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Another Southwest Card Retires to the Hangar
Today I closed one of my Southwest Airlines credit cards. Yes, I have two. Well, had two. The one I closed is the Chase Southwest Rapid Rewards Priority card. I just hit my three year anniversary with it. Among other things that means the annual fee for the next year, a significant $149, recently posted. I decided it wasn't worth $149 to keep flying this card for another year.
The way I choose to open and close credit cards is never seat-of-the-pants, like "Oh, this fee just posted, I'll close it." I'm very deliberate. So let's review the math on this one.
The primary benefit of the card is the points. I earned 66,000 points over the past year. At a value of 2 cents apiece (due to Companion Pass benefits) those are worth a whopping $1,320. There were also several cash-back opportunities totaling $112. Adding these together and subtracting the opportunity cost of $740— what I could have earned from using a no-fee, 2% cash-back card instead— leaves a net win of $692. And that's not even counting some of the other fringe benefits of this card.
You might wonder how, with a win of almost $700 from the past 12 months, it's not worth paying $149 to play this game another 12 months. Probably I could even have gotten that fee waived with all the business I've given this card; meaning I could take a shot at winning $632 in the coming year without even having to pay the rake. The answer, as always, is Compared to what?
Yeah, that's a question, not an answer per se. 😅 But the answer to that question is the answer to why I chose to close this profitable card.
The way I choose to open and close credit cards is never seat-of-the-pants, like "Oh, this fee just posted, I'll close it." I'm very deliberate. So let's review the math on this one.Doing the Math on the Points
Over the past 12 months I cycled $37,000 worth of charges through this card. I hit it hard. Though that's actually less hard than the previous year's $47k. I've hit this card hard because it offers decent benefits for someone who's already got elite status with Southwest and wants help maintaining it.The primary benefit of the card is the points. I earned 66,000 points over the past year. At a value of 2 cents apiece (due to Companion Pass benefits) those are worth a whopping $1,320. There were also several cash-back opportunities totaling $112. Adding these together and subtracting the opportunity cost of $740— what I could have earned from using a no-fee, 2% cash-back card instead— leaves a net win of $692. And that's not even counting some of the other fringe benefits of this card.
You might wonder how, with a win of almost $700 from the past 12 months, it's not worth paying $149 to play this game another 12 months. Probably I could even have gotten that fee waived with all the business I've given this card; meaning I could take a shot at winning $632 in the coming year without even having to pay the rake. The answer, as always, is Compared to what?
Yeah, that's a question, not an answer per se. 😅 But the answer to that question is the answer to why I chose to close this profitable card.