Chase Freedom Review: 5% Cash Back is King(5/5 - 220 Votes)
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|
|Annual Fee||Signup Bonus||APR , Variable*||APR Promotions|
|$0||Earn $100 Bonus Cash Back after you make $500 in purchases in your first 3 months from account opening.||13.99% - 22.99% (Variable)||0% APR for 15 months on purchases & balance 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.