Reader Question: Should I Cash Out My Ultimate Rewards Points Or Transfer To Southwest?

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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.

Transfer Ultimate Rewards Points to Southwest-002

You Can Use Chase Ultimate Rewards in 3 Ways!

You can redeem Ultimate Rewards for:

  • Cash
  • 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.

Convert Ultimate Rewards Points into Cash!

Convert Ultimate Rewards Points into Cash

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 PreferredChase Ink BoldChase 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.

trave

Redeem Ultimate Rewards Points For Flights Through The Ultimate Rewards Portal With NO Restrictions

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

You Can Use Points For Any Seat 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

Southwest is offering double points for flights if you use your Southwest credit card to book and fly before August 31, 2013.

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.

Southwest Double Point Promotion if You Have the Southwest Card

Southwest Double Point Promotion if You Have the Southwest Card

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
  • Hyatt
  • Marriott
  • Priority Club
  • Ritz-Carlton
  • Korean Air
  • Southwest
  • Virgin Atlantic
  • Amtrak

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.

Alvin could pay 22,000 points for 1 night at the Park Hyatt Vendome which costs $750 with taxes!

Transfer Ultimate Rewards Points to Southwest-001

22,000 Ultimate Rewards Points Transferred to Hyatt Can Get You a $750 Hotel Room!

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).

Bottom Line

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...AlvinAlvin's WifeTotal
...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.

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35 responses to “Reader Question: Should I Cash Out My Ultimate Rewards Points Or Transfer To Southwest?

  1. goals^n^dreams

    wow… I am really love this explanation. I have learn how to churn and earn a lot of Chase points but I have never learn how to use them for airlines and hotels. In this post, I learn a lot about Southwest points! Thank you so much Darius!

  2. goals^n^dreams

    oh I forgot, do you have any post that shows newbies how to book airline points and hotel points such as United, AA advantage, and Hyatt? Thanks ^_^

  3. Do you also earn southwest points for the actual amount of miles you end up flying? Or do you only earn miles based on how much your ticket cost?Maybe that’s why Southwest calls them points instead of miles.

  4. “Unlike other airlines and hotels, Alvin doesn’t have to worry about award availability on Southwest.”

    True, but he does have to consider that the max value on the points only comes if WGA fares are available. If they are not then the value proposition drops and it may actually be true that the points are worth less than a penny each. If that was the flight Alvin needed to be on then the value proposition would be worse.

    Also, the Hyatt redemption option is a bit of a red herring given the stated/intended travel patterns. If someone isn’t going to Paris then how does that hotel value help? I could get a one-way ticket from the US to Asia in first class via United and that could be worth more than $3000 so shouldn’t that also be on your list as a better value??

    Finally, the points don’t expire so long as you’re paying an annual fee to keep them alive. At $100 per account that’s a pricey proposition unless you’re continuing to accrue more points in those same accounts.

  5. Posts like these is why this site is quickly becoming the best out there. Thanks for the easy explanation!

  6. Thanks MMS! Although I knew it in the back of my head….I’ve never fleshed out the numbers in an example. It’s good to see.

  7. Ok, great explanation, but does it change if Alvin (in the example) is closing his Sapphire card? What if in the example, he closes the CSP and has only the Freedom card, can he still access those UR points to switch to SWA later?

  8. Great info on transfers.My question : Can I transfer ultimate reward points to southwest to use for companion pass eligibility? If so, wouldn’t that double value of southwest points?

  9. @JM, if you close the CSP CC, you will not be able to transfer UR Pts to the UR Partners.

  10. good posts. However, I think I would prefer a lesser hotel in Paris, which I can get a decent one for $200 and use points for SWA or other. There are many decent hotels for 1/4 of what the Hyatt reg. rates are — but can’t get much cheaper air travel in US than using SWA. In essence, you have many options to spend less for Paris hotels, but not many much cheaper options to fly in USA. I enjoy luxury, but not at $500 a night more. Each to his own, but I think the SWA exchange is a much better value.

  11. Fashions by Larry

    @Grant you are all over the Blogosphere commenting, makes you look desperate for exposure

  12. Darius,

    Thanks for the post! I’ve been thinking about getting one of these cards and that clears a lot up!

    One question – do the transferred points count towards the Southwest Companion Pass?

  13. Daraius obviously wanted to keep this simple, but he hasn’t even mentioned how you can get even more value out of these points. For example, getting the Southwest companion pass and receiving 2x the value from transferring to SW. Or transferring to United and being to fly anywhere from the States to Mexico, the Caribbean, northern South America, or Hawaii round trip. Or transferring to British Airways and flying to Ireland from either Chicago, NYC, or Boston. And all the information you need is on this blog, which is why it’s a great resource for newbies and old timers alike!

  14. D,
    Thanks for the detailed explanation, we know that you love park hyatt Paris; but I wanna know what you think is the best hotel you have ever stayed at? (with points unlimited amount) Maldives? Burj Al Arab Dubai? The Antarctica hotel? st. regis in bali? Mombo camp in Botswana?

    Or this can be the next article? lol Thanks as always.

  15. Catherine Edwards

    Darius,

    You are the “Chief Executive of Explaining Stuff” and you are very good at it.

    Cheers,
    Cathy Edwards

  16. @goals^n^dreams – Thanks! Here’s a post on booking American Airlines awards and I’ll soon post on booking United awards.

    @Sarah – You only earn Southwest points for paid tickets based on the dollar price of the ticket and the type of ticket (Business Select, Wanna Get Away etc.)

    @NM @Lively @Catherine Edwards – Thanks for reading!

