Southwest just launched a promotion where you can purchase their points with up to a 50% bonus. On the surface, a 50% bonus might sound good to some, but ultimately you are purchasing their points at a rate of higher than what they are worth.
With this promotion, the more points you purchase, the higher the bonus, ranging between a 30-50% bonus.
- Purchasing at a 30% bonus will cost 2.12 cents per point
- Purchasing at a 40% bonus will cost 1.96 cents per point
- Purchasing at a 50% bonus will cost 1.83 cents per point
Since Southwest has a program where the amount of points redeemed is tied directly to the fare class, you are typically redeeming Southwest points at a cost of 1.4-1.5 cents per point. There is a slight difference for international vs. domestic fares and they recently introduced peak pricing. But assuming those numbers when redeeming your points. Since the cost to purchase points is higher than the cost to redeem points, purchasing points will never be a good deal. With that being said, there are two reasons to purchase points.
Few Points Shy of a Reward Redemption
Let’s say you are looking to redeem your Southwest points for a few points and you are a few points shy, purchasing the remaining points could be worth it. For me personally, I’d probably just save the points for a future flight and work on earning more points in the meantime, but if you are strapped for cash or do not think you’ll fly Southwest again, you might want to top off your account and cash in those Southwest points.
So let’s say you are currently looking to book a Southwest flight that requires 18,000 points for a free flight, but you only have 11,500 points in your account. The cost to purchase the remaining 7,500 points is $165, which is cheaper than the $270 paid fare. This means purchasing points will “save” you about $100.
Southwest has once of the most flexible cancelation policies in the industry. You can cancel a flight (up to 10 minutes prior to departure) for absolutely no fee. If you paid with points they just go straight back into your account and if you booked a revenue fare you’ll receive a credit for the price paid. The problem with the credit is that it expires one year from when the flight was originally purchased (not canceled) and it is not refundable. If you do not fly often enough where you think you’d use the credit, then this could be a problem. That is why using points to purchase your flight is definitely the best scenario.
Let’s assume you are looking to book a flight that costs 36,000 points roundtrip. If you have no points in your account, it will cost you $660 to purchase the required point. Or, if you paid for the flight outright it would only cost you $540. For some folks, paying a slight premium is worth it to know that they will not be left with a voucher. This also will allow travelers to purchase a few “speculative” Southwest flights if they aren’t 100% of their travel plans. Once you cancel your flight, the points will go back to your account vs. having a large credit which you might not be able to use.
While the numbers absolutely are not in your favor to purchase Southwest points, there are a few scenarios where it might work out in your benefit. Personally, I like to just accrue Southwest points the traditional method and do not purchase the points, but I slightly see the benefit of purchasing points for some.
Southwest Credit Cards
- Southwest Business Credit Card — Earn 60,000 points after you spend $3,000 on the card ($99 annual fee)
- Southwest Rapid Rewards Priority Credit Card — Earn 40,000 points after you spend $1,000 on the card ($149 annual fee)
- Southwest Rapid Rewards Premier Credit Card— Earn 40,000 points after you spend $1,000 on the card ($99 annual fee)
- Southwest Rapid Rewards Plus Credit Card — Earn 40,000 points after you spend $1,000 on the card ($69 annual fee)
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