The Southwest credit cards are some of the most valuable travel rewards credit cards because they offer great sign-up bonuses and offer you a shortcut to obtaining the valuable Southwest Companion Pass. But are these credit cards keepers that you’d want to hold on to after you’ve squeezed the up-front value out of them? This article will look at why you should or should not cancel your Southwest credit cards.
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Table of Contents
Your credit score
Before you ever cancel a card you need to make sure that your credit score is not going to be severely impacted.
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If canceling a Southwest credit card will dramatically increase your utilization then you probably should not cancel, even if you have no real need for the card. You might want to wait until you’ve picked up other cards in the future that can help you keep your utilization low before you cancel. You can also consider shifting your credit to other Chase cards if possible.
Credit history/age of accounts
Also, you want to make sure that you’re not cancelling your oldest account. For credit history, which makes up 15% of your credit score, your oldest aged account is the #1 factor so in the vast majority of circumstances, you don’t want to cancel that account!
Southwest retention offers
Chase will sometimes offer you retention offers if you’ve put some spend on your Southwest card (and they will even do it when you don’t have much spend). Sometimes they’ll offer you something like a $30 or $70 statement credit and other times they won’t offer you anything at all.
You can find data points for these offers here.
Do you fly Southwest?
This is the simple common sense way to determine if you need to cancel your Southwest cards. If you do not ever fly Southwest then you’re going to have trouble justifying paying the annual fee for these cards and you might want to cancel them.
The exception would be if you have future plans to fly them since you could bank your anniversary points for that day in the future. If you’re able to score a retention offer and the anniversary bonus, you’d be coming out on top big time with these cards.
The first thing to look at is how much value are you getting from the anniversary bonuses. If you didn’t know, each cardmember year, you’ll be given a certain amount of anniversary points that will be deposited into your Southwest account.
Here’s a rundown of the bonuses for the personal Southwest credit cards.
- Southwest Priority Credit Card = 7,500
- Southwest Premier Credit Card = 6,000
- Southwest Plus Credit Card = 3,000
The first thing to look at is the value that you get from your anniversary bonus. The value of Southwest Rapid Rewards can vary between 1.4 and 1.7 cents per point based on my own personal experience with booking Southwest flights.
So I’ll just stick with a valuation of 1.5 cents per point for this but you should obviously value your Rapid Rewards based on the value you expect to receive from them on your bookings.
At a valuation of 1.5 cents per point, the anniversary bonus is going to offer the following value for your cards.
- Southwest Priority Credit Card = $112
- Southwest Premier Credit Card = $90
- Southwest Plus Credit Card = $45
Now here are the annual fee for these cards:
- Southwest Priority Credit Card = $149
- Southwest Premier Credit Card = $99
- Southwest Plus Credit Card = $69
As you can see, the value from the anniversary bonuses wipes out a lot of the annual fees for these cards. Let’s go ahead and offset the annual fee and see what the effective annual fee comes out to with factoring in the value of the anniversary bonus.
- Southwest Priority Credit Card = $37
- Southwest Premier Credit Card = $9
- Southwest Plus Credit Card = $24
Southwest Priority Credit Card
The Southwest Priority Credit Card’s effective annual fee drops all the way down to $37 but that card also comes with a lot of additional benefits which include:
- 2X Rapid Rewards on Southwest purchases and hotel and car rental partner purchases.
- $75 Southwest annual travel credit
- 7,500 anniversary points each year
- Four Upgraded Boardings per year when available.
- 20% back on in-flight drinks, WiFi, messaging, and movies
- No foreign transaction fees
With the $75 travel credit and the $112.50 in annual Rapid Rewards, that’s value at $187.50 received each year from the perks which already offsets the annual fee. Then there’s the upgraded passes which could be worth anywhere from $120 to $200. When you add on the additional discounts on in-flight purchases and lack of foreign transaction fees, it becomes clear that it’s very easy to justify this annual fee.
The only way you don’t come out on top is if you have no use for the Rapid Rewards and don’t plan on flying Southwest so the $75 travel credit/bonus spending does you no good. But if you plan on flying Southwest even a couple of roundtrips a year, it should be pretty easy to justify the annual fee for this card and so you’ll want to think twice about cancelling
You can read more about this card here.
Southwest Premier Credit Card
It’s pretty clear that the Southwest Premier Credit Card is almost completely justified by the anniversary bonus. You’d only need to get $9 worth of value from other perks like the bonus spend on Southwest, hotels and rental cars; 1,500 TQP for each $10K in purchases up to $100K; lack of foreign transaction fees; and preservation of your account.
I think it’s very easy to get $9 worth of value for those things. Plus, if you value Rapid Rewards at just a slightly higher number like 1.6 cents per point, you’d only need to get $3 worth of value from those perks. So I think in many cases you won’t want to cancel the Southwest Premier Credit Card, unless you absolutely need to free up space for another valuable card.
Be sure to consider if upgrading to the Southwest Priority is a good option for you as well (it likely will in many cases).
Southwest Plus Credit Card
The Southwest Plus Credit Card has an effective annual fee of $24 when you factor in the anniversary bonus. The problem with this card is that it doesn’t offer much else in the benefits department. It has foreign transactions fees of 3% and doesn’t allow you to earn points towards A-list Status.
So I personally would look to upgrade this card to the Premier or the Priority Card if I flew Southwest. It will be much easier to get your value back with the Southwest Premier and the Southwest Priority card for most Southwest customers, even if they are not frequent flyers. So when it comes to the Southwest Plus card, you’ll probably want to ditch it for something else.
And if you don’t fly Southwest and have no plans to fly Southwest, then the Southwest Plus Credit Card really probably has no place in your wallet.
If you want to check out a comparison between Southwest credit cards check out the table below.
|Features||Southwest Priority Credit Card||Southwest Premier Credit Card||Southwest Plus Credit Card|
|Sign-up Bonus||40K for $1K spend in 3 months||40K for $1K spend in 3 months||40K for $1K spend in 3 months|
|Bonus Earning||2X on Southwest, hotel and car rentals||2X on Southwest, hotel and car rentals||2X on Southwest, hotel and car rentals|
|Anniversary Bonus||7500 Rapid Rewards||6000 Rapid Rewards||3000 Rapid Rewards|
|Travel Credit||$75 Southwest annual travel credit||None||None|
|Upgrades||Four Upgraded Boardings per year when available.||None||None|
|In-flight Discount||20% back on in-flight drinks, WiFi, messaging, and movies||None||None|
|Foreign Transaction Fees||None||None||3%|
|Points towards A-list Status||1,500 TQP for each $10K in purchases up to $100K||1,500 TQP for each $10K in purchases up to $100K||None|
Do you keep points?
If you cancel your Southwest card after points have been added to your Rapid Rewards account, you will keep those points in your account.
As you can tell, it’s usually not worth it to cancel your Southwest credit card because of the value of the annual bonuses and the additional perks provided by the card. Unless you have no current or future plans to fly Southwest or other unique situation (e.g., you need an open credit card slot with chase), you’ll probably want to hold on to your Southwest cards and let your accounts age while you take advantage of their perks.
Daniel Gillaspia is the Founder of UponArriving.com and the credit card app, WalletFlo. He is a former attorney turned travel expert covering destinations along with TSA, airline, and hotel policies. Since 2014, his content has been featured in publications such as National Geographic, Smithsonian Magazine, and CNBC.