Chase Sapphire Preferred vs Chase Southwest

We had a reader question from Victor this week. He was looking into whether to apply for the Southwest Airlines credit card issued by Chase. Specifically, he was wondering whether there was any way to get the annual fee waived. I told him that the Southwest credit card was, counterintuitively, not the best card for earning Southwest miles. Instead, he should sign up for the Chase Sapphire Preferred.

Chase Southwest

Don’t get me wrong, this is a great card. It has a 25,000-mile signup bonus (sometimes even 50,000). It also comes with a $69 annual fee, however, and this is not waived for the first year unlike many other Chase and airline credit cards. In pure mile value this is a still a great deal, since 25,000 miles are worth almost exactly $420 (each Southwest point is worth 1.69 cents of airfare, although this number will go down 13% next year). The card earns 1 mile per $1 spent, and 2 miles per $1 when spending with Southwest.

Chase Sapphire Preferred

CSP earns Ultimate Rewards points, a Chase points currency that can be instantly transferred to Southwest, United, Hyatt, Marriott, Amtrak, and a few other partners at a 1:1 ratio. It can also be used like cash at 1.2 cents apiece on Chase’s travel site to pay directly for airfare or other types of travel. CSP earns 1 point per $1 spent, and 2 points per $1 on dining and travel (airfare, hotels, metro, parking, etc.). So right off the bat, even if the only thing you ever did with your points were transfer them to Southwest, you’d be better off using Chase Sapphire Preferred instead of Chase Southwest because it earns double points at more places.

But there are a few kickers that make Sapphire far and away a better card:

1. Points flexibility

As mentioned earlier, Ultimate Rewards points can be used not only on Southwest but on a number of other travel partners , all of whom you can transfer your points to instantly. The points can also be used like cash. Southwest’s card only lets you use your points on Southwest.

2. Annual fee

Chase Sapphire Preferred has a $95 annual fee, which is higher than Southwest’s $69 annual fee, but it’s waived for the first year. You could do a year of earning your miles, transfer them all to Southwest, and have paid no annual fee to do so. And if you wanted to keep the card, it would take 4 years to pay the same amount in annual fees on Sapphire as on Southwest.

3. Signup bonus

The signup bonus for CSP is 40,000 points, versus 25,000 for the Southwest card. Chase also gives you a 7% bonus on all points earned on your Sapphire at the end of each year.

The one instance I consider the Southwest card to be a better choice

Chase Sapphire Preferred does the financial equivalent of kick the crap out of the Chase Southwest card. But the Southwest card offers one thing that I believe causes it to be the superior card for a very select group of people, and that is the companion pass.

Southwest’s companion pass allows the owner to name one person (changeable twice) who can fly with them for free anytime they fly Southwest, be it on a paid fare or on miles. It’s good from the time you earn it until the end of the following calendar year.

You can earn the companion pass by earning 110,000 Southwest points in a calendar year. This includes miles earned from flying but also miles earned from the credit card (including the signup bonus). It does not, however, include miles transferred from Chase Sapphire Preferred.

So, here is how I would describe someone who the Southwest credit card would work for:

1. You fly with one person a good amount of the time you travel for leisure
2. You generally use your Southwest miles to pay for your own tickets (instead of for family members or friends)
3. You spend $110,000 a year

If this fits you, I’d recommend getting the Chase Southwest card. Personally, I don’t meet any of these criteria. I imagine most of my 10 to 20 readers don’t either. So for me, the Chase Sapphire Preferred makes far more sense.