Southwest now lets you convert vouchers into points — but is it a good deal?

Aug 10, 2020

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Due to the unprecedented uncertainty around the future, every major airline continues to extend its change-fee waivers. If you’ve got an upcoming trip or you’re thinking about booking future flights, airlines want to reassure you that you can cancel for future credit — without paying a $200 (or more) penalty.

But there’s one airline that never charges change fees, even well before the pandemic. And that’s Southwest.

If you voluntarily cancel a Southwest booking, you’ll receive a travel fund for future use on any flight. These vouchers typically carry a one-year expiration policy and can only be used by the originally-ticketed passenger. Due to the pandemic, many funds have been extended through Sept. 7, 2022.

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The new Southwest feature

With Southwest’s newest feature that debuts today, you’ll be able to unlock even more flexibility from travel funds by converting them into Rapid Rewards points. The Dallas-based carrier first announced this capability in April, but it’s taken just under four months to get it live.

(Screenshot courtesy of Southwest)

As mentioned, one of the downsides of travel funds is that they can only be used by the originally-ticketed passenger. That means that even if you purchased a ticket for a friend or family member, they’ll get to use the value of the ticket for future travel.

But Rapid Rewards points can be redeemed for anyone you choose, never expire and never have change or cancellation fees. As such, they’re much more flexible than travel funds.

Related: 9 ways to earn points with the Southwest Rapid Rewards program

So, should you convert travel funds into Rapid Rewards?

Well, it boils down to the conversion ratio. And based on the tickets we’ve analyzed, it appears to be fixed at just under 1.3 cents per point. TPG’s valuation for Rapid Rewards is 1.5 cents per point, so you’re gaining some value when converting funds to points.

However, when you redeem Rapid Rewards, you’re still on the hook for the taxes and fees associated with your ticket. Though you’re gaining some value in the conversion, you’re going to need to pay out of pocket for the taxes. (Travel funds can be applied to the entire ticket, inclusive of taxes.)

(Screenshot courtesy of Southwest)

In addition, you don’t earn Rapid Rewards points on award tickets, but you do with tickets booked with travel funds. Furthermore, you don’t earn tier-qualifying points (TQPs) or Companion Pass qualifying points (CPQPs) for award travel. So even though you’re gaining some value in the conversion, you’ll be losing out on the points you could’ve earned when flying on a paid ticket.

As long as the conversion covers the difference in taxes and you’re comfortable forgoing earning points and status qualification, then I’d consider converting funds to points, especially if you want to use vouchers for other passengers.

This new feature is available through Dec. 15, 2020, so you have some time to weigh your options. Just note that once you process a conversion, it’s non-reversible.

Related: How to redeem points with the Southwest Rapid Rewards program

Terms and conditions of the conversion

In order to qualify for the points conversion, your travel fund must expire on Sept. 7, 2022. In addition, the name on the travel fund must match the name on the Rapid Rewards account. Though you can book award travel for anyone, the points themselves must be converted into the account of the originally-ticketed passenger.

Rapid Rewards points can be redeemed for any seat (Photo by Zach Griff/The Points Guy)

Finally, the funds must’ve originated from a ticket purchased on Southwest.com, through a customer representative or approved by your employer.

Related: No, Southwest didn’t devalue its Rapid Rewards program overnight

Bottom line

Southwest’s latest feature offers the ability to convert restrictive travel funds into much more flexible Rapid Rewards points.

It could definitely make sense to convert your travel funds to points assuming the conversion rate is lower than the points valuation. Note that you can’t apply points to pay for taxes and fees though. Whatever you do, make sure you’ve made up your mind because conversions are non-reversible.

Featured photo by Zach Griff/The Points Guy

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