Southwest Rapid Rewards Devaluation 2024: What You Need to Know

by joeheg

Southwest Airlines’ loyalty program is called Rapid Rewards. This program offers various ways to earn points, not just by flying with Southwest. You can earn points through credit card spending, either by using a Southwest co-brand card or transferring points from Chase or Bilt Rewards. Additionally, you can also earn Rapid Rewards points by participating in their dining program, shopping portal, or even when renting a car or staying at a hotel. With so many options available, you can easily accumulate points and enjoy the benefits of the program.

When you use your Southwest points to book a flight, the Rapid Rewards program uses a fixed-value system. This means that the number of points required for a flight directly corresponds to the actual cash price of that ticket. Southwest does not peg a value to their points, only saying this about how much a point is worth.

The number of points needed for a reward flight depends on the fareReward pricing can vary based on destination, time, day of travel, demand, fare type, point redemption rate, and other factors and is subject to change at any time until the booking is confirmed. 

To determine the value of points, Southwest Airlines uses a unique approach. Rather than assigning a cash value to each point, they specify the number of points required for every dollar spent. After analyzing several bookings, the current estimate is that you’ll need 83 Rapid Rewards points for every dollar spent, making each point worth approximately 1.2-1.4 cents. While Rapid Rewards is supposed to be a “fixed-value” program, there is some wiggle room built in.

Upcoming Devaluation

I mentioned “Current estimate” because Southwest Airlines is planning to devalue its frequent-flyer program from January 1, 2024. Unlike the previous devaluation in 2021, this time they have given a notice period of 2 months to make reservations at the current levels. However, they are not widely advertising the change, as they have hidden the information at the bottom of the monthly statements that they email to members.

Notice: Starting on January 1, 2024, for flights purchased using Rapid Rewards points, the number of Rapid Rewards points required per dollar of base fare will increase by approximately 4%. This change will not affect Rapid Rewards Members who book travel prior to January 1, 2024.

Southwest will increase the points required by 4% or about 3 extra points per dollar, resulting in approximately 60 extra points for a $200 ticket.

I understand that some of you will ask if the number of points required is determined by the cost of the ticket, why does Southwest have to devalue their program at all? If flights are more expensive, they’ll just cost more points.

The issue lies not with the valuation system, but with the abundance of points in the market and the ease of acquiring them. In essence, an increase in the number of points in the system results in a decrease in the value of each point. It may be tempting to sign up for a Chase co-branded card with a 75,000 point sign-up bonus or to earn points monthly by paying rent with a Bilt Rewards card, but there is a trade-off.

Although devaluations are an inevitable part of the system due to banks offering larger sign-up bonuses or increasing bonus categories, we can still make the most of the rewards programs available to us. By staying aware of any changes and planning accordingly, we can continue to maximize our benefits.

Final Thought

When we consider the current scenario, a 4% devaluation may not appear to be a significant change, especially when compared to other loyalty programs that have abruptly doubled the cost of their rewards without prior notice. However, my main concern lies in the frequency of these devaluations by Southwest. The airline’s most recent devaluation was implemented in 2021, and before that, in 2018.  I hope that such devaluations do not occur every three years, as it could potentially diminish the value of the rewards program.

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