Flat-rate cash-back credit cards are having a moment, and Chase is getting in on the action.
Chase plans to release a new flat-rate card this April, dubbed the Chase Freedom Unlimited®, says Pamela Codispoti, president of Chase Consumer Branded Cards. The new card will earn a flat 1.5% cash back on all purchases, she says.
It’s just the latest sign that flat-rate rewards — as opposed to tiered systems that offer different rewards rates on different types of purchases — are gaining ground in the cash-back world. In the past few years, other major issuers, including Citi, Barclaycard and Capital One, have also introduced flat-rate cash-back cards.
Chase Freedom Unlimited® will be the only proprietary Chase consumer credit card that offers a flat-rate rewards structure. Here’s what the card offers, as described by Codispoti in an interview with NerdWallet:
- Earn rate: Unlimited 1.5% cash back on all purchases
- Sign-up bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
- Annual fee: $0
- Redemption options: Cash back or Ultimate Rewards points. Ultimate Rewards points, worth 1 cent apiece, can be transferred to other cards that earn Ultimate Rewards or redeemed for gift cards and trips booked through Chase’s travel portal. Cardholders will also be able to redeem Freedom Unlimited rewards at certain stores’ point-of-sale terminals using the Chase Freedom® Mobile app.
The Chase Freedom Unlimited®’s flat-rate rewards structure sets it apart from other Chase cards that offer tiered rewards. Chase’s original Chase Freedom® card, for example, offers 5% cash back on quarterly rotating categories, and 1% back on everything else. The Chase Sapphire Preferred® Card earns 2 Ultimate Rewards points per dollar spent on travel and dining, and 1 point per dollar spent elsewhere. And like those cards, the Chase Freedom Unlimited® will allow rewards to be transferred to other cards that earned Ultimate Rewards, which translates to more redemption possibilities.
While the Chase Freedom Unlimited®’s flat-rate rewards could certainly complement other Chase cards, it will not replace them, as some bloggers have speculated.
“People were worried the (original) Freedom was going away. We get it. But it’s not going away,” Codispoti says. “We’re just adding to our Freedom suite. They don’t have anything to worry about.”
Why get the Chase Freedom Unlimited®?
The Chase Freedom Unlimited® won’t be available for a while. But if you’re thinking about getting a cash-back card sometime soon, here’s why you might want to hold out for its release:
Several redemption options. The main feature that makes the Freedom Unlimited different from other flat-rate cash-back cards is its versatility — namely, the fact that it’s backed by “our award-winning Ultimate Rewards program,” as Codispoti puts it.
This flexibility makes the Chase Freedom Unlimited® an excellent companion to the Chase Sapphire Preferred® Card, for example. Cardholders who had both cards could potentially increase their earning power on the Chase Freedom Unlimited® by transferring the points to the Chase Sapphire Preferred® Card. If they did this, they’d get a value of 1.25 cents per point when redeeming through Chase’s travel portal, and they’d have the option of moving rewards at a 1:1 ratio to several other major loyalty programs, such as British Airways, Southwest Airlines and Hyatt.
No minimum redemptions. With the card, you can redeem for cash-back in any amount — even for as little as 1 cent, Codispoti says. Many other cash-back cards set a minimum redemption amount — $25 is common, and some cards go as high as $50. With no minimum redemptions, Chase Freedom Unlimited® cardholders will be able to redeem every cent earned on the card, a relatively rare benefit.
Big sign-up bonus and a 0% APR period. The card comes with a generous sign-up bonus, which is the same as the Chase Freedom® offers. It also offers a 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 16.74% - 25.49% Variable APR.
The limits of the Chase Freedom Unlimited®
The Chase Freedom Unlimited® offers good value — especially if you’re looking for ways to earn more Ultimate Rewards points. But it also comes with some caveats you should know about:
Foreign transaction fees. Like many cash-back credit cards, the Chase Freedom Unlimited® comes with foreign transaction fees, Codispoti says. If you’re traveling abroad, the Capital One® Quicksilver® Cash Rewards Credit Card might be a better choice, since you won’t have to pay that extra 1% to 3% fee on every purchase made outside the U.S.
Not the highest flat-rate cash-back card around. If you’re just interested in cash-back rewards — and not necessarily Ultimate Rewards — the Citi® Double Cash Card – 18 month BT offer is still the best. It offers 1% cash back on every dollar spent, and 1% cash back on every dollar paid off, more than the Chase Freedom Unlimited®’s 1.5% cash-back rewards rate.
No bonus categories. The whole point of a flat-rate cash-back card, of course, is to increase your rewards earnings across the board, not just in one category. But for those who do most of their spending in one area — say, groceries — a card with bonus categories may offer more overall value. And there’s no reason you couldn’t use both types of cards: a flat-rate card for everyday purchases, and a card with tiered rewards for purchases within a certain category.
Chase Freedom Unlimited®: Is it worth getting?
The Chase Freedom Unlimited®, while it hasn’t been released yet, is good news for consumers. Unlike other Chase credit cards, it offers relatively high flat-rate rewards for all purchases, while offering more redemption flexibility than we’ve seen in other Chase cards with no minimum redemptions. It doesn’t offer the highest flat-rate cash-back rate around, but for consumers looking for a card that offers versatility and value, this card appears to be a strong choice.
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