Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.
If you’re on the hunt for a new rewards card, you’ve probably come across Chase Freedom® during your search. The Chase Freedom® offers 1% cash back on all purchases and the opportunity to earn additional cash back if you spend money within revolving quarterly bonus categories.
The information related to Chase Freedom® has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.
- Annual fee
- Rewards Rate
- Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.
- Regular Purchase APR
- 16.49% - 25.24% Variable
You automatically earn 1% cash back on all purchases as soon as you start using the card.
Every quarter, Chase introduces bonus categories where you can earn 5% cash back. In order to earn 5%, you need to activate the bonus category every quarter. If you don’t activate, you will only earn at the 1% cash back rate. You can only earn 5% cash back on up to $1,500 of spending every quarter.
How to Activate the Quarterly 5% Cash Back Categories
Now that you know the type of spending that will earn you 5% cash back, let’s touch on how it all works.
To earn 5% cash back each quarter, you must activate the quarterly bonus categories before the deadline. The activation deadline appears on the cash back calendar.
There are six easy ways to activate. Just choose the one that’s best for you.
- Online – Once you are a Chase Freedom® cardholder, you can activate online at the Ultimate Rewards portal.
- Text message – Sign up for Chase Freedom® 5% text reminders at online. You’ll get a text reminding you when it’s time to activate.
- Email – You can also sign up for email reminders from Chase.
- Phone – Call the number on the back of your card to let one of the specialists activate your 5% cash back.
- Chase location – Visit any Chase Bank and see a personal banker.
- ATM – Chase checking customers can activate their 5% cash back with one click via the ATM while making a cash withdrawal.
The base 1% cash back will always apply first to purchases on your statement. Each quarter you activate, spending that qualifies for an extra 4% cash back will appear in a separate section broken down by category.
Up to 5% cash back if you are on top of things.
It’s hard to beat 5% back on spending you’re already doing, and if you pay attention and enroll in the categories every quarter, you can earn up to $300 in cash back a year compared to the base 1% cash back you earn on all purchases.
A good selection of 5% categories.
Chase comes up with fresh categories that sometimes include tie-ins with big retailers like Amazon so it’s not hard to find a way to earn 5% on your spending throughout the year.
You can pair it up with other Chase rewards.
If you have another card that earns Ultimate Rewards® points, like the Chase Sapphire Preferred® Card, you can combine the rewards you earn from the Chase Freedom® with your other Ultimate Rewards points anytime.
Need to enroll manually.
There’s no automatic enrollment in the 5% categories, so you need to remember to take care of that every quarter. Chase lets you sign up for alerts so it’s not hard to get reminded, and you can enroll right from your phone. This is a card for maximizers, not people who want to set it and forget it.
A cap on 5% earning.
You only earn 5% back on up to $1,500 worth of spending in the designated categories each quarter. That’s $1,500 total across all the categories, not $1,500 for each category.
Right off the bat, you can probably tell a card with changing quarterly categories like the Chase Freedom® isn’t for the passive cash back rewards earner. There’s a lot involved here.
You need to activate the 5% cash back bonus each quarter. The cash back categories can change each year. And you must be a mindful spender who remembers when to swipe the Chase Freedom® to earn 5% back.
There’s a fair amount of fine print that dictates what will and won’t qualify for 5% cash back. As the new categories roll out, you’ll want to pay close attention to the type of purchases that are eligible.
The Chase Freedom® is part of the Chase Ultimate Rewards® program, so the Ultimate Rewards portal is where you go to manage and redeem points. Cash back earned from the Chase Freedom® is tracked in Ultimate Rewards points – $1 in cash back equals 100 points.
When you redeem points for rewards, for the most part, 100 points also equals $1 (and 1 point equals $0.01).
The true value of points earned varies slightly. Here’s the breakdown:
Statement credit or cash deposit redemption: 100 points = $1
Gift card redemption: 100 points = $1
Travel redemption: 100 points = $1; you can use a combination of points and your credit card for bookings
Amazon product redemption: Below is a sample conversion, but it’s subject to change
If you do choose the Chase Freedom®, make sure to redeem your points in a way that you’ll get the most value. Choosing Amazon products may not be the way to go.
Combine with a Chase Sapphire Preferred® Card
If you have a Chase Sapphire Preferred® Card or Chase Sapphire Reserve®, you can combine your Chase Freedom® Ultimate Rewards® points with your Chase Sapphire Preferred® Card Ultimate Rewards points. That means you would have all of the redemption opportunities associated with the popular Sapphire cards, including the ability to transfer your points to frequent flier programs like United MileagePlus® and Southwest Rapid Rewards®.
You need to have Excellent/Good credit in order to be approved for the credit card. In addition to having an Excellent/Good credit score, Chase will consider your employment status and income to ensure that you would be able to afford any new debt.
Overview of Card Benefits
For benefits and protections, the Chase Freedom® offers:
- Zero liability protection means you won’t be held responsible for unauthorized charges made with your card or account information. This is a fairly common credit card benefit.
- Chip-enabled card. Just one warning: this is a chip and signature card (and not a chip and pin card). While that should be fine for all of your spending in America, it might make using the card overseas a bit more difficult when only chip-and-pin is accepted.
- Purchase protection covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.
- Price protection provides that if a card purchase you made in the U.S. is advertised for less in print or online within 90 days, you can be reimbursed the difference up to $500 per item, $2,500 per year.
- Auto rental collision damage waiver means you can decline the rental company’s collision insurance and charge the entire rental cost to your card. Coverage is provided for theft and collision damage for most cars in the U.S. and abroad. In the U.S., coverage is secondary to your personal insurance.
How does Chase Freedom® stack up versus the competition? It really depends upon how you use your card. 5% cash back is one of the highest rates on the market, but you need to activate and spend in that category to earn rewards. Otherwise you would be earning a not very exciting 1%.
We will now compare Chase Freedom® to three other types of cash back credit cards:
- Discover it® Cash Back – a credit card that offers rich cash back rewards
- Flat rate cash back credit cards, where you can earn 2%
- Bonus category cards
Discover it® Cash Back
There are a lot of similarities between Discover it® Cash Back and Chase Freedom®. Both cards have no annual fee and pay a base cash back rate of 1%. Both cards offer 5% cash back in rotating categories. Both cards require you to opt in to the 5% cash back categories and cap the 5% cash back up to $1,500 of spend. But there are two areas where these cards are different.
The first big difference is the intro bonus. With Chase Freedom®, you can Earn a $150 Bonus after spending $500 on purchases in your first 3 months from account opening. Discover will match ALL the cash back you’ve earned at the end of your first year, automatically. There’s no signing up. And no limit to how much is matched (new cardmembers only). There is no cap to how much you can earn. If you are a big spender (especially in the bonus categories), you would earn much more during Year 1 with Discover. Here is a comparison of first year earnings:
- You spend $1,000 a month in 1% categories
- You spend $500 a month in 5% categories
- The sign-on bonus at Chase would be $150, after required spend
- The sign-on bonus at Discover, at the end of the first year, would be $420
While you get the intro bonus much quicker at Chase – for big spenders, it pays to wait until the end of Year 1 at Discover.
The second big difference is the categories. Each quarter Discover and Chase announce their bonus categories, and they can be different. At Discover, the 5% categories from April to June 2020 are Gas stations, Uber and Lyft. The 5% is limited to $1500 spending per quarter, 1% after that. Activation is required.
If you are a big spender, the Discover it® Cash Back first year bonus makes it a good choice. If you are constantly looking for good deals, having both cards in your wallet to take advantage of the bonus categories might be a good choice.
Flat Rate Cash Back Cards
If opting into bonus categories every month sounds painful, you might want to consider a card that pays a flat rate on all of your spending. Whereas Chase Freedom® offers a combination of 5% on bonus categories and 1% on everything else.
Citi® Double Cash Card – 18 month BT offer
Citi® Double Cash Card – 18 month BT offer lets you Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay.. If you pay your statement balance in full every month and claim the cash back as a check or deposit into your checking account, you can earn double cash back.
Alliant Cashback Visa® Signature Card
Another new option is from Alliant, a credit union that anyone can join. With the Alliant Cashback Visa® Signature Card, you can earn unlimited 2.5% cash back on all purchases. Just be warned: there is a $99 annual fee, waived the first year. If you spend more than $1,000 a month on the card, the Alliant Cashback Visa® Signature Card will be a better deal than Citi® Double Cash Card – 18 month BT offer.
Bonus Category Cash Back Credit Cards
If you spend a lot of money in a single category every month, you might want to consider a credit card that pays a higher rate on just that category. For example, if you spend a lot of money on gas, you can find a card that pays 5% cash back on gas. If groceries are your biggest expense, you can find a card with 6% on groceries. You can find the best cash back credit cards by category here.
Cash back credit cards are great ways to put a little extra money in your pocket. Just remember to pay the statement balance in full and on time every month. Interest and late fees can quickly eat away at the cash back that you earn.
Chase Freedom® is a good choice for people who are willing to opt in to the bonus categories each quarter and actually spend a lot of money in the bonus categories. If you don’t take advantage of the generous 5% bonus categories, you will be left with a card paying only 1%, which is not very exciting.
The information related to the Chase Sapphire Preferred® Card and Chase Sapphire Reserve® has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.
The Ultimate Rewards points you earn from the Chase Freedom® don’t expire as long as you keep the account open. If you close your account, you will forfeit your points, though if you keep another Chase card that earns Ultimate Rewards open you can transfer your points to that account before you close your Chase Freedom®, and keep them alive.
Credit card companies rely on merchant codes provided by payment networks to determine the category of a purchase. Some stores might have a merchant code that doesn’t fit what you might think the purchase will be. For example, buying groceries at a Walmart isn’t a grocery purchase because Walmart doesn’t code itself as a grocery store. There’s no way to know for sure in advance what category a merchant falls under, so be aware of that before relying on the cash back for a category from a merchant you haven’t shopped at before.
Don’t let those cash back promises pressure you into spending more than you can afford. If you don’t pay your statement balance in full each month, you could get slapped with sky-high interest charges. That would totally negate any benefit you might get from earning cash back. Cash back cards are only valuable if you can pay your bill in full and capture the entirety of your cash back rewards.
It depends on the card. Some cards allow you redeem cash back dollar for dollar as a statement credit, which can help lower your total balance. Just keep in mind that applying cash back to your card statement does not count as a monthly payment. Other cards will increase the value of your cash back if you spend on certain categories, like travel. Review your terms carefully to be sure you’re getting the most bang for your buck.
Find the card that fits your day-to-day spending needs best, beyond the flashy sign-up bonus offers and cash back promises. Pay your bill in full each month (spend only what you can afford to pay off).