The secret way to get a refund for flights paid with a Southwest gift card

By now, every TPG reader should know that you are entitled to a refund for your canceled flight — even if the airline says you aren't.

This is based on the Department of Transportation policy stating that airlines need to refund you when involuntarily canceling a flight.

For canceled flights booked with credit cards (here are our top recommended airline cards), you'll typically get your money back as a statement credit. But, what happens if you paid for your flight with a gift card?

Well, with Southwest, many readers were offered travel funds instead of getting their money back to a gift card. These readers were upset to learn that travel funds are a lot more restrictive than the original gift card.

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For one, travel funds must be used by the originally-ticketed passenger. So, say you booked a flight for your friend using your gift card that ultimately gets canceled. Turns out, your friend will be the one with the future travel credit. That takes away a lot of flexibility, since gift cards can be used to purchase travel for anyone.

Additionally, while Southwest gift cards never expire, travel funds do. Typically, they are only valid from one year from the date of ticket purchase. However, in light of the coronavirus pandemic, Southwest has extended the validity to Sept. 7, 2022. Even so, there's a big difference between getting your money back to a gift card that never expires and getting a refund in the form of a travel fund that expires in just over two years.

Related: Southwest extends Companion Pass, elite status benefits into 2021

As frustrating as this may be, receiving travel funds as a refund actually lines up with the gift card terms and conditions, which state "Southwest gift card redeemed for travel is not refundable. If travel is not taken, the funds will be held with an expiration date."

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As a Southwest spokesperson explained:

"Unlike credit card payments, Southwest gift card refunds provide a unique challenge as many Customers do not keep the original card once it's been redeemed. Due to this security concern, it is not our policy to reissue gift card funds back to the original gift card."

So, while you may think you're stuck with travel funds when Southwest cancels a flight that was purchased with a gift card, that's actually not the case!

Related: Southwest's groundbreaking feature will allow you to convert vouchers into Rapid Rewards points

Instead, as confirmed by a Southwest spokesperson, you can get a LUV Voucher in lieu of travel funds.

That's great news, since LUV Vouchers are transferable and can be used to book travel for anyone, which directly matches the terms of a gift card. Additionally, even though LUV Vouchers expire one year from when they're issued, in this case, Southwest will extend the validity if unused by the expiration date.

Therefore, the only real difference between a gift card and LUV Voucher is that the latter can only be applied toward the purchase of airfare, but not for taxes and fees. Otherwise, they are about as similar as you can get — and much better than receiving travel funds.

So, how do you actually get a LUV Voucher for a flight purchased with a gift card? First, you need to make sure that Southwest canceled or significantly delayed your flight. Voluntary changes aren't eligible for the LUV Voucher.

If you're indeed eligible, then you should reach out to the Customer Relations Team to work through the process. Explain that you'd like a LUV Voucher instead of travel funds, and an agent should be able to help you.

After all, you are entitled to an unrestricted refund when the airline cancels your flight — even if you paid with a gift card.