Overview of the Chase Freedom Cashback Credit Card
Last Reviewed: 7/13/2010 Last Revised: 8/21/2010
If you just read some random Chase Freedom promotional materials, the Chase Freedom credit card probably seems like an amazing offer, paying a whopping 4% bonus cashback (on top of the base 1% cashback!) on rotating spend categories each quarter. However, as with many credit card programs, the devil is in the details. Specifically, the Chase Freedom card has in place spend caps which severely limit the true upside of the card. Read more below if you want to find out why.
| Rank | 7 (out of 31 cashback cards tracked by PlasticIQ |
| Value of rewards* | $919 |
| Value of rewards for top cash-back card* | $1,467 |
*Values determined by the PlasticIQ Ranking Engine for a 3-year time period, based on our standard spending profile. Includes annual and other fees.
Let’s Examine Chase Freedom Rewards
The Chase Freedom Credit Card offers a standard 1% cashback bonus on all purchases, and an additional 4% cashback bonus on a pre-defined group of spending categories, which change each quarter. For example, in Q3 2010, the categories eligible for the 4% cashback bonus are: gasoline purchases, air travel, auto rentals, and hotel stays.
Here’s the catch: The Chase Freedom card has specific spending limits each quarter that limit the cash back bonus that can be earned on the 4% component (the 1% component has no such limits). For example, in the Q3 2010 group of categories, only your first $800 of combined spend in those categories qualifies for the 4% cash back bonus. Any spend above $800 in those categories only earns you the standard 1% bonus.
The table below provides a summary of the eligible 4% cashback bonus categories for 2010 for the Chase Freedom card, along with the spending caps for each quarter and the maximum cashback that can be earned based on those caps.
| Quarter (2010) | Categories | Spending Cap |
|---|---|---|
| Q1 | Dining, Utilities, Education, Child Care | $1,000 |
| Q2 | Home improvement, Lawn & Garden, Home Furnishings, Drug Stores | $800 |
| Q3 | Gas, Air Travel, Auto Rentals, Hotel Stays | $800 |
| Q4 | Grocery Stores, Department Stores, Movies | $600 |
| Total | $3,200 | |
| Value with 4% cashback | $128 |
According to Chase customer service agents I’ve spoken to, the Chase Freedom categories should remain roughly the same going forward, though they may be assigned to different quarters. It also wouldn’t surprise me if they introduced new categories or swapped out some of the existing ones.
If we assume the spend caps will also remain roughly the same, the Chase Freedom cashback bonus is, at a maximum, woth around $128 per year–and this assumes you successfully max out the spend limits each quarter.
Expenses and Fees for the Chase Freedom Credit Card
Fortunately, Chase Freedom doesn’t have any annual fees. Foreign transactions incur a 3% transaction charge denominated in US dollars (fairly standard for most credit cards). So nothing particularly unusual or sinister about the fee structure here.
PlasticIQ’s Final Assessment of the Chase Freedom Credit Card
While the Chase Freedom Card is clearly superior to a plain-vanilla 1% cashback card, there are several other cashback credit cards that easily outperform this card (check out the PIQ Ranking Engine to find out which ones).
Thus, Chase Freedom shouldn’t be used as your primary card, but rather as a niche card (part of your arsenal) that you only use when you can get the 4% cashback bonus. And when you max out the 4% bonus for the quarter, simply tuck the card away in your dresser drawer and put a reminder in your calendar to dust it off next quarter. Of course, you’ll have to decide if the extra monitoring and overhead costs of having another credit card justify the $128 or so of incremental upside.
