The Chase Freedom Flex℠ card recently announced its 5 percent cash back categories for Q1 2023: grocery stores (excluding Walmart), Target purchases (both in-store and online) and fitness club and gym memberships. Cardholders earn 5 percent cash back on up to $1,500 in combined spending each quarter, then 1 percent cash back after that (activation required).

In Q1 2022, the Freedom Flex’s 5 percent bonus categories were grocery stores (excluding Walmart and Target) and eBay. Target, fitness club and gym memberships were not included. I think the 2023 options are more widely applicable.

Interestingly, even though Walmart sells more groceries than any other U.S. retailer, it has typically been excluded from the 5 percent grocery quarter on the Freedom Flex and its predecessor, the original Chase Freedom® credit card*, which has been discontinued. That will be true again in Q1 2023 (although Walmart has made an appearance, along with PayPal, in Q4 2022).

But Target — another large, diversified retailer that sells groceries and many other things — will be included in Q1 2023. That’s a change from Q1 2022 and other previous quarters in which the Freedom Flex (or the original Freedom) offered 5 percent cash back on groceries. Note that groceries purchased at Target will only earn a total of 5 percent cash back in Q1 2023 (you can’t double dip). On the plus side, all Target purchases (even non-groceries) will earn 5 percent cash back via the Freedom Flex in Q1 2023 (until you hit the quarterly spending threshold).

Chase also specifically notes that Freedom Flex cardholders will earn 5 percent cash back on groceries ordered via Instacart in Q1 2023 (although other Instacart purchases will not qualify) when activated through Chase Ultimate Rewards.

All of this adds up to an extremely broad array of Q1 earning potential. My only regret is that the $1,500 cap is not higher. As I’ve written before, I firmly believe that this limit should be raised to account for inflation. It has not changed since 2011. If adjusted for inflation, $1,500 in 2011 equates to about $2,000 today.

Grocery prices are up 12 percent from November 2021, according to the latest Consumer Price Index data. I suppose the glass-half-full take on this is that earning 5 percent back on groceries with the Freedom Flex can take away almost half of that bite (assuming you weren’t earning any rewards last year, perhaps if you were using cash or a debit card instead).

Personally, I plan to use my Freedom Flex for groceries in Q1. I don’t have any fitness club or gym memberships, and I’m not a big Target shopper. Your circumstances might be different, however.

While there’s universal appeal to groceries, gym memberships and Target purchases are harder to maximize on other cards. You might want to put those first in some circumstances. It depends on how you spend your money and which other cards you have. There are plenty of top grocery credit cards that offer between 3 and 6 percent cash back on groceries. If you have one of those cards, in Q1 2023, you may be better off primarily using your Freedom Flex for Target purchases and/or gym memberships if you would only earn 1 percent cash back on those categories with your other cards.

The competition

Many cash back lovers have the Freedom Flex and the Discover it® Cash Back, which has a very similar structure (5 percent cash back after activation on up to $1,500 in spending on rotating quarterly categories, then 1 percent). The beauty of this strategy is that the cards’ quarterly bonus categories are usually different, giving you many opportunities to earn 5 percent cash back.

Unfortunately, for a second straight year, Q1 2023 is a rare quarter in which Chase and Discover have a lot of overlap between their eligible categories (Discover’s Q1 categories are grocery stores, drug stores and select streaming services). Ironically, in 2022, Discover paired groceries with fitness club and gym memberships, as Chase will do in 2023.

If you spend a lot at Target, on gym memberships, at drug stores or on eligible streaming subscriptions, this may not be a terrible conflict of interest. You could prioritize Target and/or gyms on the Chase card and drug stores and/or streaming on the Discover card, with groceries filling in the gaps on either card (or potentially even both). Some people might spend enough on groceries to reach a combined $3,000 quarterly spending threshold (you’d need to spend roughly $230 on groceries per week to max this out in a 13-week quarter).

You could consider buying gift cards to help you reach the limit, too (especially since Target and many grocery stores and drug stores have gift card racks that offer a wide variety of cards).

Looking further ahead

In a departure from years past, Discover is now joining Chase in electing to roll out its 5 percent categories one quarter at a time (Discover used to unveil them all at the beginning of the year). So it’s hard to forecast the rest of the year.

Using the past as a guide, both cards will probably have a holiday shopping emphasis in Q4. This doesn’t usually overlap as much as the grocery quarter, however. In the fourth quarter of 2022, Discover’s 5 percent categories are Amazon.com and digital wallets, while Chase’s are Walmart and PayPal.

The second and third quarters are more difficult to determine. In 2022, Discover’s Q2 categories were gas stations and Target. In Q3, they were restaurants and PayPal. Chase, meanwhile, went with Amazon.com and select streaming services in Q2 and gas stations, car rentals, movie theaters and select live entertainment in Q3. While things could certainly change, a similar set of categories seems likely in 2023.

Two categories that Chase has deployed in prior years, but not in 2022, are internet, cable and phone bills and home improvement stores. I’d be good with either (or even better, both!) if Chase wants to bring them back at some point in 2023.

Other valuable Freedom Flex benefits

Even if you may not love a certain quarter’s 5 percent cash back categories, the Freedom Flex is a very useful card to hold because it also provides 5 percent cash back on travel purchased through Chase Ultimate Rewards, 5 percent cash back on Lyft rides (through March 2025), 3 percent cash back on dining and drugstore purchases and 1 percent cash back on everything else.

This year, I maxed out the 5 percent rotating categories in three of the four quarters and came close in the other. I’m a big fan of this card. It doesn’t charge an annual fee, its purchase protection benefit once saved me $299 and it’s my go-to dining card.

The bottom line

It’s easy to see why the Freedom Flex is so popular. When you consider the total package, there’s truly something for everyone. While we don’t yet know what the 5 percent categories will be in Q2 2023 and beyond, I’m confident that this will continue to be a versatile cash back card that I use regularly.

Travel enthusiasts also love the Freedom Flex because they can pool their rewards points with other Chase cards, potentially stretching them even further with a transferable points card such as the Chase Sapphire Preferred® Card or the Chase Sapphire Reserve®.

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.

*All information about the Chase Freedom® credit card has been collected independently by Bankrate and has not been reviewed or approved by the issuer.