Updated April 13,2011
We’re eating some crow right now because of Chase’s new $150 signup bonus (see below for full details). Here’s why.
Over the last year or so, Chase has created more versions of the Freedom rewards card than most card issuers have in their entire credit card lineup. And throughout it all, we have remained skeptical of this card. While a common favorite amongst reward credit cardholders, we maintained that the Chase Freedom rewards program was too convoluted for us to hold it in the same esteem as many other cash back cards.
“5%” doesn’t always mean “5%”
Last year we first complained when they switched from “3% on your top 3 categories” to “5% on quarterly rotating categories that you have no control over.” Then we vented (rather publicly) that the 5% promises from this card and similar cards from Discover and Citi were misleading, since the categories rotate and users are required to proactively opt-in to receive those bonus rewards. Because of the rotation, the math works out to only 2% on average, year-round, for categories that many credit cards pay 5% on every day.
Thankfully, the rewards program hasn’t changed much since they settled on the 5% scheme, but they have rolled out Visa and MasterCard versions, and they have been constantly tweaking the signup bonuses. New users have been promised between $50 and $100 off-and-on for the past few months, and a 0% APR on balance transfers or purchases, anywhere from 6 to 12 months after signup. And the minimum spend required to earn the cash back bonus has hovered just under $800.
Now begrudgingly, we concede defeat
Presumably just to shut us up, Chase has stepped up their game, and is now offering $150 to new signups, the highest yet, and only requiring a $500 minimum spend to collect the cash. On top of that, anyone looking to offload some debt in the next few months can take advantage of 0% interest on purchases and balance transfers.
We still feel that too many other cards offer much simpler rewards. But with a $150 signup bonus, we can’t help but admit that the Freedom can be a powerful card in the right cardholder’s hands. While the 5% categories do rotate, and users do have to opt-in to earn them, those who are in the market for furniture, or gardening supplies, or travel at the right time of year, can reap the cash back benefits accordingly.
Especially when combined with a card that earns steady returns year-round, like the CapOne Venture or Blue Cash, the Freedom can net a true credit card nerd some serious rewards.
Bonus categories: a briefer
Can’t wrap your head around 5% rotating categories? Here’s how we like to think about it:
- Each bonus category earns 5% for 3 months, and 1% for 9 months
- That’s 5% * (3/12) + 1% * (9/12) = 2% on average, for the year
- So if your spending is pretty consistent throughout the year, every bonus category effectively pays 2%, and you earn 1% on all other purchases.
Chase also seems to do a decent job of coordinating the categories with season-specific spending (like travel around the summer months), so the percentage reward rate is probably a bit higher than 2% on these categories. Combined with a check for $150 upfront, that’s not too shabby.
And to give you an idea of how the bonus categories are broken down, here’s the full list of Chase Freedom’s rotating 5% rewards categories for 2011:
- Jan – Mar: Grocery and drug stores.
- Apr – Jun: Home improvement, lawn & garden, and home furnishings.
- Jul – Sep: Gas, hotels, and airlines.
- Oct – Dec: Dining, department stores, movies, and charity.
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