This post goes against conventional wisdom and even contradicts my own advice from the past. But bear with me anyway. On Monday I wrote about some of my points’ balances that I could convert to cash/groceries if needed. Among them was my stash of Rapid Rewards points which you can redeem for various gift cards.
There is one requirement, however: you have to have a Chase Southwest co-branded credit card. It can be Business, Plus or Premier version, doesn’t matter (see more details on these offers here). Right now I happen to have Premier and so does my husband. I got it for the sign-up bonus, which is 50,000 points after spending $2,000 in 3 months.
Without the card, you can only redeem points for Southwest flights. In reality, that is where you should be spending them anyway. After all, you can get around 1.6 cents per point toward Wanna Get Away fares.
But what if your real emergency fund is very low at the moment? Then you, my friend, should make sure you have that Southwest credit card active. Of course, there is one problem. Plus version gives you 3,000 points upon renewal, and you have to shell out $69 for the privilege. So even if you redeem points for flights, you would be taking a loss.
Things, however, get more interesting with Premier version. You get 6,000 points in exchange for renewing and paying $99 annual fee. Assuming you redeem those points for flights, it’s possible to break close to even.
Neither card is worth it for everyday spending because you earn 1 Rapid Rewards point on most purchases. You would do better with Citi Double Cash or any other “keeper” card on my list. And the perks are “weak sauce” because you already get free checked bags on Southwest flights anyway.
But I do think renewing Premier card could make a lot of sense for many middle-class families. There are a couple of reasons:
1) If needed, you can liquidate your Rapid Rewards points for Walmart, Target or Amazon gift cards, and buy food and household supplies.
The first option is probably the most valuable because you can rarely get a decent discount on those, plus Walmart is everywhere. Sure, nobody wants to give up Rapid Rewards points at 30% loss when it comes to flight redemptions. But if you can’t afford to travel, what difference does it make?
If your spouse loses his/her job or you have an unexpected bill, it’s unlikely that you will be planning a trip to Caribbean. But you will still need to eat.
Here is how to find this option:
First, you go to your Southwest profile and log in. Then, go to “more rewards,” a section accessible only to Chase Southwest cardholders.
Then browse through gift card selection. Normally, you will get the best ratio when you redeem at least 5,000 points, but the amount varies by retailer:
2) Your Rapid Rewards points will have real, tangible value.
If you are on a tight budget, it will make you think twice before you burn points that can be easily converted to food. Sure, the whole point of this hobby is to encourage families to travel more. But balance is important, and this will serve as restraining mechanism of sorts.
It will make you more sensible when it comes to your travel budget, I guarantee it. Hmm, take that flight for only 10,000 points or get a $100 worth of groceries?
Maybe it will even encourage you to look into Spirit credit card. No? OK, fair enough. Baby steps. Speaking of, my cousin-in-law said her Spirit flights were great. The planes were clean and left on time. Most importantly, she is still alive.
To renew or not to renew?
You might be wondering what my plans are for Southwest Premier credit card. I honestly don’t know what I will do. I have till next March to decide one way or another. It will mostly depend on the amount of real savings I have at the moment. Obviously, I would rather burn the points on flights, and Southwest has very good coverage where I live. Caribbean, Mexico, plus most of lower 48 States, possibilities are endless… And that’s the problem!
Of course, I will probably call and see if I can get a retention bonus of some sort for my Chase account. And ideally, that’s what you should do as well. If you are approved for a different version of Southwest card down the road, you may not need to worry about any of it. Otherwise, don’t automatically dismiss renewing your Premier card and paying $99 for those 6,000 points. Your real savings account will thank you, I promise.
Readers, what are your thoughts?
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.