Chase Freedom Unlimited Cash Back
In an effort to match products offered by rival credit card issuers, Chase is launching “Freedom Unlimited” to compete in the 1.5% cash back space. This will complement their existing Chase Freedom card, not replace it.
The new offering will align it with the likes of Capital One Quicksilver and Discover it Miles, which both offer the exact same cash back rewards – 1.5% cash back per dollar spent.
But what about cards like Citi Double Cash, which offers 2% cash back on every purchase? Or the Fidelity Amex? You could also argue that you’re better off going with Discover it Miles and it’s 3% cash back rate during year one.
All that being said, is the new Chase Freedom Unlimited card really competitive?
Chase Freedom Unlimited Earns Ultimate Rewards Points
So we know there are cards out there that offer better rates of cash back than the new Chase Freedom Unlimited card. No one can contest that.
But if you dig a little deeper, you could argue that we’re comparing apples and oranges, or more specifically, cash back and rewards points.
For those who have the Chase Freedom Unlimited and another Ultimate Rewards earning card, such as Chase Ink or Chase Sapphire Preferred, those points can be transferred to travel partners.
As a result, the 1.5% cash back rate could actually be valued a lot higher if the points are used to purchase first class airline tickets.
So that’s the big distinction that some people may miss if they’re underwhelmed by the 1.5% cash back rate.
You won’t find an American Express card that earns 1.5 Membership Rewards points per dollar spent, other than the $5k+ single purchase bonus on the Amex Business Platinum.
Chase Freedom Unlimited Math
Let’s take a minute to do some math to see if the new iteration of Chase Freedom is any better than the existing rotating category version, which offers 5% in certain categories each quarter.
We’ll assume our hypothetical cardholder spends $12,000 annually on the card.
Now remember the existing Freedom card earns 5% cash back each quarter on up to $1,500 in purchases. That’s a maximum of 7,500 UR points, or $75 if redeemed for cash, per quarter.
If we pretend that the cardholder maximizes the 5% cash back category all year round, they’ll earn 30,000 UR points. That accounts for $6,000 ($1,500 x 4) of their spending.
They’ll earn another 6,000 points for their remaining $6,000 in annual spending at a rate of a point per dollar.
In total, that’s 36,000 UR points for the person who maximizes the 5% cash back categories on the old version of Freedom.
How about the new Unlimited version? Well, the math is decidedly easier to compute. We simply multiply 1.5 x $12,000 to come up with 18,000 UR points. I figured make it an even $12,000 in annual spend for both our cardholders.
If you’re keeping track, that’s 50% fewer UR points on the new version of the card. The upside is that they can spend the $12,000 anywhere they want. And if they spend a lot more than $12,000 their UR points potential is endless.
But that’s the big question isn’t it? How many individuals will actually spend more than $12,000 on their Chase Freedom card each year?
Where Do You Win with the New Version of Freedom?
Of course, you can argue that many folks won’t maximize the 5% categories either. If we assume a slightly more realistic scenario where they spend $750 per quarter in the 5% categories, it drops to 15,000 UR points.
Let’s add the remaining $9,000 ($750×4=$3,000 in 5% categories) in spending and it’s 24,000 UR points.
That’s still 33% more points earned on the old version of Freedom.
If we drop it to $500 per quarter in the 5% categories, the total would be 20,000 UR points. (10k bonus + 10k in regular spending). That’s still better than the new card.
Ultimately, if you don’t spend more than $375 in the 5% categories, the new version is better. Assuming you do spend $375 per quarter in those bonus categories, you’ll earn 7,500 points. That would account for $1,500 of your $12,000 in spending annually.
The remaining $10,500 would earn 1 point per dollar, or 10,500 UR points. Combined with the 7,500 bonus points that’s 18,000 UR points.
Anything less than $375 each quarter and the new version is a better version.
Chase Freedom Unlimited vs. Chase Freedom Classic:
If $12,000 in annual spending:
Chase Freedom Unlimited = 18,000 UR points
Chase Freedom (old version)
= 36,000 UR points if you maximize 5% categories
= 24,000 UR points if you spend $750 in 5% categories each quarter
= 20,000 UR points if you spend $500 in 5% categories each quarter
= 18,000 UR points if you spend $375 in 5% categories each quarter
Get Approved for Chase Freedom Unlimited Regardless of 5/24 Rule
My wife recently applied for the Chase Freedom Unlimited card despite being right at 5/24.
She checked her Credit Karma credit report and saw that she had opened exactly five new credit cards in the past two years. The oldest ones weren’t due to be 24 months old for a few more months.
I asked her to go to the newly designed Chase website and over to the special offers section from the top-left drop-down menu.
Lo and behold, Chase Freedom Unlimited was listed despite her being exactly at 5/24.
To be even more thorough, and not waste an inquiry, I asked her to call our local Chase branch and ask to speak with a personal banker.
She asked if she was targeted for the $300 (30k UR points) bonus offer and was told no, but was pre-approved for the Chase Freedom Unlimited card.
While somewhat bittersweet to only get the $150 offer, we had a pretty good feeling she’d be approved, even though the new Chase rules say otherwise.
After filling out the app and hitting apply, and nervously waiting as the page populated, she was instantly approved with a handsome credit limit.
This is yet another datapoint that the 5/24 rule isn’t as hard and fast as Chase seems to make it out to be.