    @Wandering Aramean – Fair point that Alvin is better off cashing out if he wants Anytime or Business Select tickets on Southwest. But even then, he can transfer points to Air Tran and back to Southwest for a flight credit and then use that flight credit for a last minute award (usually cheaper than redeeming for Business Select/Anytime). Keeping the points in the Ultimate Rewards account lets him see if it is better to transfer to Southwest to use for Wanna Get Away fares or if it is better to cash out.

    He does need to pay the annual fee to keep the Ultimate Rewards points active, but can pool the points with his wife’s account or other cards. The Hyatt example wasn’t supposed to be the maximum possible value – just an example of how transferring points can be better than cashing out. But Alvin has to decide what’s best for his family based on his travel needs.

    @JM – He should transfer his points to the Freedom before canceling otherwise he will lost the points. He can transfer the points back to a Sapphire Preferred, Ink Bold & Ink Plus and then transfer to airlines or hotels.

    @Goosfish @Jeff – Unfortunately, transferring points from Ultimate Rewards to Southwest doesn’t count towards the Companion Pass. You could transfer to Hyatt and then to Southwest to have the points count, but you’d lose half the points in the transfer.

    @Grant – Thanks for helping out!

    @SAPMAN – The best use is different for everyone, so do what makes sense for you!

    @Jasmine – Ha! I actually had information on British Airways, United and other transfer options, but removed it from the final post to make it shorter.

    @jonathan – I liked the PArk Hyatt Paris, InterContinental Thalasso in Bora Bora, and the Hotel Imperial in Vienna. For non points hotels, we loved The Lake Palace in Udaipur, India.

  17. charles alan satterwhite

    Maybe I’m crazy but if you use the points to buy like a cheap fare to istanbul or some other long flight you also get 12000 airline miles which adds value to using it to book a flight over transfering to like southwest.
    -a

  18. Thanks for the explanation. Believe it or not, some of us do not value first class so much that is worth triple or double the points. Why waste all my points on a lousy meal, a mediocre seat, when I can get two or three trips instead of one? Only exception would be trips to Hong Kong, Dubai or Australia which are very long. And I would choose business class. But first class for trips between East coast US and Europe are just a waste of miles to me.

    Same goes to luxury hotels. I barely go there to sleep, since I am out most of the time, and resorts do not appeal to me. I would not waste 22k points for 20 hours of residency, when any 4 star hotel usually suits me well.

  19. Transfer to Southwest. I have had nothing but good experiences with them.

  20. Good comparison MMS. One more point to add on is that Cash back and UR portal should be 1.1x to compare with other option since those two option generate miles/points.

  21. I have completed 5000 spending requirement for chase ink card for 60000 Ultimate rewards points. How long it takes to show up in my account. I have not seen it after three days.

  22. LOL….good point Jorge. It’s nice to see someone else who couldn’t care less about flying “first class”. As far as I’m concerned, the entire aircraft will end up at it’s destination so why waste the extra miles.

    When it comes to Hyatt though, the difference in points to get to their top tier hotel is so small, yet when compared in terms of $$, a Park is the better dollar value. eg: a category 4 hotel is 15,000 points, while top tier (6) is 22,000 – but in terms of $$ you could be looking at a difference as much as $400 -$500 per night. So when showing value, it’s good to see you can spend only 22,000 points to get to a hotel that would otherwise cost almost $700 per night. (I would definitely not spend to cash to stay at a Park Hyatt but I might spend the points).

  23. Or if you like first class rail travel, 40K UR points will buy you and partner a one way first class ticket (Superliner Bedroom) from Chicago to San Francisco on Amtrak. I just checked, that particular rail fare sells for $2,993. If you have time and want an enjoyable experience, first class rail travel is a treat. The journey can be just as important as the destination.

  24. Hi Darius, could you still earn miles on tickets purchased through Ultimate Rewards portal, either in all UR points or points+cash option?
    Thank you.

  25. @Alok - It should show up a few days after the statement in which you completed the minimum spending closes (as long as you complete it 8 to 10 days before the statement closes).

    @Andy F. – Yes, you’d still earn miles for flights booked through the Ultimate Rewards portal.

  26. CheapskateCharlie

    Hello Darius, really enjoy your blog and appreciate your openness and willingness to state when an alternate blog site finds a good deal. I used to be a big fan of SWA due to them having low fares but the last 3 times I booked domestic flights I found that between Delta, United, and US Air they were cheaper than SWA depending on route. I typically book 6 to 10 weeks out so not talking close in windows. Even the “wanna get away” web fares were higher and of course you need to pay even more to get preferred seating. With the 3 listed above you can get seats assigned but of course paying lowest fares you are in the back of the bus. Personally I prefer to use points for business class travel internationally and pay for US flights.

    I still really like SWA but they are no longer the low priced spread in many cases; if you have a co-branded credit card from the above airlines you get first checked bag free and “quasi priority boarding” too. My message is always compare fares!

  27. @CheapskateCharlie – Thanks for reading! You should absolutely compare fares and the days when Southwest was always the cheapest option are long gone!

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  29. I have the Southwest Companion pass this year thanks to southwest’s 50,000 bonus miles promotion. Would it be possible for both me and my girl friend to sign up for the sapphire card and get the 40,000 mile bonus then both of us transfer to a common hyatt rewards account and then transfer to my Southwest Rapid Rewards account? That would put me within easy striking distance of a second year of companion passes!!

  30. @Justin – That would work, but you could have your companion apply for the cards in your name. Or try for different versions of the card.

  31. I guess I was wondering if she got a Sapphire card in her name would she have any difficulty transferring to a Hyatt rewards account that had a different name. Is there anything preventing that in the system?

  32. @Justin – She could transfer the Ultimate Rewards points from the Sapphire Preferred to you and from there to Hyatt.

  33. Great!! I didn’t realize you could transfer ultimate rewards to another ultimate rewards member at no cost!! What an awesome card.

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