Chase Freedom®

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This card can give you some real cash-back bang for your buck.

For no annual fee, the cash back returns for this card are excellent if — and here’s the important question — you’re willing to put in some time and effort to track and maximize the card’s rotating categories. The Chase Freedom allows you to earn 5% back on up to $1,500 a quarter on rotating categories. You must enroll to earn the higher cash back amount (all other spending earns 1% unlimited) and Chase announces the upcoming categories one at a time at the end of the previous quarter.

This card just got edged out of the top spot for cash back credit cards without an annual fee. That’s because, for most card users, we prefer a simple rewards program that pays a flat rate for all spending. Still, that doesn’t mean this card isn’t a worthwhile choice for savvy cash-back maximizers who enjoy working to get that extra return.

A worthy addition to your wallet?

The simple answer is: It depends what you’re looking for.

If you’re looking for a single go-to credit card that you can use for every purchase without thinking too much about it, then there are better deals available to you.

The Chase Freedom is best when paired with other cards, like a 2% flat-rate cash back card or a Chase card included in the Ultimate Rewards program, so you can transfer points you earn on the Freedom and increase redemption value through the Chase portal.

The Freedom does have a bit of an edge over its competitor, the Discover it® Cash Back, in that the rotating bonus categories for the Freedom are often a bit more varied than the Discover categories. The one drawback is that you don’t have visibility into the full year of categories. Here are the categories for 2018 to give you an idea of the types of spend-areas that you could earn higher rates:

  • The first quarter was a mix of internet, cable and phone services, gas station spending and mobile wallet payments.
  • The second quarter included PayPal, Chase Pay and grocery stores.
  • The third quarter offered 5% on gas station spending, Lyft rides and Walgreens.
  • The final quarter of the year included wholesale clubs, department stores and Chase Pay.

Consider your annual spending to determine if these types of spend groups match your spending habits. One other thing to keep in mind: Spending more than you normally would because it will earn you extra cash back is self-defeating. So, don’t be tempted to overspend if you choose this card.

If your credit score is less than “excellent” but still in the “good” range — between 670-739 — you may still be able to qualify for this card. Using it responsibly could also help to push your score up.

Advantages
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate.
  • There’s a sign-up bonus worth $150 in cash back if you spend at least $500 within the first three months of card ownership.
  • You can redeem your points as a cash-back deposit to your bank account, a statement credit, or transfer them as Chase Ultimate Rewards points to an eligible Chase card that has Chase Ultimate Rewards.
Disadvantages
  • On-line sign-up required each quarter to earn the 5% in the bonus categories might be too much for some.
  • There’s a 3% foreign transaction fee, so you may want to consider using a different card for international travel.
  • If your balance transfer is greater than $100, you'll be subject to a 3% balance transfer fee, which is high compared to other cards that offer balance transfers at no cost.
  • There are other flat rate cards that offer 2% cash back, so depending on how you spend, you might earn more back over time with one of those options.

How much are your rewards worth?

The sign-up bonus of $150 after you spend $500 in your first three months is easily attainable and a nice start to your cash back earnings with this card.

The real benefit of the card is its 5% cash back rotating categories. However, the cap on earnings at $1,500 limits your 5% benefit to $75 per quarter. After that, a standard 1% back unlimited applies.

Assuming average monthly spending of around $1,600 on your credit card – and if you maximize your $1,500 limit on your 5% bonus category – that’s $3,300 a quarter to earn the remaining 1% rewards rate ($1,600 average monthly spending x3 for quarterly total, minus $1,500 for 5% rewards limit). On these assumptions, you would receive an additional $33 a quarter from your 1% rewards rate for $132 a year.

Including the sign-up bonus and assuming you max out the benefits of your quarterly bonus rewards, that’s a combined $450 cash back in your first year. Add that to the remaining 1% rate of $132 and you have a total first-year benefit of $582, with an ongoing annual reward rate (excluding sign-up bonus) of $432 a year. Not bad for a no annual fee card.

The Chase Freedom is really best when paired with other Chase cards in the Ultimate Rewards program: Chase Sapphire Preferred Card, Chase Sapphire Reserve and the Ink Business Preferred Credit Card. Each of these cards charges an annual fee — which can be substantial depending on which card you get — but can boost your redemption 25%-50% through the Ultimate Rewards program when you redeem through the Chase portal.

For instance, when you transfer your points to the Chase Sapphire Preferred Card, those same points increase in value by 25%. So, 100 Ultimate Rewards points become worth $125 when redeemed for hotels, airlines tickets or anything else that Chase categorizes as travel.

