If you’re asking yourself whether the Southwest Rapid Rewards® Premier Credit Card is worth the annual fee, the answer should be based on two questions: “Is the annual fee worth it for the first year?” and “Is it worth it for the second year and beyond?”
Here’s how to evaluate both questions so you can decide whether this card is right for you.
Is the annual fee worth it for the first year?
Whether the Southwest Rapid Rewards® Premier Credit Card’s annual fee of $99 is worth it during the first year depends on the sign-up bonus and whether you end up earning it. Here’s the current offer: Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open.
As long as you meet the minimum spending requirement in the given amount of time, you’ll earn these bonus points. We estimate the sign-up bonus to be worth about $1,050 based on our valuation of Rapid Rewards points. NerdWallet values Southwest points at 1.4 cents each.
Because of this value, you’ll almost certainly come out ahead for the first year. To make your points go further, book Southwest’s cheaper “Wanna Get Away” fares. (Southwest’s redemption rates vary with the cash price of their flights, so you’ll shell out fewer points when cash prices are low.) And be flexible if you can.
For instance, at the time of publication, a one-way “Wanna Get Away” flight from Indianapolis to Los Angeles on Oct. 3 was 6,145 points. But the price to fly roughly two weeks later, on Oct. 16, was more than double: 15,142 points.
To figure out what flights you might be able to book with the points from your sign-up bonus, use the Southwest website to check points prices for several destinations.
» Learn More: Southwest Rapid Rewards Program: The Complete Guide
Is the annual fee worth it for the second year and beyond?
Whether the Southwest Rapid Rewards® Premier Credit Card’s annual fee is worth it after the first year is a bigger question. First, consider that you’ll receive 6,000 points every year on your cardmember anniversary, which may cover the value of the annual fee outright if you redeem them well.
» Learn more: Chase 5/24 rule explained
However, the real value of this card in the long term comes from flying Southwest Airlines on a regular basis with paid tickets, and spending enough on your credit card to really rack up points. The card earns 2 points per dollar spent with Southwest Airlines and Rapid Rewards hotel and car rental partners. These aren’t exactly stellar bonus opportunities if you don’t plan to fly Southwest Airlines regularly.
If you want to try to earn the Southwest Companion Pass, you’ll need to earn 125,000 Rapid Rewards points in a year. This means you’ll likely need to be dedicated to flying Southwest Airlines regularly and charging your daily expenses to the card. If you plan to do this, the card may absolutely be worth it, since you can bring someone with you on every flight for at least a year just by paying taxes and fees.
» Learn More: Find the best airline credit card for you
Other travel rewards card options
Whether a card is worth its annual fee isn’t just about what the annual fee is compared to the value of any rewards you earn. It’s also about the opportunity cost of not having used another card instead.
For instance, if you value hotel points more than airline miles, the versatile IHG® Rewards Club Premier Credit Card usually offers a higher sign-up bonus with the opportunity to earn points more quickly (as high as 25 points per dollar on IHG hotel stays). But keep in mind that hotel points often have a lower value; NerdWallet currently values these IHG points at 0.8 cent each. The annual fee on this card is $89. IHG has a range of hotels where you can redeem points, from Holiday Inn Express to higher-end Kimpton and InterContinental hotels.
The bottom line
There’s no question that the Southwest Rapid Rewards® Premier Credit Card’s annual fee can be worth it for your first year. However, the annual fee may not be worth it after that if you don’t plan on flying with Southwest Airlines or making purchases with their car and hotel partners — or if you value hotel points more than airline miles.
How to maximize your rewardsYou want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
- Airline miles and a large bonus: The Chase Sapphire Preferred® Card
- No annual fee: The Wells Fargo Propel American Express® card
- Flat-rate rewards with no annual fee: The Bank of America® Travel Rewards credit card
- Premium travel rewards: The Chase Sapphire Reserve®
- Luxury perks: The Platinum Card® from American Express
- Business travelers: The Ink Business Preferred® Credit Card
Planning a trip? Check out these articles for more inspiration and advice:
Find the best travel credit card for you
Snag these hotel loyalty perks, even if you’re disloyal
Earn more points and miles with these 6 strategies