Million Mile Secrets reader Alvin emails to ask:
I love your emails with credit card and travel advice. My wife and I both have the Chase Sapphire Preferred Card. We both have 44,000 plus points. With the Chase Sapphire Preferred Card we can get $440 cash for each account ($880 total). We have Rapid Rewards accounts with Southwest Airlines. Wouldn’t it be better to take the cash instead of transferring my Sapphire Preferred points to Rapid Rewards?
We could then not have to worry about expiring points, change in rules, etc. Also if we chose to fly Southwest we could use that $880 to purchase Southwest flights and get double or triple points with that purchase using our Southwest card.
Does this make sense? Am I missing something. It seems to me that it would be better to get the cash from Chase and you would have more flexibility with any airline (whichever had the lowest price). Thanks and keep up the good work.
How Much Is An Ultimate Reward Point Worth?
Chase Ultimate Rewards points are very useful because they can be used in 3 different ways.
You can redeem Ultimate Rewards for:
- Travel from the Ultimate Rewards portal
- Or transfer them to airline or hotels such as Southwest or Hyatt
You earn Chase Ultimate Rewards points when you use a Chase Ultimate Rewards card like the Chase Sapphire Preferred, Chase Ink Bold, Chase Ink Plus and other Chase cards which earn Ultimate Rewards points.
You also earn Ultimate Rewards points for using the Ultimate Rewards shopping portal.
1. Cash Value
Alvin can redeem 1 Ultimate Reward point for 1 cent in cash back. This is very easy to do and you just log into your Ultimate Rewards account and ask for a statement credit, check, or direct deposit.
So Alvin will get $440 (44,000 Ultimate Rewards points X 1 cent per point) in cash back. His wife will get another $440 for her 44,000 Ultimate Rewards points, and they will together get $880 in cash back.
Alvin and his wife can spend the $880 in ANY way they want! But they aren’t getting the most value out of their Ultimate Rewards points.
2. Travel via Ultimate Rewards portal
Alvin and his wife can also book flights on the Chase travel portal and get 1.25 cents towards travel for every 1 Ultimate Rewards point as long as he has the Chase Sapphire Preferred, Chase Ink Bold, Chase Ink Plus. You get only 1 cent towards travel if you have the Chase Freedom, Chase Sapphire, Chase Ink Cash or the Chase Ink Classic.
This means that Alvin and his wife will each get $550 (44,000 Ultimate Rewards points X 1.25 cents per Ultimate Rewards points) towards travel via the Ultimate Rewards mall because they have the Chase Sapphire Preferred card.
Not only is $550 towards travel worth MORE than the $440 in cash back, but Alvin will be able to book travel with NO blackout dates or restrictions. He can choose flights on most airlines which fit into his schedule and select the lowest priced flights.
If Alvin wants to book a flight which costs more than $550, he can simply pay the difference with his Ultimate Rewards card!
However, Southwest flights are not available through the Ultimate Rewards portal, which is good, because you can get much better value by transferring Ultimate Rewards points to Southwest.
3. Transfer Ultimate Rewards Points to Southwest
Alvin can get much more value from his 44,000 Ultimate Rewards points if he transfers them to 44,000 Southwest points.
That’s because 1 Southwest point is worth ~1.7 cents when used towards the cheapest “Wanna Get Away” fares. So his 44,000 Ultimate Rewards points are worth $748 (44,000 Ultimate Rewards points X 1.7 cents towards Wanna Get Away fare).
$748 is 70% more than the $440 Alvin would have got by cashing out his points! Unlike other airlines and hotels, Alvin doesn’t have to worry about award availability on Southwest.
Southwest has a very good award program and if Southwest is selling a seat on the plane, you can use your points to get that seat at a fixed rate of ~1.7 cents for Wanna Get Away fares.
However, Alvin is better off cashing out if he wants to redeem for the more expensive Business Select or Anytime Southwest fares. But he can always keep the Ultimate Rewards points in his Ultimate Rewards account and see if he can book a low level Wanna Get Away fare before cashing out his points.
Southwest Double Points
Let’s see if Alvin is better off cashing out his 44,000 Chase Ultimate Rewards points and using his Southwest card to pay for his Southwest flights and earning double points.
With the double point promotion you earn:
- 12 points (instead of 6 points) per $1 on Wanna Get Away fares + 2 points per $1 for using the Southwest credit card
- 20 points (instead of 10 points) per $1 on Anytime Fares + 2 points per $1 for using the Southwest credit card
- 24 points per $1 on Business Select Fares + 2 points for using the Southwest credit card
If Alvin cashes out his 44,000 Ultimate Rewards points, he will get $440.
If he buys $440 in Southwest Wanna Get Away fares and pays with his Southwest card to take advantage of the double points promotion, he will earn:
- 5,280 Southwest points (12 points per $1 spent on Wanna Get Away fares X $440) and
- 880 Southwest points for using his Southwest card (2 points per $1 X $440)
That’s a total of 6,160 Southwest points which are worth ~$105 (6,160 points X 1.7 cents per point).
So Alvin’s 44,000 Ultimate Rewards points gets him ~$545 ($440 in cash + $105 in Southwest points) worth of Southwest travel, but that’s still less than the $748 in Southwest travel if Alvin transferred his Southwest points directly to Southwest.
Alvin is NOT better off cashing out his points if his goal is to get the most Southwest travel!
4. Other Transfer Options
Alvin can also transfer his Ultimate Rewards points to other airlines or hotels such as:
- United Airlines
- British Airways
- Priority Club
- Korean Air
- Virgin Atlantic
Transferring to certain airlines or hotels could give Alvin even more value that the $748 he gets for transferring them to Southwest.
For example, Ultimate Rewards points transfer to Hyatt in a 1:1 ratio – so 44,000 points would become 44,000 Hyatt points. Hyatt’s top hotels only cost 22,000 points a night.
The downside of transferring is that you are limited by hotel and airline availability.
One Last Thing
Ultimate Rewards points never expire as long as Alvin doesn’t cancel the card or transfers the Ultimate Rewards points to another account. In contrast, most airlines miles and hotel points expire. But it is easy to keep your points alive.
So Alvin and his wife are better off leaving their Ultimate Rewards points in their Chase account until they need to transfer the points. That way they get more flexibility with their Ultimate Rewards points, because they can’t get them back once they transfer them to other airlines or hotels.
Points transfers are usually instant (though sometimes it could take a day or two to transfer).
Ultimate Rewards points are extremely valuable because they never expire and can be exchanged for different airline miles and hotel points.
Alvin will NOT get the best value by cashing out if his goal is Southwest travel (or luxury travel at top hotels or in business or first class).
44,000 Ultimate Rewards Points...
|...used as Cash Back||$440||$440||$880|
|...used for Travel via the Ultimate Rewards Portal||$550||$550||$1,100|
|...transferred to Southwest||$748||$748||$1,496|
|...transferred to Hyatt||~$1,500||~$1,500||~$3,000|
That’s because he gets more value when he transfers points directly to those airlines or hotels.
* If you liked this post, why don’t you join the 10,000+ readers who have signed-up to receive free blog posts via email (only 1 email per day!) or in a RSS reader …because then you’ll never miss another credit card tip!