Alternatively, if you transfer the same 100 points to the Chase Sapphire Reserve card, they increase 50% in value, so that 100 points is now worth $150 in travel benefit through the Chase portal. Yes, the math can be confusing, but for some, the payoff of increased value is worth the legwork.

The Chase Freedom also offers 0% APR for 15 months on balance transfers (16.99%–25.74% variable APR after that) and the balance transfer fee is 3% of your transfer amount ($5 minimum). Considering the average American credit card debt balance is $6,375, and the average interest is at 17.14% (as of Nov. 28, 2018), if you’re making a $200 payment each month, transferring the balance to a Chase Freedom card could save you $1,491 in interest expenses, after paying $191.25 in fees. If you used this introductory period to pay down the total amount owed — which would mean paying $437.75 per month — you would save yourself $2,000 in interest.

Fees and APR

  • This card charges no annual fee.
  • You’ll be charged a 3% foreign transaction fee on every purchase made outside of the United States.
  • Chase Freedom comes with an introductory offer of 0% APR for the first 15 months on purchases and balance transfers. Regular APR is a variable 16.99% to 25.74%.
  • There’s a balance transfer fee of either $5 or 3% of the amount being transferred, whichever is greater.

How this card compares

Chase Freedom vs. Chase Freedom Unlimited®

Chase Freedom Unlimited is a solid, straightforward cash-back rewards card that’s ideal for cardholders who just don’t have the time or energy to track categories. A lot of the benefits mirror its sister Chase Freedom card with the major difference being the 1.5% back, unlimited, on all spending.

The bottom line: If the thought of tracking rotating rewards is making you tired, you’ll get comparable returns for less maneuvering with the Freedom Unlimited.

Read Bankrate’s Chase Freedom Unlimited Review.

Chase Freedom vs. Discover it® Cash Back

The Discover it® Cash Back card is the most directly comparable to the Chase Freedom as it also offers 5% cash-back on up to $1,500 in purchases, 1% on everything else. Discover it Cash Back cardholders have access to quarterly category bonuses by enrolling each quarter. They also help you plan your spending to align with the bonus categories by publishing the calendar of benefits for the entire year. (Jan-Mar 2019 – Grocery Stores, Apr-Jun 2019 – Gas stations, Uber & Lyft, Jul-Sep 2019 – Restaurants, Oct-Dec 2019 – Amazon.com)

The balance transfer offer for the Discover it Cash Back card is slightly lacking compared with the Chase Freedom. If that’s a big part of your decision, then you might want to stick with the Chase Freedom.

The major side benefit of the Discover it Cash Back card is the generous first-year bonus: With the Discover Cashback Match, Discover will match all of the cash back you’ve earned for your first year. That makes the first-year returns for this card extremely preferable to the Chase Freedom.

Read Bankrate’s Discover it Cash Back Review.

Chase Freedom vs. The Citi® Double Cash Card

When it comes to rewards value, the Citi Double Cash Card ranks among the very best cash-back credit cards that charge no annual fee. The Citi Double Cash Card offers a higher flat-rate cash back amount 2% (1% when you buy, 1% when you pay). It also boasts a slightly better balance transfer offer with 18 months 0% APR (15.74% – 25.74% after that) with the same 3% rate for the balance transfer fee ($5 minimum). If the balance transfer is your main motivation behind applying, and you can qualify, the Citi Double Cash might be the better option for you.

Read Bankrate’s Citi Double Cash Card Review.

How to get the most value from this card

To get the most value from this card, you must remember to activate the quarterly bonus categories. There are five ways to do this:

  1. Sign into your Chase account and look for the “Activate Now” button.
  2. Call the number on the back of your card and activate over the phone.
  3. If you have a checking account with Chase, you can activate your bonus categories at an ATM while making a withdrawal.
  4. You can ask Chase to email you when it’s time to activate, and the emails include a link to activate.
  5. You can go to a Chase bank location and ask a Chase representative to assist you.

Maximizing rewards with these rotating categories involves planning your spending accordingly. As soon as you know the next quarter’s bonus categories, think about how you can shift your spending to best match the high-value rewards.

Takeaway

This card has a lot to offer cash back maximizers willing to put in a bit of effort to make the rotating categories work for them. For any Chase Sapphire Reserve or Preferred members, this card makes a lot of sense to add to your arsenal.

EDITORIAL NOTE

Opinions expressed here are author's alone, not those of any bank, credit card issuer, airlines, or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.