Chase

Should I get the Chase Freedom or Chase Freedom Unlimited?

I was recently approved for the Chase Ink Business Preferred card, which for now is the credit card that I am focused on. The minimum spend to get the 80,000 point sign up bonus is $5,000 in 3 months, so I don’t want to add any more spending on top of that. But as any points enthusiast should do is plan ahead — and in this case I am planning what card I will target next.

I talked in a previous post about the ideal card for someone getting started in credit cards and points and miles — which I pointed to the Chase Freedom Unlimited. Not only will you begin earning Ultimate Rewards points (given that you eventually pick up a Chase Sapphire product), but you will also earn 1.5% cash back on all purchases (or 1.5x UR points). Now that I have secured the Ink Business Preferred card, there shouldn’t have been an increase to my 5/24 count, and I’d like to further solidify my Chase earning portfolio. What that means is a decision between the Chase Freedom and Chase Freedom Unlimited.

To first clarify, I am deciding between these two products because I want to maximize my Chase points. While there are plenty of other products from American Express or Citi, I find it important to not over diversify your credit cards. Especially for people in a similar financial situation to me, having too many different cards will hinder your ability to earn a substantial amount in any one program. Down the road I will most likely begin to diversify, but for now I want as many Chase products as possible –specifically Chase Ultimate Rewards earning cards. I currently have the Chase Sapphire Reserve, so any cash-back points I earn will be transferred to the Ultimate Rewards portal and redeemed that way. Let’s first take a look at each product separately.

Chase Freedom

Chase Freedom card

  • $150 sign-up bonus after $500 spent in the first 3 months
  • 5% cash back on up to $1,500 in spend on specific, rotating quarterly categories. 1% cash back on all other purchases
  • No annual fee

Here is the current “Freedom calendar” showing the spending bonus categories.

Chase Freedom 2018 5x bonus categories

To put this in context — if I maximized spend on this card for a whole year ($6,000 across the 4 categories) I’d have 30,000 points that can be transferred to the Ultimate Rewards portal. That is $450 when redeemed for travel through the portal.

 

Chase Freedom Unlimited

Chase Freedom Unlimited credit card

  • $150 sign-up bonus after $500 spent in the first 3 months
  • 1.5% cash back on all purchases
  • No annual fee

So now let’s look at these cards head to head. While I want to identify the clear differences and similarities in these products, I will be treating this with my own goals and spending habits in mind. Just because I lean one way does not mean someone else will.

Comparing the two

When you look at the two products in comparison, the differentiating factor comes down to the spending bonuses. The sign-up bonus and annual fee are the same across both cards, so I want to focus solely on spending bonuses and where I see more benefit for myself.

As I already went over, the Chase Freedom offers a total of 5% cash back on $6,000 max in spend for a year. If you were to redeem that for cash, that would be $300 cash back for the year — which doesn’t take into account the 1% cash back you receive on spend on top of that bonus categories spending. By carrying the Chase Sapphire Reserve I am able to transfer the points earned on this card to my Ultimate Rewards portal and redeem directly for travel — by taking that route the 30,000 earned is $450 in travel, almost $150 more in value.

When we compare the earning potential with the Chase Freedom Unlimited, it obviously looks a lot less appealing. That same $6,000 spent annually is only 9,000 UR points or $90 cash back with the Chase Freedom Unlimited. On a high level, the Chase Freedom is pretty obviously the choice. What I am specifically looking at is the potential when it comes to my personal spending. Specifically, will I be able to max out the spend on the Freedom categories, or even put enough spend on the categories to make it valuable? Breaking down the numbers, I want to look at the quantity of spend at which the Freedom becomes less valuable.

When I look at the current category for January – March, I consider the amount of spend I could realistically put on the card. My monthly budget is maybe only a bit more than $500 ($1,500 max divided by 3 months) , but that is across all spend. So what would I be able to fulfill out of the total ? In the first quarter spending, I would be able to put my internet bill on the statement, which for the sake of argument we’ll say is $100 a month. So right there is $300 towards  the bonus spend. On top of that, I would say I spend about $200 every three months on gas — being a road warrior I don’t pay for my own gas, but for these three months I’d probably put gas on my personal card. We are now at $500. So there is about a $1,000 left to maximize the bonuses on the card. In this situation I could pretty easily buy something for $1,000 to max out the card, but for arguments sake let’s say that I am able to get to $1,000 in spend for the first quarter spending. I will not go into every quarter, but for the most part the categories have remained somewhat similar year after year.

For arguments sake, I will say that I am able to hit $1,000 in bonus spend a quarter, and then $1,000 in spend on top of that. So going back to an annual perspective, that is $4,000 in bonus spend for the year and $4,000 in non bonus spend. Annually, I’d be getting 24,000 points to be used to redeem through the Ultimate Rewards portal, worth $360 in travel. 

If you look at that same spending for the year, that would only be 12,000 points earned with the Chase Freedom Unlimited — $8,000 spent annually with 1.5x points earned. While the spending can really vary, and maybe one quarter I would not come close to that amount of spend, the value is basically double with the Chase Freedom. So where does that leave me?

Decision

I think the obvious decision is to have both. There are no restrictions in place for holding both cards, except for any restrictions stemming from Chase’s 5/24 rule or the general guideline restricting people from signing up for two Chase cards within 30 days. So ultimately I will have both cards, but for now I am going to sign up for the Chase Freedom first. The bonus earning is a lot more appealing, but I also want to maximize the spending outside of the bonus categories. If I stay with the $4,000 in Freedom bonus spend, and use the Freedom Unlimited for the “other” $4,000 in spend that would be 26,000 points back versus the 24,000 points if only using the Chase Freedom. While not a huge difference, this would represent the highest earning potential (which is not even considering the other Chase card bonus categories).

So I will first apply for the Chase Freedom card. Then in September my Chase Sapphire Preferred will hit its one-year mark and I will product change to the Freedom Unlimited. While it is a bit longer than I had anticipated, my Chase portfolio will all have come together.

Tucker is an avid points and miles enthusiast. Being fully involved in the world of credit cards and frequent flying for only a few years now, he brings a very fresh and unique perspective to the world of travel.

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