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Southwest devalues Rapid Rewards, makes points less valuable overnight

April 14, 2021
4 min read
Southwest devalues Rapid Rewards, makes points less valuable overnight
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I hate to be the bearer of bad news, and, well, there isn't any upside to call out here — it's just your run-of-the-mill, no-notice loyalty program devaluation. And, with a glut of points impacting airlines and hotel chains around the world, there will likely be more to come.

Southwest Airlines, home of the beloved Companion Pass, just erased some of the goodwill it's built up among loyalists throughout the pandemic. The value of Rapid Rewards points dropped overnight. Effective immediately, all redemptions will require 6% more points.

While some carriers have notified customers weeks or even months before an upcoming change, Southwest didn't offer up any warning. The new rates are already live — existing bookings will remain intact with previous redemption amounts, of course, but any changes will be processed at the new levels.

For example, below is a search I completed on Tuesday, from Honolulu (HNL) to Kauai (LIH), with awards starting at 5,007 points.

Screenshot courtesy of Southwest.

By early Wednesday, all awards were pricing roughly 6% higher, as you can see below.

Screenshot courtesy of Southwest.

The cash fares were completely unchanged, at $79 for Wanna Get Away, $196 for Anytime and $213 for Business Select.

This move is likely to be especially frustrating for Rapid Rewards members who converted vouchers into points in 2020. For a limited time, flyers with travel funds could convert their balance to points at a rate of roughly 1.3 cents per point, below TPG's valuation of 1.5 cents per point.

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While Southwest grounded planes early in the pandemic, many have since returned to service as demand continues to return. (Photo by David McNew/Getty Images)

While Southwest's redemption rate can vary slightly depending on the flight you choose to book, following this latest adjustment, you should expect your points to have 6% less purchasing power than they did last night.

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Southwest last devalued its Rapid Rewards points in 2018, with a similar 6% drop. That redemption reduction specifically impacted Wanna Get Away fares — Anytime and Business Select redemptions actually increased in value, roughly matching the rate of Southwest's lowest-category booking type.

I had a chance to discuss this latest adjustment with Jonathan Clarkson, Southwest's managing director of marketing. As Clarkson explained, this week's 6% hike isn't directly related to the pandemic — there hasn't been an adjustment in three years, so it could have happened around this time either way.

Still, Clarkson noted that customers have been earning points at similar rates throughout the pandemic, even though air travel has declined. As a result, it's safe to conclude that there are currently an abundance of outstanding Rapid Rewards points — a devaluation decreases purchasing power, and the airline's liability.

We'll be digging into the implications a bit more later today, but for now, I'd hold off on transferring points into Southwest, including from Chase Ultimate Rewards — with a reduced redemption rate, direct Southwest bookings or transfers to other partners could make more sense, instead.

Chase's 1:1 Southwest transfers lost even more appeal today. (Screenshot courtesy of Chase)

Buying Southwest points will become even less appealing as well. The carrier is maintaining its current purchase price of 2.75 cents per point, though it's possible we could continue to see limited-time discounts or partner transfer bonuses from time to time.

Ultimately, Southwest Rapid Rewards remains more flexible than many other programs. The airline offers last-seat availability, customers can easily cancel and rebook awards when rates drop, and Companion Pass members always get to bring someone along for just the cost of taxes and fees — even on redemption flights.

There are also a growing number of routes to book. Southwest continues to build up its U.S. footprint throughout the pandemic, with a seemingly endless domestic and regional expansion.

That said, this devaluation really stinks, especially for customers with a large balance of Rapid Rewards points, and anyone who opted to take the airline up on its (seemingly generous) points conversion offer last year.

The good news, if you could call it that, is that we shouldn't expect any other imminent changes at Rapid Rewards. According to Clarkson, "the things that people know and love about the program are going to stay the same." Everything except the redemption rate, that is.

Featured image by Photo by John Tlumacki/The Boston Globe via Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
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Apply for American Express® Gold Card
at American Express's secure site
Terms & restrictions apply. See rates & fees
Best for the well-traveled foodie
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

4XEarn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S.
4XEarn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
3XEarn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • Intro Offer
    Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.

    60,000 bonus points
  • Annual Fee

    $250
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.

Pros

  • 4x on dining at restaurants and U.S. supermarkets (on the first $25,000 in purchases per calendar year; then 1x)
  • 3x on flights booked directly with the airline or with Amex Travel
  • Welcome bonus of 60,000 points after spending $4,000 in the first six months

Cons

  • Weak on travel outside of flights and everyday spending bonus categories
  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber/food credits
  • Few travel perks and protections
  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
  • $120 Dining Credit: Satisfy your cravings and earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Enrollment required.
  • Choose the color that suits your style. Gold or Rose Gold.
  • No Foreign Transaction Fees.
  • Annual Fee is $250.
  • Terms Apply.
  • See Rates & Fees