Is the Southwest Performance Business Card Worth the Annual Fee?
Update: Some offers mentioned below are no longer available. View the current offers here.
Southwest offers a surprising number of cobranded credit cards, but it's never had a true premium credit card. Last week, the airline launched the Southwest Rapid Rewards Performance Business Credit Card with an 80,000-point welcome bonus after spending $5,000 in the first three months. This is certainly the most premium card Southwest offers, but in keeping with its low fares and even lower fees, the new card carries an annual fee of $199, not the $450+ fees that accompany most higher-tier cards.
Given how new the Performance Business credit card is, many people are still trying to figure out how it fits into their plans, especially to earn the coveted Southwest Companion Pass. Today we're going to tackle a simpler question: "Is the Performance Business Card worth the $199 annual fee?" (This card is restricted by Chase's 5/24 rule, so even if you're eligible for it, you need to think carefully about your credit card strategy before submitting an application.)
What You Get In Exchange For Your Annual Fee
Since Southwest uses a revenue-based scheme for award pricing, each Rapid Reward point is worth roughly 1.5 cents according to TPG valuations, whether you're a first-time flyer or a veteran road warrior. That makes this 80,000-point bonus worth $1,200, and the Performance Business card seems like a no-brainer for the first year (especially if you have the Companion Pass, which doubles the value of your points). But what about in subsequent years?
Many Southwest credit cards offer an anniversary points bonus to incentivize you to keep your account open in the long term. With the Performance Business Card, you'll get 9,000 points ($135) each year on your account anniversary. That's a huge chunk of your annual fee returned to you all at once. If you have the Companion Pass, you'd come out ahead with this card based on that one perk alone. But we're just getting started.
Southwest charges $8 per device for inflight Wi-Fi, but the Performance Card comes with an $8-a-day reimbursement for Wi-Fi purchases. Simply charge it to your card and you'll see it erased. That's a valuable benefit for frequent flyers, as it saves you money and makes you more productive on the road. If you fly Southwest 25 times a year, the Wi-Fi credits would be enough to completely offset your annual fee.
Performance Business Card holders will also get four A1-A15 priority boarding passes each year (when available), to help you get your first choice in seats. You'll also get a Global Entry/TSA PreCheck application fee credit every four years, although so many cards offer that perk these days that I wouldn't necessarily call this a huge added benefit.
This card also offers a number of other perks that are slightly harder to value, including 3x points per dollar spent on Southwest as well as Rapid Rewards hotel and car-rental partner purchases (the highest bonus multiplier of any Southwest card), 2x on social media and search engine advertising, internet, cable and phone services (categories that are popular with small businesses) and 1x on all other purchases. You'll also receive 1,500 Tier Qualifying Points for every $10,000 in purchases, up to 15,000 Tier Qualifying Points annually.
How Does The Performance Business Card Compare To Others In This Price Range?
There aren't a whole lot of cards in this in-between price tier, straddling the gap between ~$100 entry-level cards and ~$450+ premium credit cards. In fact the only two that come to mind are the Platinum Delta SkyMiles® Business Credit Card from American Express and the American Express® Business Gold Card, along with the personal versions of each.
The Platinum Delta SkyMiles Business card is the best comparison as it's a cobranded airline credit card, and at $195 a year ($250 if application is received on or after 1/30/2020) (see rates & fees), it has the closest annual fee. There's no anniversary-points bonus, but you will get a round-trip domestic companion certificate each year you renew your card. That could easily be worth more than the $135 worth of points the Southwest Performance Business card offers as an anniversary bonus, even after factoring in the up to $75 in taxes you'll pay. With the Delta card you get a 20% savings on inflight purchases, although Wi-Fi is excluded. However, it's possible to recoup your annual fee much faster, thanks to the free checked bag for you and up to eight companions traveling on the same reservation. With a savings of about $30 per bag, you'd only need to use this benefit seven times to fully recoup the money spent on your fee.
The Amex Business Gold is a different story. The card isn't laden with perks, despite its $295 annual fee (see rates & fees) and it has a relatively lower welcome offer of only up to $500 back in the form of statement credits by purchasing qualifying services with FedEx using your Card within the first 3 months of Card membership. (Offer ends 11/06/2019.) However, the Business Gold card can be one of the simplest and most rewarding cards for many businesses out there. When Amex refreshed the card late last year, they changed the bonus categories so you'll now automatically earn 4x points on whichever two of the following categories you spend the most in each month:
- Airfare purchased from airlines
- US purchases for advertising in select media
- US purchases for shipping
- US purchases at gas stations
- US purchases at restaurants
- US purchases made from select technology providers
The 4x earning is capped at $150,000 in spending a year, but that still works out to 600,000 Membership Rewards points a year. The real kicker is that Amex will automatically pick which categories you spent the most in to reward you without you lifting a finger. That alone might be worth justifying the annual fee, as TPG values 600,000 Membership Rewards points at a massive $12,000.
The Southwest Performance Business Card is a game changer for anyone who frequently travels with one of America's friendliest airlines. The $199 annual fee might raise some eyebrows, but the Wi-Fi credits and anniversary bonus points make it easy to get that money back and then some. If you're gunning for a Companion Pass in 2019, that 80,000-point bonus is the best way to start.
For rates and fees of the Business Gold Card, please click here.
For rates and fees of the Platinum Delta SkyMiles Business, please click here