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DO NOT BUY REWARD POINTS!!! It is non-refundable. The reward system is run by a 3rd party and not SW, so SW will not refund you.
The cost for points is more than the actual worth of ticket value in cash/credit card. Save yourself the money and headache and just purchase the flight with cash/credit card. You have more power to dispute if there is a mistake.
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Purchasing points is useful for when you are trying to redeem your existing RR points towards a flight, but are short a few points. You can purchase the few remaining points and then redeem all your points towards a free flight. The option to purchase points is not meant as an alternative to directly purchase a flight using a credit card on southwest.com. As you noted, you will pay much more for the flight if you buy 100% of the points needed versus just paying for the flight.
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Which I think should be obvious - if you have Path A to buy direct from Southwest, compared to Path B where another person handles the transaction as a business, of course Path B will be more expensive than Path A.
Great option to top off some points to get a reward flight, especially if your reward points were going to expire soon and you needed to use them.
Not recommended to purchase points for the majority of a ticket.