Is everyone ready for some breaking news, as of 5 days ago? I’m a little embarrassed right now. Somehow, I managed to miss a relatively important announcement in the credit card multiverse. Today, we’re talking Southwest, and the brand-new Chase Rapid Rewards Priority card.
What we’ve got here is a semi-premium product, meant to sit on top of the existing Chase Rapid Rewards Plus and Premier range. Honestly, it’s kind of an odd-duck, and definitely provides some unique earning opportunities and benefits.
|Fee||$149 Not waived year one|
|Intro Bonus||65,000 Points – Tiered|
|Anniversary Bonus||7,500 Points|
|Travel Credit||$75 on Southwest|
|Extras||Upgrade vouchers, A-list points and in-flight rebates: discussed below|
Let’s start with the basics. The Rapid Rewards Priority has a $149 annual fee, which is not waived year one. Right away, that kind of sucks. I like to think of new cards in terms of their value proposition. So, starting off $150 bones in the hole is very sub-optimal. However, for this, we get a bunch of things, beginning with “up to” 65,000 points. It’s up to, and not a straight 65K because you don’t get them all at once. It’s what we called a tiered signup bonus. It starts with 40,000 points after a $1,000 spend over three months. Pretty standard stuff. This actually matches the Plus cards bonus exactly. But then, we get another 25,000 after running $15,000 through the card within one year of account opening. Furthermore, one will be granted 7,500 bonus Rapid Rewards miles on their cardmember anniversary. Finally, one is getting a $75 Southwest travel credit along with some less useful stuff we’ll discuss later.
Rapid Rewards Priority Initial Thoughts
So, I see what Chase and Southwest are trying to do hear. I understand it, but I don’t like it. They’re stretching out the bonus to dissuade people from signing up, grabbing the bonus, tossing it in the sock drawer and finally cancelling before their 2nd year renewal. A lot of people in the game do this because there are other cards, like the Sapphire Preferred or American Express Premier Rewards Gold that offer more lucrative rewards on everyday spend. But here’s why I think it’s a stupid solution: it only delays the inevitable, as people will still toss the card aside once they hit that $15,000 annual spend. So, it’s not really any type of long-term strategy. The other reason I don’t like it, is because I have a feeling that even though you get a bonus 25,000 points at the end, you’re probably still better off just using your Sapphire Preferred.
Just for shits and giggles, lets run the numbers and see where we be in either case. Also, because I don’t have access to other’s data, I’ll use my own spending patterns as the basis for this calculation. Looking at my Sapphire Reserve 2017 annual spend summary, I can break it down by category, according to the following percentages:
And, just to make sure we’re running a fair comparison, I’m going to continue my hypothetical earning potential as if I were using a Sapphire Preferred, and not my Reserve. Applying these percentages to the $15,000 we’d need to spend in order to get our 25,000 bonus miles, we get the following chart, as well as how many points hypothetically earned and their value.
I’ll just point you to the numbers that matter $85.50 and $397.57. Those are the value of the awards one would earn by spending $15,000 on the Rapid Rewards Priority and the Sapphire Preferred. At least if your spending habits are anything like mine and you put a little faith in my valuation method. Speaking of that, it certainly doesn’t help Southwest’s case that we value Ultimate Rewards roughly 4 times higher than Rapid Rewards. As always, I’ll place a link to any technical info shown during the video down in the description. Also worth noting, is that I set the category bonus at 1.5 for Travel and Entertainment, as it contains some purchases earning 2 Ultimate rewards, the travel ones, and some only earning 1, the entertainment items. I’m just ballparking a 50/50 split.
Now, let’s add in the value of the signup bonuses and subtract out the cost of the cards and see where that gets us. I gotta say, I’m surprised. The Chase Rapid Rewards Priority is the clear winner, at least on the first $15,000 of spend. However, vary the travel purchase ratios a little bit or spend some of those travel dollars on Southwest flights, hotels or rental cars, which earn you 2 Rapids Rewards each, and we could easily tilt this chart in either direction. I always like to say that I value award currencies based on facts, not feelings and this is why. Because initially, my feeling was that the Sapphire Preferred was going to be the clear winner, and we see here it’s not. Also worth noting, is that we’re comparing a new Rapid Rewards card to an existing Sapphire. If one were opening a new account, and deciding between the two, the latter becomes completely dominant.
Other Benefits of Card Membership
Now lets move on to some other, but harder to value, benefits of holding the Rapid Rewards Priority. The first of which, is four upgraded boardings per year. Southwest normally sells this for 30-$50 per flight. So, one might say this benefit is worth 120-$200, but I would disagree with this assessment. I don’t think upgraded boarding is worth what Southwest charges. Honestly, I prefer boarding at the top of the B’s, so I can choose my seatmate and avoid the babies.
Next up, they’re offering 20% back on in-flight purchases. This might be worth something if you fly the carrier a lot for leisure or you own the company picking up the business expenses. Though honestly, if you’re flying this much you’re likely A-list and get WiFi for free anyway. So this doesn’t factor into the open or not open decision for me.
Then we have a perk that is completely dependent on how much one values Southwest’s A-list status. Unlike any other Rapid Rewards card, this one earns tier qualifying points. You get some free internet and A-group boarding, but their lack of premium travel options precludes the real benefit of airline status, seat upgrades and lounge access. To me, this is another benefit that wouldn’t necessarily affect my opinion of the card.
Now, there is one more strategy we could talk about here, and probably how I would play it if I decided to open an account. And that is, to grab the $40K point signup bonus, and then not worry about the additional 25K points. Do this, and we get the following chart
Our net value, year one, is down to just over $200. Not great you say, But wait, we now have $14,000 to spend on the Sapphire Preferred, earning a solid $371. By splitting our spend, we went from a net value of $424 on the Rapid Rewards Priority OR a net value of $302 on the Sapphire, to a hybrid net value of $573. We’re cherry picking the best of both.
Now that this is all clear as mud to everyone, let’s recap. We could open the Rapid Rewards Priority card, and net $424.75, we could do nothing, and earn $302 from everyday spend on our presumably existing Sapphire Preferred or, we could grab the initial signup bonus plus the extras on the Rapid Rewards card, but continue to put everyday spend on the Sapphire Reserve and net out $573. I know which option I would choose.
There is one more consideration, and it might actually be the most important, and that is the Southwest Companion Pass. Like every other Rapid Rewards card, points earned via spend count towards this extremely lucrative status. I currently have it, and it is fantastic. For anyone unfamiliar, it allows a passholder to fly two for one on any Southwest operated flight. If one is using this card as part of their strategy to earn their Companion Pass, all previous calculations go out the window.
So what’s the final verdict. It’s a good card, with some good value to be had, but it’s not a slam-dunk. While this isn’t a hard no, like that garbage Barclays Arrival Premier card was a few months ago, in the short-term, I’ll be holding off. Personally, I need to be able to quickly earn at least $500 in value from a card before I’ll consider opening. The only real benefit here, at least to me, is that 40,000 point initial bonus, only worth $228. This is potentially doubled for anyone holding the Companion Pass. Furthermore, none of these even matters to any existing Rapid Rewards cardholders, as Chase and Southwest recently started limiting signup bonuses to just a single Rapid Rewards personal card.