$500 Amazon Gift Card Signup Bonus and How to Use Southwest Points

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Southwest Airlines Rapid Rewards® Premier Credit Card
Chase Sapphire Preferred Card

In my opinion you should almost never transfer Chase Ultimate Rewards points to Southwest Airlines Rapid Rewards. The only exception is to top off your account with a few points to claim a specific award.

You usually don’t want to transfer all the points you’d need for a Southwest ticket, even though Southwest redemption tickets are fully cancellable with points redeposit for no fee.

One exception that that Southwest redemptions can be great hedges — book an award ticket with another airline out of a city besides the one you live in, and book a Southwest ticket to get to the start of that award, then if space opens up on your original redemption you can include it in your award ticket and cancel the Southwest award.

That’s great for through-checking baggage and also a net savings especially if you have elite status with the airline whose miles you’re using for the international redemption and can make award ticket changes for no or a reduced fee.

Points from a Chase Sapphire Preferred Card are great to transfer to airline miles or hotel points, programs like United, Singapore, Korean, and Hyatt. You can also use them at 1.25 cents per point towards paid travel through the Chase portal.

Points from a Chase Sapphire Reserve Card have the same transfer partners and can be used at 1.5 cents per point towards paid travel through the Chase portal.

Southwest points on the other hand are worth about 1.4 cents apiece towards fare plus taxes (a redemption pays only the TSA security tax). So you’re usually better off booking paid travel through the Chase portal rather than transferring points. You’ll earn points on the ticket based on the value of your fare.

This underscores the relatively low value per-point of Southwest Rapid Rewards. To my mind the only reason to proactively accumulate them is for a companion pass, which lets you take someone with you for free on paid or award tickets when you travel.

And Chase points transferred directly to Southwest don’t actually count towards Companion Pass (though Chase points transferred to a hotel program and then to Southwest do count, Marriott’s travel packages can be especially good for this.

Given the low value of Southwest points, what should you do with them? Obviously if you have a companion pass that doubles the value of your points (compared to buying tickets without one, not compared to cash, since the value of your cash towards tickets is doubled also). But if you don’t… consider gift cards.

Earlier this month One Mile at a Time redeemed 150,000 Southwest points for gift cards. There are extra options for Southwest co-brand cardholders and Southwest points are worth a penny apiece towards gift cards.

In the comments I offered a formula or framework for thinking about when to use accumulated Rapid Rewards points for gift cards rather than Southwest Airlines tickets.

  • There’s some probability of having an opportunity/need for tickets at a higher value per point in the future, but you have to discount that based on risk.

  • There’s some probability that Southwest will devalue points between now and then.

  • And since that redemption will happen in the future, you should discount that future risk-adjusted value further.

What you want is to compare the risk-adjusted net present value of your redemption opportunities. This is all highly sensitive to your assumptions, however:

  1. say you have an 80% likelihood of having an opportunity to redeem at 1.4 cents 3 years from now

  2. there’s a 90% likelihood that’s even still an option. (I’ve simplified the devaluation risk to say 90% likelihood you can redeem at a high value per point on airfare in the future when really there’s a very high likelihood of some additional devaluation within 3 years but odds on that devaluation will be quite small.)

  3. The current risk-adjusted value of that future option is $0.0095 per point. ($0.014 x 80% x 90% and then discounted to present value using a 2% rate)

And that would suggest a gift card redemption today that’s equivalent to cash (and an Amazon gift card is just about a cash equivalent) at 1 cent apiece, would be the better or at least equal option. In fact, an Amazon gift card isn’t quite cash, so let’s just call them of equal value.

It’s worth noting then that since the Southwest Airlines Rapid Rewards® Premier Credit Card lets you earn a signup bonus of 50,000 points after $2000 in spending on purchases within 3 months of account opening, it effectively means you can earn $500 in Amazon gift cards as a signup bonus.

Southwest Airlines Rapid Rewards® Premier Credit Card
Chase Sapphire Preferred Card

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

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  1. I think a 1.4 cent valuation is pretty low, I can normally get 1.6 on southwest points. If it is 1.4, i just pay cash or book through Chase travel portal, but at 1.5 or 1.6 it is a much better deal. Throwing a CP in the mix, and you could argue for more value.

  2. Also, on a 200 dollar ticket, you would earn about 1000 RR points. so $14-$16 dollars. That would cost between 12500-14285, On the chase portal, you are talking 16000, so the earned points don’t really make up for the more points you would be using.

  3. Putting the obvious shill BS meter aside you do have a point. Not to mention all the Southwest discount gift card deals.

  4. Great post. There is one thing that you have forgot: the points/miles that one would have get from purchasing $500 worth of stuff on Amazon. If, say, I was able to get 4% back on Amazon purchases using my credit card, these $500 would only be worth (100%-4%)*$500=$480.
    I would still consider this a better deal than using WN miles for travel, though.

