Why I Turned Valuable Travel Assets into Southwest Rapid Rewards Points
Cash is king. You shouldn’t speculatively buy points or miles. I (sort of) violated these two mostly-correct platitudes last week when I swapped over $2k of travel assets into Southwest Rapid Rewards Points. Yes, I “locked” these assets (previously Southwest Travel Funds and long-held gift cards) into Southwest points. But with Southwest, I don’t consider the points to be limiting. Rather, by doing so, Southwest provided me more rewards rapidly. (Groan.) Before I get into why I’m doubling down on Southwest points, let’s quickly review.
Reset – Transferring into Southwest Rapid Rewards Points
Southwest released the capability to convert travel funds into Southwest Rapid Rewards Points last week. Southwest provides a rate of 1.282 cents per mile, or as I like to think of it, 78 points per dollar. Those of us who enjoy the flexibility of Southwest routinely end up with travel funds when we cancel a flights where points aren’t used. Since Southwest announced this planned capability a few months ago, I’ve been intrigued and prepared accordingly for this conversion tool. Mark also shared some plays last week.
Escaping Expiration of Travel Funds
A major reason I decided to turn my travel funds into Southwest points is due to the time-limited nature of travel funds. While many funds’ expirations have been extended to September 2022 due to the COVID-19 pandemic, funds are usually only good for one year from booking. Alternatively, flights booked with Southwest points can be canceled and all points are immediately refunded back to the member’s Rapid Rewards account. These points do not expire. By deciding to book with miles rather than travel funds or gift cards, I’m avoiding current travel fund expirations and any which would be created by canceling flights purchased with gift cards in the future.
Avoiding Payment Limits
While Southwest is my favorite domestic carrier by far, the one painful part of booking with them is their limit of three forms of payment. I can only use three gift cards in one purchase. Sure, I avoid some headaches by only booking flights one-way, and there are more convoluted ways of consolidating Southwest gift card balances. But for years, I’ve had a variety of balances across a buffet of various gift card types (plastic cards, paper copies of emails with gift card info, online codes). I obtained these gift cards in a variety of ways – discounted gift card deals, airline credits, etc – and in denominations from a few bucks to $200. Every time I booked a Southwest flight with gift cards, especially with family, I felt like the appropriate methods were worthy of a whiteboard and decision tree.
Getting rid of these moldy gift cards and travel funds has turned all bookings into using one common pot of currency – Rapid Rewards points. Future bookings will be a snap in comparison!
I Love Southwest
Another reason I had no reservations (purposeful pun) in converting everything into Southwest points is I love the airline. As I previously mentioned, they are my favorite domestic airline, but that statement alone means less but is more comical by the day. I have full confidence that I will use all of the points and will not be holding my nose while doing it (unlike United). I enjoy most everything about my Southwest experiences – their flexibility, employees’ generally positive attitudes, checked baggage when I need it, and convenience for the locations I need service. Again, I’m “locking” myself into doing more business with Southwest by converting into their points. But I don’t consider this “lock” as a negative.
Buying Points at a Discount
In addition to the many gift cards I’ve obtained for free over the years, I previously bought several at substantial discounts. Consequently, this conversion opportunity allowed me to effectively buy Southwest points at a discount. While not a major reason for why I converted, it’s a nice additional benefit to making the conversion now versus some future period (which may never come).
Drawbacks of Converting into Southwest Rapid Rewards Points
Yes, there are a few drawbacks to converting into Southwest points. However, I consider them to be minor in my situation.
Giving Up Point Earning on These Travel Assets
With the conversion, I gave up point-earning ability on flights where I used travel funds and gift cards to book. Initially, this made conversion a non-starter for me. I hardly ever earn any miles on actual flights, since I book with miles the vast majority of the time. Why would I give up one of the few opportunities to do so? After doing the math, I realized I would only be giving up just over 4,800 Southwest points. That’s usually no more than a one-way ticket on a cheap fare during a promo (in my situation). Basically, I bought the flexibility and life simplification of Southwest points by giving up this earning. I’m good with that trade.
Risk of Devaluation
Of course, any travel currency is at risk of an unexpected devaluation. Why would I want to unnecessarily hold on to more points or miles if I didn’t need to? Here are a few reasons I’m okay with it in my situation:
- We fly Southwest more than any other airline currently. We will go through these miles relatively quickly, lessening the devaluation risk in our situation.
- Southwest doesn’t devalue often in my experience/opinion.
- I expect to continue obtaining “free” Southwest gift cards, and I’d rather not hold too much.
- The “bird in the hand” nature of this opportunity. Southwest is only allowing these conversions through mid-Dec 2020. I’m fully aware that Southwest’s offer and terms have pushed my hand here, but I’m fine with it.
- Even if Southwest did devalue, we’d probably outweigh the devaluation with what we received from the conversion.
- If I was a devaluation victim, I’d rather it be Southwest getting one by on me, rather than another domestic carrier. I know that may seem odd, but it’s how I feel.
Even with the above reasons, I knowingly accept the risk of devaluation is real. Regardless, I still wanted to be out from under all of the travel fund terms and gift card nonsense.
Conclusion
I’ve been planning this points conversion for months, but I infrequently go so far with any one play so quickly. I tend to be more deliberate, perhaps too much so, with certain aspects of the hobby. But times do come for us to be bold. Everyone’s different, of course, and those times will vary for each of us. Converting into Southwest points was my time do so. Are you swapping for Southwest Rapid Rewards Points?
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I don’t think you are “locking in” in the way a lot of people might use the term. you already were locked in with the vouchers and gift cards. YOu just changed your southwest “currency” into a different, more flexible form.
Patrick,
Good point – “locked” may be too strong a term. Perhaps I just “recommitted” myself.
Yeah, I don’t see it as a big risk at all. I did the same thing with my gift cards and travel vouchers. I did the trick to extend them to 2022 but didn’t want to hassle with expiration dates and it’s so easy to set and forget right now.
Mike,
Speaking of the 2022 expiration dates, I would have been tempted to hold onto the TF’s had it not been for the Dec 2020 cutoff for transfers to RR points.