Friday, July 17, 2015

Unlocking Arrival Points via Southwest Gift Cards - Earn over 80% of the Value Immediately

The Barclays Arrival Plus World Elite Mastercard has been getting a lot of press lately.  They have reduced their travel redemption from a 10% bonus to a 5% bonus.  Meaning that if you redeem $100 of travel rewards, you used to earn a $10 with of rewards back into your account.  That is now dropping down to $5.  There are other changes as well.  Miles to Memories has a good post on it.

The Arrival Plus has always had a great sign up bonus, but the annual fee of $89 after the first year has been tough to swallow since there are other comparable cards and with impending downgrades.

One problem for me has always been in liquidating the rewards.  I don't travel much and redemptions for statement credits are worth half as much as redemptions against travel expenses.  Also, what if you aren't traveling and you want to cancel without downgrading or losing the points.  So, is there a way around this problem?  Yes, of course.

Buy and Resell Southwest Gift Cards

Admittedly, you will lose a bit by doing this, but it is nice idea if you don't have too many regular travel expenses or you want to redeem fast.

The first thing is to buy Southwest Gift Cards.  The eGift Cards cards come with no fee.  Physical gift cards come with a $2.95 fee if you are not in a rush (4-7 business days) and Federal Express overnight comes with a $9.95 fee.

I bought a $50 eGift card as a test.

When I checked my Barclays account, I was able to redeem against this charge at the full $0.01 per mile value.  Costing 50,000 miles.

A $50 Southwest eGift card can be sold to for $40.75 (81.5%).  It would seem.

The problem is that I tried to sell with two separate gift cards and I kept getting this error for some reason.

The next best seems to be Gift Card Zen which is only offering 76% for eGift Cards. Not a good option.

So let's go to physical gift cards.  Gift Card Zen is offering 82% for physical Southwest Gift Cards.

So now you have sold your gift card and gotten 82%. Now we have to account for the  $2.95 fee. That ends up with a redemption percentage of 76%.

The $2.95 fee is the same whether you do a $50 redemption or $1,000.

Let's redo the math if you do a $400 redemption, which is the signup bonus.

$400 redemption costs $402.95.  You earn 82% of $400 which is $328 which is slightly greater than 81% of the original $400 value.  

The last point is that when you pay for the travel with another credit card, you earn more points/miles which are worth at least another 2% so your value jumps to 83%, more if you have a credit card dedicated for travel expenses.

If you want to unlock your Arrival points immediately, you can cash out at over 83%.  This isn't the greatest option but it might useful for some.