  5. I may not be following. Assume an 80% likelihood of keeping 1.4 cent valuation. Wouldn’t you have to know what the other 20% chance valuation is likely to be? It seems like this calculation assumes that the other 20% chance is for zero valuation.

    Maybe I’m missing something. Wouldn’t you have to add something to say there is a 20% chance of x after devaluation, and that would be added in?

  6. Pretty poor analysis, if you ask me. For anyone who flies southwest somewhat regularly (even 2-3 times per year), you can get far more than 1.4 cents per point. Don’t transfer to Gift Cards. Don’t use Gary’s links.

  7. I always get around a 1.7 cents/mile with Southwest and the ability to book and cancel anytime and not have to track using the cash within one year is worth a lot to me. The points go right back into my account as if the transaction never occurred. I often use the points with a companion pass but I agree that is a separate benefit that had its own cost to achieve. I prefer flying Southwest above AA, Delta and United because I always get a large plane and I am frequently booked speculatively and changing my plans. I may book a whole trip with airfare and hotel and just decide not to go. That is cost prohibitive with AA being at least $175 to redeposit miles for 3 people, and Delta being $200 per award. I agree it’s a different analysis if you place a lot of value on flying first class domestic.

  8. Just yesterday, I paid a little more than 3300 points for a $59 WN ticket (buying the ticket would have cost me $64, but since I still had to pay the $4 security fee, so it was really a $59 ticket). This is a 1.7 cent per mile redemption, which is pretty fantastic. Unless you truly value biz class redemptions at market prices (ie, you’d actually fly at those prices), you’ll almost NEVER do better with your miles.

    But, of course, I did. I had previously gotten the 2 Chase WN cards, and have a companion pass. So my 3300 points got me two tickets! And this tickets are incredibly flexible. If the fare goes down, I can rebook at the lower price. I can change my flights at any time, and I can get all my points back (and my 5 bucks) if I decide not to go. This is pretty much as sweet as any airline redemption ever, and would be well worth using Chase points for (I don’t need to, though, because I earned 110,000 free points getting the Chase credit cards).

    Because I have elite status with the legacy airlines, flying WN is not my first choice — at the same price. Without status, though, it’s probably a BETTER experience than flying the legacies. So WN points are certainly very valuable, and also good uses of Chase points. Unless you don’t fly domestically of course. Or only fly first class. And, I would submit, if you have a companion pass, it may be the single BEST use of points and miles.

  9. Thanks for the perspective. I agree with the response asking for consideration of the 20%, and also agree with the added-value of being able to purchase multiple tickets and simply cancel with points going back into the account. That is a substantial value for the way I travel.

    However, at some point you do reach a point of “how much is enough” as far as number of points in the Southwest RR Account – there is probably no need to have 500,000 points when 200,000 would more-than cover all the above scenarios.

    Additionally the CSR 1.5 redemption ratio had not crossed my mind and provides an additional path to Companion and A-List I had not considered. Thanks for the post!

  10. I agree with the “how much is enough” and its effect on a holder’s personal point/mile valuation. As an example I still have 1.1 million Club Carson points from when I used to stay there a lot (after already using a fair amount up), so my valuation is probably different from somebody’s with 100K points.

  11. I’m in general agreement with those getting 1.7c/m (I usually get 1.67) and I have no problem paying for tickets outright w/ Chase UR points. In addition to the hedging strategies, speculative bookings are great on WN when they have sales. What other Chase UR transfer partners or airline program is gonna allow you to fly one-way from the north to FL for less than 4000pts or cross country for less than 9000 points w/ 2 free luggage & fully refundable options?

  12. I still argue that the true present value for most wanna get away tickets are in the 1.6~1.7x cpm range (as most stated). The 72 points per dollar is applicable to the “base fare” on cash tickets. When redeeming award tickets, you only pay $5.60 security fee and DO NOT pay excise taxes, segment fee, passenger facility charges and therefore the true cpm CAN be quite a bit more than 1.4, especially on cheaper fares.

  13. Check your math before typing in ALL CAPS. As Trey stated you don’t pay any fees other than the security fee. Basically WN is giving you discount of around $15 for a one way (depending on airports).

  14. Gary,

    I just looked up a fare on Southwest.com, and it’s $83.98 or 4,680 points + $5.60 tax.

    so each points = exactly 1.67 cents.

    Don’t know where you are getting 1.39 cents from? are you including the miles you would get if you book a revenue fare?

