Southwest balance transfer bonus offer: is the fee worth the points?
The Southwest Rapid Rewards credit cards are offering a limited time balance transfer bonus offer. The bonus is one Southwest Rapid Rewards point per dollar of balance transfers into your new Southwest Rapid Rewards credit card.
The catch…
- You pay a 3% cash fee on the amount of the balance transfer
- You are limited to a $10,000 total transfer with the Southwest Rapid Rewards Plus credit card and $15,000 with the Southwest Rapid Rewards Premier credit card
- You must initiate the balance transfer within 90 days of receiving the Southwest credit card
But the biggest thing to be aware of…
Southwest Rapid Rewards points are capped out at a value of $1.67 per 100 points. That’s because each $100 in Southwest airfare requires 60 Rapid Rewards points for the best value ‘Wanna Get Away’ fares.
A $100 ticket requires 6,000 points, $300 ticket 18,000 points, and so on.
So, by doing the balance transfer you are paying $3 per $100 to earn points worth $1.67.
Let’s use some numbers to make it easier.
- Let’s say you make a $10,000 balance transfer. That will cost you $300 (3%), and you will earn 10,000 points.
- 10,000 points (divided by 60) is worth $167 toward a Wanna Get Away Fare per Southwest’s rules.
- So, you’re actually losing money on this deal, about $133 worth. That doesn’t count the amount of interest you will have to pay if you don’t pay off the credit card balance within the first month.
In general we discourage carrying a month to month balance on mile credit cards.
If you’re carrying a credit card balance month to month, you will be better off moving your balances using a standard 0% APR balance transfer like the Citi Simplicity Visa 0% balance transfer offer.
Even then make sure you do the math to make sure it saves you more than the standard 3% transfer fee. Paying down outright is always the best option.
Once your balances are off, start using mile credit cards for your ongoing expenses, and have fun earning points with them.
When you’re not carrying a balance, earning points worth up to $1.67 for every $100 you spend on the Southwest Rapid Rewards credit cards is not a bad deal. It’s better than the 1% cash back you earn on a lot of credit cards. You can also earn Southwest Rapid Rewards points using the Chase Sapphire Preferred which now offers instant 1:1 point transfer into anyone’s Southwest Rapid Rewards account.
I appreciate you taking the time to work this out. I had just Googled “SWA Visa balance transfer” to try to get the information to do this myself. It was a pleasant surprise to see the work had been done for me.
But, as Keith indicates, YMMV. For example, my fence is falling down. I need to replace it but don’t have the cash. I will first put it on an Amex Gold charge card where I need to meet a spend to get a 75,000 pt bonus. Then, I need to pay that right away and that balance has to go somewhere. Most balance transfer offers don’t allow points, but they either have a fee or interest charges. So, then the question for me is whether the possibility of the companion pass is worth paying both a transfer fee and interest on that balance.
@Jules- Glad you found it. You are right, there are situations where it can make sense where we haven’t mentioned. And if you’re prudent there are lots of ways to take advantage.
When I did a $15000 transfer onto my Chase SWA card, for whatever reason the transfer fee was capped at $99 (not that I’m complaining!) Also note that the 15000 points for the balance transfer also counted towards the Companion Pass status, which was quite a deal. So on my first statement, I received the initial 50000 points for first purchase on the card, and the 15000 points for balance transfers, which gets me pretty close to Companion Pass already.
@Keith – Interesting, are you sure the $99 you saw on your statement was the transfer fee and not the standard annual fee of the card?