How Much Is a Southwest Rapid Rewards Point Worth?

Route

In addition to no change fees and including check-in bags in the fare, I like Southwest Airlines also because its frequent flyer program Rapid Rewards is the easiest to use.

Other airlines limit seats available for reward travel. I have miles but when I want to redeem them for a free ticket, I often find I can’t get reward seats on the flights I really want. With Southwest Rapid Rewards, I pretty much just use the points as cash to buy the ticket.

Southwest Airlines announced it will increase the number of points required for each $1 worth of fare in the least expensive Wanna Get Away class from 60 points to 70 points after March 31, 2014.

What are these points worth anyway? Is it $1/60 = 1.67 cents before March 31, 2014 and $1/70 = 1.43 cents after March 31, 2014? Close, but not quite.

This is because when you fly on a paid ticket, you also earn points. When you fly on a reward ticket, you don’t earn points. Therefore the difference between spending points and spending money is larger than just the points you redeem. You also have to add the points you would otherwise earn.

The same goes for any small fee not covered by redeeming rewards.

I priced a random Southwest itinerary in both in dollars and in points. In each case I picked the least expensive Wanna Get Away tickets.

  Money Points
Use money (A) $360 +2,082 points
Use points (B) $5 -20,820 points
Difference (A – B) $355 22,902 points

You earn 6 Rapid Rewards points on a paid ticket. You don’t earn points on a reward ticket. I reduced the fare by 2% assuming one has a 2% cash back card. Between these two scenarios, paying money versus redeeming points, we are looking at a difference of $355 versus 22,902 points. That puts the value of a Southwest Rapid Rewards point at 1.55 cents each.

After the devaluation on March 31, 2014, a Southwest Rapid Rewards point will be worth 1.35 cents each.

Because you get six points for each dollar spent, buying a Southwest ticket basically gives you 8-9% delayed rebate.

[Photo credit: Flickr user psd]

See All Your Accounts In One Place

Track your net worth, asset allocation, and portfolio performance with free financial tools from Personal Capital.

Comments

  1. KD says

    By extending your line of thinking, would the Southwest Rapid Rewards Credit Card then be a pretty good bet based on the value of the points?

    • Harry says

      It is if you are going after the signup bonus — 50,000 points after spending $2,000 in the first three months — or if you spend a lot on Southwest flights (2 points per dollar). For ongoing spending on “everything else” a 2% reward card such as Fidelity AmEx or Barclaycard Arrival is better.

  2. Bucky says

    Thanks. The final “8-9%” was what I was interested in knowing.

    Southwest Rewards are still better than other airlines because they don’t have “limited” seats when using Rewards. But remember the original Rewards? 8 round flights (of any distance) and you get a free ticket (for any distance).

    • Harry says

      I agree the old setup was better. It was too good. The current setup is fairer. You get more points if you spend more. You need more points if your trip costs more.

  3. Marcie says

    Another great thing about Southwest points is that when the company has a sale on their regular purchased fares, the number of points required for a frequent flyer ticket is reduced. It makes it worth watching their fare sales even when you’re planning to use points.

Leave a Reply

Your email address will not be published. Required fields are marked *