (1.67 cents per point)

Just be aware that many of these flights operate once a day, and several others don’t fly every day of the week, so be sure to check schedules and availability prior to making other travel arrangements like hotel or car rental reservations.

For this week's Thursday Giveaway we are giving away a $500 Southwest gift card.
If you’re looking for a simple program for free flights mainly within the US, now is a great time to sign-up for the Southwest Premier Credit Card.

Final Thoughts

The Southwest Premier Credit Card offers these enhanced bonuses relatively consistently, with the last one coming this past May. Many commenters on my post on best starter cards for free flights felt that this card was a great option for those new to the points and miles hobby due to the simplicity of the Rapid Rewards program, and I think they do have a point. You can certainly get a lot out of the card in the first year, especially with the increased sign-up bonus of 50,000 points.

In addition, keep in mind that the above calculations may be too conservative:

  • The calculation assumes that you’re the average consumer. If you typically spend more in a year, then your earnings will be even higher.
  • The calculation assumes that you only open one card. Other travel rewards credit cards with terrific sign-up bonuses (like the Citi ThankYou Premier Card or the Chase Sapphire Preferred Card) can be opened and used alongside the Southwest Premier Visa for even more earning potential.

These items notwithstanding, I hope I’ve illustrated that one card (especially in the first year) can open up a wealth of redemption possibilities.

How would you redeem one year of points from the Southwest Rapid Rewards Premier Credit Card?