Going along with my post from a couple of weeks ago about deciding if loyalty to United was worth it, I've started being a bit more open when searching for flights. I know I need to be in New Orleans in January for a friend's wedding and began looking for flights last week during the Southwest sale. Lo and behold, United only matched Southwest's fare sale in Basic Economy. Since that isn't an option for me, I booked my flights on Southwest, and learned a trick in the process.
For simplicity of explanation, let's break down my flights and assume they cost $220. (They cost a little more than that, but this makes it simpler). I had just missed the PayPal/Ebay 10% off Southwest gift card purchases, I was looking for the a way to purchase these tickets and maximize my return. I could book the tickets with my Chase Sapphire Reserve and earn 3x Ultimate Rewards points on travel, 660 points. Using The Points Guy's (TPG) valuation of Ultimate Reward Points (2.2 cents/point), that would yield a return of 6.6%. A great return on travel purchases!
However, knowing I had just missed Ebay's 10% sale, I was curious if buying a gift card could get me a better return. I went to Giftcard Zen and saw they were selling a $220 gift card for $205.70, a discount of 6.5%. I went ahead and purchased the gift card with my Starwood Preferred Guest which earned me 205.7 Starpoints at TPG's valution of 2.7 cents, a return of $5.55 or 2.7%. Comparing the two methods ended up like the following:
- Chase Sapphire Reserve = $220 Ticket - $14.52 (660 UR x 2.2 cents/point) = $205.48 Cost
- Gift Card = $220 Ticket - $14.30 ($220 - $205.70 gift card cost) - $5.55 (Starpoints) = $200.15 Cost
There are ways to generate an even larger return, if I had a Chase Ink card, I could have earned 5% back at office supply stores, and purchased my Southwest gift cards there. I also am aware it would be possible to realize an even higher return with the right Ultimate Rewards redemptions, but I currently have a large stockpile of UR points. Saving $14.30 of actual money on a $220 purchase and earning some Starpoints in the process is a pretty solid way to save a little more money, and the definite way to go for those who are into cash back over points.
One thing to keep in mind when making this purchase, Southwest only allows you to use a total of three payment methods when purchasing a ticket, including a credit card. Therefore, you can only use two gift cards and a credit card when making a ticket purchase. Next time you're booking a Southwest flight, take a look and see if purchasing a gift card can save you some money! Do any of y'all have creative ways to generate a little bit of extra return when booking Southwest flights?