Chase Freedom Review: 5% Cash Back is King

The Chase Freedom can be one of the best rewards credit cards in the business, offering no annual fee as well as great cash back rewards. Offering 5% back on bonus categories that change every quarter and 1% elsewhere, the Freedom also boasts a $100 signup bonus. It’s a Visa Signature card, sporting concierge service, rental car insurance, purchase protection, and so on; and since it’s a fairly easy credit card to qualify for, it’s great for rewards rookies and cash back connoisseurs alike.

Chase Freedom® Visa
	This offer is for people with a good to excellent credit history which means, among other things, that your credit history is clear of bankruptcy and seriously delinquent accounts Earn $100 Bonus Cash Back after you make $500 in purchases in your first 3 months from account opening 0% Intro APR for 15 months on purchases and balance transfers 5% Cash Back on up to $1,500 spent between July 1 and September 30, 2013 at gas stations, theme parks, and Kohl's® You'll enjoy new 5% categories every 3 months like gas stations, restaurants and Amazon.com. It's free and easy to activate your bonus each quarter! Unlimited 1% Cash Back on all other purchases No annual fee and rewards never expire		Pros Bonus cash back categories No annual fee 0% for 15 mos on transfers

The best of the rotating bonus category cards

The Freedom is easily the best of the three cards that give rewards on rotating categories. The Chase Freedom® gives 5% cash back on rotating bonus categories, up to $1,500 in purchases a quarter. Here are the Freedom’s 2013 bonus categories:

• Q1 (January – March): Gas, drugstores and Starbucks
• Q2 (April – June): Restaurants and movie theaters
• Q3 (July – September): Gas, theme parks and Kohl’s
• Q4 (October – December): Amazon.com and “select department stores”

The other 5% cards are the Discover it, Citi Dividend Platinum Select and US Bank Cash+. Here’s how they stack up:

US Bank Cash+: The Cash+ can actually beat out the Freedom in most ways, but suffers for the lack of a signup bonus. The Cash+ gives an unlimited 5% cash back on two bonus categories (you choose from a list that changes quarterly), 2% on gas, groceries or drugstores, and 1% elsewhere. But even better, if you save up for $100 worth of cash back, you’ll get $25 extra, effectively raising your rate to 6.25% and 2.5% on the bonus categories. and 1.25% elsewhere. However, it doesn’t have a signup bonus or access to discounts such as you see at the Chase Ultimate Rewards Mall, so it’s better than the Freedom if you hold the card for a short period of time.

Discover it: The Discover it offers more or less the same program, with a $1,500 quarterly cap in bonus spending and an unlimited 1% rewards elsewhere. In the it’s favor is its lack of foreign transaction fees; on the other hand, Discover’s acceptance isn’t as good as Visa or MasterCard’s. Plus, the it has no signup bonus, while the Freedom offers $100.

Citi Dividend Platinum Select: The redheaded stepchild of the lot, the Dividend caps your rewards at $300 back per year – that’s $1,500 in bonus spending per quarter, with no rewards for additional purchases.

Capital One® Cash Rewards - $100 Cash Back Bonus: If you don’t like the idea of 5% bonus categories – and some people don’t want the hassle – you can consider the Capital One® Cash Rewards - $100 Cash Back Bonus. Offering a flat 1.5% cash back on all purchases, the card sports a $100 signup bonus as well as no annual or foreign transaction fee.

The value of 5%

How do you calculate the value of this card? We think it’s about equivalent to a card that gives 2% on all the bonus categories all the time, and 1% elsewhere. Think of it this way: you earn 1% on every bonus category three-fourths of the year, then 5% for one quarter, which averages out to 2%. That’s assuming, of course, that you don’t hit the $1,500/quarter bonus rewards cap, and that your spending stays constant throughout the year. This analysis actually slightly underestimates the value of the Chase Freedom® in the bonus categories, since each quarter’s categories are tailored to season-specific spending. Your spending in each bonus category is likely to be higher when you receive the 5% bonus, so your yearly average is probably a bit higher than 2%.

But for the fact that you must enroll every quarter in your rewards program, it’s fairly straightforward and simple. You can redeem in increments as small as $20, and unlike certain other rewards programs (yes, you, Citi ThankYou Points), Chase’s rewards don’t expire. The final perk of the Chase Freedom®’s rewards program is that you get access to the Chase Ultimate Rewards Mall, an online storefront that gives you up to 10% cashback on preferred Chase retailers. These include Barnes and Noble (10% cash back), Fossil (6%) and Sears.com (7%). If you shop online anyway, this is a great way to increase your savings.