Let’s do some maths.
The new Southwest Airlines credit card, the Rapid Rewards Plus Signature VISA, offers new cardholders “20,000 points toward free flights” after your very first purchase when you use the link here to apply.
Now what are Rapid Rewards points actually worth? Current members can buy additional points from Southwest for $0.0250 per point — with a minimum order size of 2,000 points and a max order size of 40,000 points.
20,000 points, therefore, sells for $500. This would make Southwest’s credit card, at least in theory, one of the best credit card deals of the century.
But there are two important distinctions to consider:
1) No one buys that many points. Of course, maybe there is someone out there who does that, but it’s extremely foolish… Instead, the option to buy points is usually offered by rewards programs as a “bridge measure.” In other words, let’s say you have 10,000 bonus points saved up. The flight you want costs 12,000, though — so you buy the additional 2,000 points from the airline, and still get a pretty good deal: the flight only cost you $50 out of pocket.
2) According to the rough calculations I’ve done, those 20,000 points are worth something closer to $200 to $245 in terms of what flights you can get. Still a great deal, in my view — especially if you fly Southwest routes often — but it’s not worth $500.
View all of my favourite new credit card deals and offers over on Outlaw.
Disclosures: I used to review credit cards for a living. Also, my web site has a financial relationship with certain card issuers, including Chase. No financial relationship or position on Southwest Airlines or any other firm mentioned in this story at time of publication.
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