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It seems that 2018 is becoming the year of the improved co-branded airline card. With banks putting pressure on airlines with their own proprietary credit cards and flexible rewards programs that are, in many cases, more feature-rich than the airline’s own co-branded cards, airlines are coming to the realization that they need to innovate or see one of their valuable revenue streams slowly dwindle away.
Another example of this evolution arrives today, as Southwest introduces a third personal credit card to accompany its existing portfolio of cards. The Southwest Rapid Rewards Priority Credit Card, issued by Chase, is the airline’s first premium card, carrying a $149 annual fee and perks that don’t appear on any of the carrier’s other credit cards.
Sign-Up Bonus and Earning Rates
While the headline sign-up bonus number looks highly enticing at first glance, the Southwest Priority follows a recent trend of tiered and mixed sign-up bonuses that require constant usage of a credit card over a lengthy period of time rather than just a spurt of spending in the first few months. The overall 65,000-point bonus is broken up into two tiers:
- You’ll earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open.
- You’ll earn an additional 25,000 points after you spend $15,000 total on purchases within the first year.
$15,000 in spending is a significant chunk of change, though you’ll have 12 full months to do it. In his most recent points valuations, TPG values Southwest Rapid Rewards points at 1.5 cents apiece, which would make the full 65,000-point bonus worth $975. Or another way to look at it is that, when you include both the bonus and the points normally earned on regular purchases, the card effectively earns 3.3x points on all purchases for the first $15,000 you put on it within the first year.
Perhaps more surprising is the lack of new bonus categories on this card. The Southwest Priority card earns 2 points per dollar on Southwest purchases as well as Rapid Rewards hotel and car rental partner purchases, and 1 point per dollar on everything else. These are identical to the bonus categories on the two existing personal Southwest cards, and given the recent improvements that both American and United have made to their own co-branded credit card bonus categories, that’s fairly disappointing, especially for a $149 card.
While this isn’t a card that’s intended to match the premium cards of the Big 3 airlines — or their accompanying $450 annual fees — it does come with some perks that seem to be in the spirit of its sponsoring airline. The first is a $75 annual Southwest travel credit that can be used on most Southwest purchases, including actual tickets (but excluding upgraded boardings and inflight purchases). If you can maximize that credit, it effectively drops the annual fee in half. You’ll also get 20% back on in-flight drinks, Wi-Fi, messaging and movies, which should save you a few more dollars even if you only use the discount a couple times a year.
But probably the most popular benefit of the new Southwest Priority card will be the four upgraded boardings per year. When upgraded boarding is available, you’ll be able to use your card at the ticket counter or gate to pay for one of the prime A1-15 boarding spots, and the card will reimburse you for the cost. Upgraded boarding can cost from $30 to $50 per upgrade depending on your itinerary, so four of these upgrades each year will easily offset the rest of the annual fee for regular Southwest travelers.
For folks who fly on Southwest often enough to be interested in the carrier’s A-List elite status tiers, the Southwest Priority also shares one of the more useful features of the Southwest Rapid Rewards Premier Credit Card. For each $10,000 in spending on the card every year, you’ll earn 1,500 Tier Qualifying Points that count toward A-List and A-List Preferred status, up to $100,000 in spending. Also, like the Southwest Premier card, the Southwest Priority has no foreign transaction fees, so you can safely use it overseas.
Finally, like the rest of Southwest’s credit cards, the Southwest Priority comes with an anniversary bonus. You’ll get 7,500 Rapid Rewards points at each card anniversary, which is 1,500 more than the Southwest Premier and 4,500 more than the Southwest Rapid Rewards Plus Credit Card. According to TPG’s valuations, 7,500 Southwest points are worth $112, so this isn’t a trivial bonus.
One of the most lucrative and highly sought after frequent flyer perks at any US airline has to be Southwest’s Companion Pass. By accumulating 110,000 Rapid Rewards points within a calendar year from either flying on Southwest, using Southwest’s partners or spending on Southwest credit cards, you’ll earn a Companion Pass that will allow you to bring a friend or family member with you on any Southwest flight essentially for free, regardless of whether your own ticket is paid for with cash or points.
Sign-up bonuses on Southwest’s credit cards have traditionally counted toward earning the Companion Pass, although that wasn’t codified into Southwest’s terms and conditions until relatively recently. But in this case, with the sign-up bonus on the Southwest Priority being drawn out over a full year, people might be wondering if the entire 65,000 points will count. The answer is a resounding “yes” and in fact, Southwest and Chase are noting directly in their marketing materials for this card that the sign-up bonus gets you “more than 1/2 way toward the Southwest Airlines Companion Pass.
In regards to the Companion Pass, there’s one other important caveat. This past April, Chase announced that it was limiting the number of personal Southwest cards one could hold at the same time. Specifically, you cannot open a new personal Southwest card if you’re a current Southwest personal credit cardholder, or you’ve earned a sign-up bonus on a Southwest personal credit card in the last 24 months. TPG has confirmed that the same rules will apply to the Southwest Priority card, meaning you will not be able to combine this card with either the Southwest Premier or Southwest Plus to earn the Companion Pass through credit card sign-up bonuses alone. However, as before, the Southwest Rapid Rewards Premier Business Credit Card is not subject to this rule.
If you already have a Southwest card, you could upgrade to the new Priority card — while you won’t earn the full sign-up bonus by going this route, you may be eligible for an upgrade incentive. We’re seeing some cardholders already being targeted to receive 5,000 Rapid Rewards points for upgrading to the Priority card and making a purchase by September 30.
Not too long ago, airlines had the travel rewards market mostly to themselves, with millions of Americans choosing a co-branded airline card as their primary credit card. But with ever increasing competition, airlines are clearly feeling the need to innovate. The Southwest Rapid Rewards Priority Credit Card requires a lot of spending to earn its entire sign-up bonus, but it also has plenty of interesting benefits that can easily offset the card’s annual fee, and it carries convenient perks which will appeal to many Southwest fans thinking about putting a Southwest credit card in their purse or wallet.
Featured image courtesy of Stephen M. Keller / Southwest Airlines.
Earn 2 points $1 on Southwest and Rapid Rewards car and hotel purchases and 1 point per $1 on all other purchases. This card also comes with an annual $75 travel credit.
- Up to 65,000 points. Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus, earn an additional 25,000 points after you spend $15,000 total on purchases within the first year.
- 7,500 bonus points after your Cardmember anniversary.
- $75 Southwest® travel credit each year.
- Four Upgraded Boardings per year when available.
- 20% back on in-flight drinks, WiFi, messaging, and movies.
- 2 points per $1 spent on Southwest® purchases and Rapid Rewards® hotel and car rental partner purchases.
- 1 point per $1 spent on all other purchases.
- No foreign transaction fees.