Chase and Southwest stunned the points & miles world yesterday with new offers for their consumer credit cards. Through February 11, all three Southwest consumer cards are offering new cardholders 30,000 points plus a Companion Pass after $4K spend in 3 months. The Companion Pass is valid only through 12/31/19.
Regarding these offers, our own Nick Reyes said: “Wow!” and “this is a great deal if you’re interested in the Companion Pass”.
On the other hand, trustworthy Doctor of Credit said: “I guess if you only have one 5/24 slot and can’t get approved for a business card and desperately want a companion pass then this is a good offer, otherwise I actually think it’s quite weak.”
How could two trusted sources in this community reach opposite conclusions? Are these offers great or weak? First, a bit of background…
The Southwest Companion pass offers incredible value to those who would fly Southwest often with a companion. No one disputes that. Once you have a companion pass, you can add your companion for free (plus fees — usually just the TSA $5.60 per segment fee) to any Southwest flight that you booked for yourself. This is true whether you booked the flight with Southwest Rapid Rewards points or if you paid cash. And there’s no limit to how many times you can use it. You could theoretically fly every single day while you have the pass, and add your companion for free very time.
Normally, the way to get a Companion Pass is to earn 110,000 qualifying points in a calendar year. Points earned from Southwest credit cards, including signup bonus points and friend referral points, do count. Points transferred from a hotel program or credit card program (such as from Chase Ultimate Rewards) do not count.
It used to be possible to easily earn a Companion Pass by signing up for two Southwest credit cards at once when they offered 60,000 point signup bonuses (there were variations too, where both cards offered 50K and it was necessary to spend $10K to round out the 110K required, or one card offered 60K and another 40K, etc.). Unfortunately, Chase made this approach more difficult by introducing new rules: now, you cannot get a bonus on a second Southwest card unless you’ve closed the previous one and have waited 24 months from the last time you got a bonus.
Business cards are the exception. You can sign up for both a Southwest business card and a Southwest consumer card and qualify for both bonuses. This is key to understanding why Doctor of Credit thinks that the new offers are weak.
Why the new offers are weak
- Companion Pass for Two Years: With the old offers, two cards (business + consumer) would get you enough points for a companion pass. And by getting the companion pass this way it would last for the rest of this year and all of the next year. In other words, if you signed up for these cards last week, then once you completed the minimum spend requirements you would have a companion pass good until 12/31/2020 (vs. 2019 with the new offer).
- More Points = Better: With the old offers, you got more points. One could argue that 60K points without a companion pass is better than 30K points with a companion pass. 60K points can get a couple just as far as 30K points with a companion pass, but without having to travel within the next year.
Why the new offers are great
- No business card requirement: It’s not hard to open a business card. You may even have a legitimate business without knowing it (e.g. you own rental property, you sell things on ebay, you drive for Uber, you’re writing a novel, etc.). That said, it’s likely that most people don’t have businesses and aren’t willing to pretend that they do. The new offers make the Southwest Companion Pass an easy get for almost anyone.
- Single card requirement: Most people think of signing up for a credit card as a big step. It’s easy for those of us who sign up for cards regularly to forget this. The point is that most people won’t even consider signing up for two cards at once. The new offers require only one new card.
- Much smaller spend vs. the 2 card approach: The most recent two-card approach required $3K spend with the business card and a whopping $12K spend on the consumer card in order to earn all 60K points on each card. Granted you would end up with far more points and a much longer lasting Companion Pass, but $15K spend is simply not feasible for many people. The new offers require $4K spend in 3 months. That can still be a stretch for many, but it’s obviously much easier to achieve than $15K.
- More time to make the two card option work: Suppose someone signs up for a consumer card now. After meeting the $4K spend requirement they would have 34K Southwest points and a Companion Pass good through the end of this year. Later in the year, they could sign up for the 60K business offer (assuming it’s still available at that time). After meeting the $3K spend requirement for that card, they would have earned a total of 97,000 points. They would only need 13,000 points more to secure the Companion Pass for another year. Those extra 13,000 points can be earned by flying paid flights, additional credit card spend, referring friends to the credit card, earning points through the Rapid Rewards Shopping portal, etc.
The new Southwest offers are great for most people. But, there are a few buts…
- But 1: For those comfortable signing up for two cards (with one being a business card), and with the ability to put lots of spend on those cards, the new offers are less valuable than before.
- But 2: The Companion Pass is only valuable if you’ll actually use it. The more you use it, the more valuable it becomes. If you don’t use it, it’s literally worthless.
- But 3: None of the offers are any good if you can’t qualify for the cards. If you previously received a Southwest card bonus in the past 24 months, or if you’ve signed up for 5 cards or more from any bank in the past 24 months (the 5/24 rule), then you can’t play this game, regardless of the specifics of the offer.
What do you think? For you, are the offers great or weak? In my case, I rarely fly Southwest so neither the new offers nor the 2 card approach is attractive to me. Plus, I’m over 5/24 so I wouldn’t be able to get these cards anyway.
|Chase's 5/24 Rule: With most Chase credit cards, Chase will not approve your application if you have opened 5 or more cards with any bank in the past 24 months.
To determine your 5/24 status, see: 3 Easy Ways to Count Your 5/24 Status. An even easier option is to track all of your cards for free with Travel Freely.