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An email from Southwest today brought good news and bad news about the Rapid Reward Program (mostly bad news). In 2011 Southwest dramatically changed their Rapid Rewards program to go from a credits system to a points system. Now Southwest is introducing another change to the program. The good news is that the change is neither massive nor happening overnight, but that’s it as far as the good news is concerned.
The email I received today states that (bolding mine):
We want to inform you of an upcoming change to the Rapid Rewards® Program that will affect the number of points needed for reward travel. Wanna Get Away® reward flight bookings made on or after March 31, 2014 will require 70 points per dollar. This is an increase from the 60 points per dollar currently required. Anytime and Business Select® reward flight redemption rates, as well as the points per dollar you earn when flying, will remain the same as they are today.
As a practical example, if you currently want to book a Wanna Get Away flight that is selling for $100, you currently need around 6,000 Southwest points (at a value of 1.67 cents each) to do so. As of March 31st next year you will need about 7,000 points to book that same $100 flight (at a value of about 1.42 cents each). That is an across the board 15% devaluation on Wanna Get Away redemptions. While that isn’t the worst devaluation I have ever heard of, it isn’t great considering their award chart is just over two years old to begin with.
To put it another way, the 50,000 points you can currently get from signing up for the Southwest credit cards (and meeting the spending requirement) are currently worth about $835 toward Wanna Get Away fares, and as of March 31st next year those same 50,000 points will be worth $710 toward Wanna Get Away fares. Obviously that is still a bunch of money toward free travel, but clearly $835 is better than $710.
Naturally this means I would get the Southwest cards sooner rather than too much later in order to get more value from points earned via the sign-up bonus. It also means I would book as much travel using Southwest points before March 31st next year as possible. Your travel can be for after March 31 as long as you book it by that date.
Consistently getting a little over 1.67 cents per point for domestic redemptions is actually pretty good, but dropping that to 1.42 cents starting next year would make me evaluate if earning Southwest points is still the best strategy for your family. It may be, especially if you have the Companion Pass, or enjoy the flexibility of being able to rebook if the price drops, and redeposit your points without penalty. However, I would at least give a look to cards like the Barclaycard Arrival(TM) World MasterCard® – Earn 2x on All Purchases since it earns 2x points (worth one cent each) on all transactions that you can use toward travel. You can then use those points to pay yourself back for Southwest flights (or any other travel expense) and you would also earn Southwest points for those flights when you travel. You also get 10% back on redeemed points, so that makes those points even more valuable.
Don’t get me wrong, I don’t think a 15% devaluation is cause for immediately jumping ship from a program, but I do think it is a good time to evaluate if focusing on earning those points with your daily spending is still the best strategy for your family. I am very happy that Southwest has given ample advance warning about this change.
What do you think – will this change your Southwest points earning loyalty at all, or is it a minor enough change to not rock the boat too much for your family?
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