Should You Use Chase Ultimate Rewards Points To Get The Southwest Companion Pass?
This question was posed to me in a roundabout way yesterday. Essentially, he said he wanted to stop using his Ink Bold to purchase office supplies because he wanted to focus on renewing his Southwest Companion Pass. The question that came up was one I hadn’t specifically contemplated:
Is it better to spend directly on the Southwest credit card to earn the companion pass, or on a card that earns Chase Ultimate Rewards at 5X on office supplies, etc?
I think it’s a given that transferring Ultimate Rewards points through a hotel chain to Southwest is a steep price to pay, but what if you earned 5X on pretty much everything you charged on your Ink Bold or Ink Plus? Essentially, should I tell my friend to keep charging his office supplies, telephone bill, etc on his Ink Bold?
His comment to me when I told him he should keep his spending in those 5X categories was that he didn’t really have a good use for the Ultimate Rewards points. In the back of my mind, it still seemed the right decision to earn 5X where he could and figure out a way to achieve his companion pass goal. But, I’m not an expert on the Southwest program and wasn’t 100% certain, so I needed to make sure I was right.
For this, I needed to do some math and get a Southwest expert to weigh in. I chose Jennifer from Deals we Like, who’s the friend I rely on for Southwest questions. She confirmed that the path still exists to transfer Ultimate Rewards points through hotel chains (Hyatt and Marriott, for example) to Southwest.
For the purposes of this example, I’m going to use Hyatt as our path, since they offer the best conversion price. To earn the 110,000 points you need to qualify for the companion pass on Southwest, you’d need to transfer 192,500 Ultimate Rewards points to Hyatt, then on to Southwest, yielding 110,400 Rapid Rewards points.
Now, if you were just going to spend $110,000 on either credit card in the pursuit of the companion pass, you’d be right to spend that money on one of the Southwest credit cards. But, if you knew you were getting 5 points per dollar on an Ink Bold or Ink Plus, the math absolutely makes that the right play. That’s easy math, since $110,000 in office supplies would earn you 550,000 Ultimate Rewards points.
Oddly, I’m sure not everyone intends to spend $110,000 on office supplies. But, the formula scales down in increments of 50,000. Hyatt Gold Passport’s official transfer ratio to Southwest is 2.5:1, but they give you a 5,000 point bonus when you transfer 50,000 points, yielding a ratio of 2:1. So, as long as you knew you could earn 50,000 Ultimate Rewards points in a 5X category in the timeframe you needed, using one of the Ink cards is the right play.
Given, this would not be my first choice. I used to strongly dislike Southwest. But, the more the other airlines have degraded the coach product the less the difference is if I know I’m flying coach (think 4 tickets somewhere in the continental US for a family vacation). Southwest is a lot closer to their competitors when it comes to coach product nowadays but their route network out of my home airport of Washington-Dulles is still weak (I have exactly 4 nonstops and none to the South). It’s unlikely I could book enough free tickets with the companion pass to be worth it. But, it’s great for folks who have more Southwest choices in their home market.
Incidentally, unless you’ve applied for all the Southwest credit cards, the best path is to score a chunk of points with the sign-up bonuses, then top off with Chase Ultimate Rewards. Jen noted recently that the 50,000 point sign-up offers are back.
Certainly not a math equation that will apply to everyone. But, if you’re up to maximizing your category spending, it’s hard to beat the 5X the Ink cards offer, even if taking a big haircut on the transfer ratio.
The post Should You Use Chase Ultimate Rewards Points To Get The Southwest Companion Pass? was published first on Pizza In Motion.
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you forgot that there’s the 5x stops at 50K. so it’d be 250,000 + 60,000 = 310,000
Steve, it’s a good point, but I have way more than one Ink card 😉
What is your thought on the marriott vacation package to transfer miles to Southwest? I normally earn the CP through the SW cards but this year I am trying that route using my Ritz cc bonus and Chase UR to earn it.
Jessica, if you have a use for the Marriott points, then it’s not such a bad value. The Hyatt path is probably more valuable in terms of redemption rates, but getting some value out of the Marriott points makes it a slightly better ratio for you.
Thanks for the response. I usually use Hyatt points but since I have the 140k Ritz sign up bonus, I figured I would take advantage of their vacation package. I agree that Hyatt hotels do have better redemption rates. We are a family of 7 and can get 2 rooms with Hyatt vs one with other chains for less points.
As someone who already has both SW personal cards already, i’m going the path of the Marriott vacation package this year also. The packages, which include a 7 night stay PLUS the SW points, seem to be a much better value than a straight up transfer with either hotel partner. Of course, you have to have a need for the 7-night stay somewhere….but if you can use that, seems to be the way to go.