  15. I disagree. First of all I usually get about 1.5 cent value out of my points. Second of all over a two year period when I had the companion pass I earned and used 200,000 points combined from Southwest credit cards and other Ultimate Rewards cards to get $6,000 worth of flights ($3,000 a person) for only paying a small fraction (annual fee plus cost to manufactured spend). This post is very simplistic and goes with a bunch of assumptions including: That 1.), I’ll use the them premium cabin redemptions 2.) I value using them for premium cabin redemptions that I would rather pay out of pocket 3.) That I will use them for United, Hyatt, or some other Hotel/Airline program that I can’t use another flexible point portal to transfer to (example Membership Rewards). My point is I could have used saved the 90,000 I transferred from UR and used them on a United premium cabin flight overseas but that would assume that I value paying $1000 for Southwest flights for getting a free premium cabin flight. It also ignores the fact that I wouldn’t find some other method (KrisFlyer miles vía Amex, Miles and More-which I used recently with only $190 in fuel charges plus 52,000 points for one way back from BCN). I could go on and just wanted to put into context. Everyone’s situation is different. Someone may value saving a lot of money only flights even for a less value if it helps bring down the cost of their trip and prevents them from having trip cause them to get into debt.

  16. @NickH: I meant to add WN doesn’t EXPLICITLY charge you for excise taxes, segment fee, passenger facility.. It’s baked into the points redemption. Partly because of this and other capacity related pricing, CPM on southwest points does vary. For most reasonably priced tickets 3+ weeks out around ($100-$200), CPM is usually 1.6-1.7. For super cheap tickets (<$59) you may see CPM around 1.8 or so. For $250+ (one-way) tickets, (most people don't redeem miles for this), CPM may be in the 1.45-1.6 range..

  17. While I love bringing higher-level finance concepts into the analysis, you are actually dead wrong here. I’m ok with this, because I don’t need more points inflation in the SW program as is, but you have a fundamentally flawed view of the value as others have stated. For SW flyers, points are BETTER than cash. They have a flexibility no other points program has.

    This article really just falls back on two underlying ideas: 1. Earn and burn, rather than letting points sit for years and 2. For people who value international premium travel, don’t bother with SW because you won’t see the value.

    Recommending trading in miles for cash at 1 c/pp is ridiculous, it sounds like something a total novice would do. Only reason to do that is if you find yourself with lots of SW points and no plans to fly SW for years.

  18. Really a pretty poor analysis, which is not par for the course because I usually like Gary’s stuff. I never see myself getting less than 1.6 cents in value, and often significantly higher. Are we just looking at different fares? But more important is the convenience of having the points redeposit immediately when cancelling the flight. Here is an example – I found out earlier this week that I want to go from DCA to MSY on January 9. I don’t know if I want to go in the morning on a connecting flight or in the afternoon directly. It may depend if I have a really long day on January 8, or on what time my friend’s retirement party is going to be, since the “save the date” e-mail doesn’t say if it’s a lunchtime event or in the evening.

    But DCA-MSY on Southwest is a great deal right now – $110 one way or 5,852 points + $5.60. (That’s 1.78 points per mile). I can both flights and cancel one the day before! It’s like getting the fully refundable price, but nothing is tied up in the meantime. It’s true that with Southwest you can get the wanna get away fare credited for future use as travel credit, but you have to use it within one year and for the same passenger. It’s not unusual for me to book alternate or contingent itineraries for somewhere I want to go and just cancel the ones I’m not going to use. If I’m interested in a trip I go ahead and book because it’s a good price, but often end up not going. The re-deposited points, unlike travel credit, don’t have a same-passenger or one-year from purchase restriction. I can use them whenever I want and for anyone I want. I keep track and try to re-use the $5.60 travel credits, and fly Southwest often enough that I have never lost one yet, but if I ever do, it’s sort of nominal, just a transaction cost.

    I don’t dispute that Chase UR can have higher value when timed right for other currencies, but Southwest is a pretty solid use in my book – JD

  19. What is the derivation of your 72 points per dollar ratio, Gary? I divide 5,852 points for the fare on the itinerary described above by the $110 cash price and get 53.2 points per dollar = 1.88 cents in value. Factoring out the $5.60, I get 56.3 points per dollar = 1.78 cents in value.

    Your numbers seem like a Garbage In Garbage Out problem.

  20. Gary is using stated value on base fares as opposed to realized value on total fares. Feedback from your readers seems to indicate realized value is more relatable.

    When you look at hotel point values, do you not consider the savings on taxes? When you have to pay fuel surcharges, do you not consider the extra cost of using points? It’s no different with SW, calculating total value based on base fare alone makes no sense.

  21. I’ve read a lot of dumb posts on various travel blogs over the years, but this one ranks up near the top!! Others have pointed out the egregious flaws with the author’s analysis, so I won’t repeat that here. All I’ll add is, Gary sell me as many Southwest miles as you have for $.01 each and I’ll buy all of them. I’ll even pay you in Amazon gift cards if you like….

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