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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.

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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.

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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  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
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Best starter travel card
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

3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases
  • Intro Offer
    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

    Earn 80,000 ThankYou® points
    60,000 points
  • Annual Fee

    $95
  • 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

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases