Chase Freedom - 2020 Deep Dive
Chase Freedom Card
Key Benefits
$200 Welcome Bonus after spending $500 on your Chase Freedom in your first three months
5% Cash Back or 5x Chase Ultimate Rewards Points for quarterly rotating categories
Unlimited 1% Cash Back or 1x Chase Ultimate Rewards Points on all other purchases
No Annual Fee
0% intro APR for 15 months on purchases and balance transfers, then 16.49% - 25.24% variable
APR after 15 months
5% Cash Back or 5x Ultimate Rewards Points on Lyft purchases
Complimentary 3 months of DoorDash DashPass which provides $0 delivery fee on DoorDash orders over $12
Gas Stations
Internet, Cable, Phone Services
Streaming Services
To the Point
The Chase Freedom, is one of the most popular beginner credit cards on the market. It is a solid foundation to begin your credit journey or add to your rewards card quiver. The Chase Freedom is a no annual fee card that earns 5% cash back on quarterly rotating categories. Historically, the 5% rotating categories tend to be on everyday expenses such as restaurants, supermarkets, drug stores, gas stations, and department stores. See below for a list of the past three years of categories. These categories tend to be money that you would be spending anyway! As of Quarter 1 of 2020 the categories include: gas stations, internet, cable, phone services, and streaming services. Unfortunately, there is a catch. The cash back is limited to the first $1,500 spent per category, per quarter, bringing the maximum reward earning per quarter to $75. After the earning cap is met, you will still earn unlimited 1% cash back, per dollar spent regardless of the category. This is the same for all non-category specific spending which will earn you unlimited 1% cash back. The current welcome bonus for the Chase Freedom is $200 after you spend only $500 in the first three months of opening the card.
Since the Points Passport is all about the points and miles, why would we recommend this seemingly cash back card? Fortunately, Chase allows cardholders to convert the cash back they've earned into Chase Ultimate Reward points. The Chase Ultimate Rewards can then be transferred to your other Chase credit cards accounts, such as the Chase Sapphire Reserve which provides a 50% Chase Ultimate Rewards redemption bonus. Essentially, if you utilize this points transfer method you could be making upwards of 7.5% back on purchases in the rotating categories. The tricky thing about the Chase Freedom is that it requires a little extra work. You have to activate the 5% categories on a quarterly basis within your Chase account, as well as keep track of your spending to take advantage of those specific categories while keeping in mind the $1,500 spending cap. As you can see, the Chase Freedom is not a "go to" kind of card for every purchases if you are trying to optimize rewards. If you are no longer getting value out of your Chase Sapphire Reserve ($550 annual fee) or Chase Sapphire Preferred ($95 annual fee), and no longer want to pay their annual fees, you have a no annual fee credit card downgrade path to the Chase Freedom. Simply contact Chase and downgrade your annual fee card into the free CF card. Conversely, if you are looking to supplement your Chase Sapphire in categories other than travel and dining look no further! The Chase Freedom is a free option to add more rewards on those rotating categories such as gas stations where you wouldn't normally earn extra Ultimate Rewards!
New Lyft and DoorDash Partnership for 2020
Chase recently partnered with Lyft to offer an additional 4% Cash Back or 4x Ultimate Rewards points when making Lyft purchases. This bring your total Lyft purchase earning potential to 5% or 5x Ultimate Rewards Points. If you spend any amount of time using ride sharing apps, this Lyft bonus could yield you a considerable amount of Cash Back or Ultimate Rewards depending on your frequency of use.
Chase has also partnered with DoorDash to offer Chase Freedom cardholders a complimentary three months of DashPass. After your free three months you will receive a 50% discount for DashPass for another nine months! The major benefit we see with the DoorDash DashPass is that you will have no delivery fee on orders that total over $12. If you are a frequent delivery diner, this membership would certainly cut some costs on your food delivery tab. Both of these new benefits are a very welcomed change, especially because the Chase Freedom cardholders incur no additional cost at all to enjoy the new valuable perks.
Value Proposition
At the Points Passport, we like to make the value proposition of the cards we review easy to understand. In order to do that, we break down the value into two parts: the initial welcome bonus and the cost to sustain every year after. Luckily, with the Chase Freedom there is no year after cost because there is no annual fee. Your first year will be the most valuable thanks to the welcome bonus. You will receive the $200 welcome bonus once you spend $500 on your Chase Freedom during the first three months of opening the account. If you have another Chase card in the Ultimate Rewards ecosystem, you can transfer the cash back into Ultimate Rewards which can increase your valuation dramatically.
The Chase Sapphire Preferred and Chase Ink Business Preferred offer a 25% Ultimate Rewards redemption bonus, and the Chase Sapphire Reserve offers a 50% Ultimate Rewards redemption bonus when booking travel within the Chase Ultimate Rewards portal. This bonus is done when Chase is converting your points to dollars, so your point balance essentially goes much further.
If you can reach the max spend of $1,500 each category quarter, you will earn 7,500 Ultimate Rewards each quarter, totaling 30,000 Ultimate Rewards annually. We value a Ultimate Rewards at an optimized value of $0.02/point. At this rate 30,000 Ultimate Rewards equates to $600. Since the card has no annual fee, the Chase Freedom is pure net value at no cost to you.
As mentioned above, if you transfer your 30,000 Ultimate Rewards from your Chase Freedom to your Chase Sapphire Reserve, you will have the ability to get 50% more value out of the 30,000 Ultimate Rewards points when you spend it on travel within the Chase portal. This means the points will be worth $675 when transferred to a Chase Sapphire Reserve card and redeemed through the Chase Ultimate Rewards portal, or up to approximately $900 when transferred to a travel partner to fully optimize! (transfer partner include Marriott, British Airways, SouthWest Airlines, United, and many, many more)
The newest 5% Cash Back or 5x Ultimate Rewards Lyft benefit can be calculated simply by figuring out how much you spend on ride sharing monthy, then multiply this rate by 12 to get an annual earnings rate. For example, if you spend $50 a month of Lyft, you will earn 250 Ultimate Rewards points, which multiplied by 12 (months) would equate to a total earning of 3,000 Ultimate Rewards annually. If you were to assign Points Passport's Ultimate Reward value of $0.02/point to 3,000 Ultimate Rewards you would be earning $60 towards future travel. As for the DoorDash DashPass benefit, you will be charged no delivery fee on orders over $12 during your first three months. If you order a meal once a week for an average of what would have been a $5 delivery fee would easily save $20 a month, and $60 in three months! Again, these new benefits are very easy to extract value from due to no actual added cost to the cardholder.
Primary Benefits
5% Cash Back or 5x Ultimate Rewards on quarterly rotating categories up to a maximum spend of $1,500 per quarter
1% Cash Back or 1x Ultimate Rewards on all other purchases
5% Cash Back or 5x Ultimate Rewards on Lyft purchases
Complimentary DoorDash DashPass which provides $0 delivery fee on DoorDash orders over $12
No Annual Fee
Chase Offers - Simply sign in to your mobile application and activate these offers! You will receive even more cash back or UR points when using your card at these specific merchants
0% APR on purchases and balance transfers for 15 months and 16.49% - 25.24% variable
APR after 15 months
Balance transfer fee: 3% or $5 whichever is greater (after intro period)
Foreign transaction fee: 3%
Purchase Protection: Purchases made on your Chase Freedom will be protected against damage or theft for 120 days after purchase up to $500 per claim and $50,000 per account.
Past Three Years of Rotating Quarterly Categories
2020
Q1 - Gas Stations, Internet, Cable, Phone Services and Streaming Services
2019
Q4 - Chase Pay, Paypal and Department Stores
Q3 - Gas Stations and Streaming Services
Q2- Grocery Stores and Home Improvement
Q1 - Gas Stations, Drug Stores and Tolls
2018
Q4 - Whole Sale Clubs, Department Stores and Chase Pay
Q3 - Lyft, Walgreens and Gas Stations
Q2 - Grocery Stores, PayPal, and Chase Pay
Q1- Mobile Wallets, Gas Stations, Internet, Cable and Phone Service
2017
Q4- Walmart and Department Stores
Q3- Restaurants and Movie Theatres
Q2- Grocery Stores and Drug Stores
Q1- Gas Stations and Local Commuter Transportation
This historical list gives you a better understanding as to what to expect from the future rotating 5% and 5x categories. You can see that gas stations appear consistent as well as Q4 Department Store bonuses. I would be most excited about grocery stores and restaurant category bonuses due to the ease at which you can generally max those out in a quarter.
Final Point
Whether you are just starting your credit history or you are an experienced points enthusiast, we believe the Chase Freedom has a place in everyone's wallet. It's the perfect beginner card and also an ideal addition to your existing Chase Ultimate Rewards ecosystem. It pairs perfectly with either of the Chase Sapphire cards and with the Chase Freedom Unlimited, creating a serious Ultimate Rewards earning trifecta. The rotating categories can be a little extra work to manage, but you can simply label your card with the three categories quarterly with some tape and paper! This little extra thought can lead to a plethora of extra points in the long run. The Chase Freedom doesn't shine with any special perks and you certainly do not want to use this card outside of the United States due to the 3% foreign transaction fee, but that is fairly typical for a no annual fee card. The Points Passport highly recommends the CF to anyone looking to get into the points and miles game, doesn’t mind the minimal extra work required to keep track of the rotating categories to earn 5x UR for everyday purchases, and wants a great no annual fee card.