Southwest Airlines has a rewards card like most other airlines.  The Southwest Airlines Rapid Rewards Visa Signature and Rapid Rewards Visa Signature Business Cards allow you to earn Southwest Airline miles without flying.  There is also a lower tier Southwest credit card which is the Visa Classic instead of Visa Signature.

For Southwest, the difference between the Visa Classic and Visa Signature is that you do not get the double Reward Dollars for every $1 earnings with Southwest flights and the partners listed below.  Instead, you would just get 1 for $1.  You also do not get the anniversary credits.

Southwest Credit Card Review

The schedule for earning Reward Dollars (Southwest’s version of points or miles) is that you earn double rewards, or 2 Reward Dollars for every $1 spent, on Southwest Airlines flight and Southwest giftcard purchases, and also preferred hotel and rental car partner purchases.

Earn 1 Reward Dollar for every $1 spent everywhere else.

Earn 2 Rapid Rewards credits every year on your card member anniversary.

Redeem Southwest Airline Reward Dollars Points

1,200 Reward Dollars equals 1 Rapid Rewards credit.

16 Rapid Rewards Credits equal 1 round-trip flight, but only if those 16 came within 24 consecutive months.  In other words, you basically have 2 years to get 16 credits to redeem for a free flight.

The math here is more convoluted than it needs to be, but isn’t complicated.

1,200 points, or Reward Dollars = 1 credit = 1/16th of a free flight.  So, the final deal is:

16 * 1,200 = $19,200 Reward Dollars for a free flight on Southwest.

Here is the Southwest Airlines Credit Card Chart Summary:

Southwest Rewards Credit Card Bonus

The current bonus offer I received for signing up for a Southwest Airlines Rapid Rewards Visa is 8 Bonus Credits after the first use. After that, the fine print starts to kill you.  Although there are 8 Bonus Credits advertised in bold for balance transfers along with a big happy note that both bonuses add up to a FREE flight.

Unfortunately, the real deal is not that sweet.  You only get ONE bonus credit for every $1,200 of balance transfer made within 90 days of opening the card.  In other words, you would have to transfer $9,600 to get all 8 credits.

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Even worse, balance transfers are subject to a 3% fee on the amount transferred.  You’ll pay $288 to transfer the $9,600 necessary to get that easy free flight.  In other words, you would just be better off paying for your ticket.

Interest Rate and Credit Card Terms

There is a $59 annual fee.  Unless you fly Southwest Airlines a ton, then you should be done evaluating this card right now.  Skip it, and get a credit card with universal miles or points that you can use on Southwest or for a billing credit when you buy an airfare ticket.  These days, there is simply no reason to ever pay an annual fee for a credit card.

If you are still considering the Southwest card, then you may want to review what good credit cards are like.  But, if you fly every week on Southwest or something like that here is the rest of the not so good deal.

The interest rate on the Southwest credit card is PRIME + 3.25% or 13.24% as of 12/22/08.  Don’t let that 13% fool you.  Interest rates are at all time lows, and even a move back to low but not historic low will bump you into the 17% range.

The grace period is a pathetic “at least 20 days”.

You should pass on this offer.  There is very little here as far as upside goes.  Every rewards card out there offers the 1 to $1 earning tier and the double rewards won’t add up to much unless you are someone who travels a lot for their job.  Even then, you could earn just as good or better rewards on an a non-branded card.

Oh, and the card is administered by First USA, which is definitely not a plus!

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Southwest Airlines Rewards Credit Card Review originally published at Personal Finance Blog - FinanceGourmet.com