In another edition of credit card madness I want to compare two more no annual fee credit cards. As I mentioned previously, I don’t have a formal ranking system to rank cards. I think eliminating similar cards from the same issuer is the best way to start this competition. This time I’ll compare the Chase Freedom vs. the Chase Freedom Unlimited. Both cards are cash back credit cards and neither card comes with an annual fee. Similar to the BankAmericards reviewed yesterday, there are a few key differences between these cards.
Chase Freedom
The Freedom card from Chase is one of the most popular cash back credit cards on the market today. With no annual fee, low APR, and rotating quarterly bonus categories the card is a winner among individuals new to credit. There are definitely more lucrative rewards credit cards offered from Chase, but Freedom offers simplicity not found among other cards.
Key Benefits
- Unlimited 1% Cash Back on all purchases.
- 0% APR for the first 15 months following account opening.
- 5% Cash Back on the first $1,500 spent on rotating quarterly bonus categories.
- No Annual Fee.
- Easy to redeem Cash Back, either from statement credits or direct deposit.
- $150 sign-up bonus after spending $500 in the first 90 days following account opening.
Rotating Bonus Categories
The sign-up bonus and 1% unlimited cash back are definitely not reasons alone to have this card in your wallet, but the rotating bonus categories is what makes this card worth carrying. Each quarter, card holder must log into their account and “activate” that quarter’s bonus category. Once activated, card holders earn 5% Cash Back on the first $1,500 spent within the category each quarter. A schedule of 5% categories is found here. This quarter’s rotating category is for all gas station purchases or local commuter transportation purchases. Card holders who maximize this benefit can earn up to $300 additional Cash Back each year!
Chase Freedom Summary
Although at face value this card seems like a low earning 1% cash back credit card, the rotating categories make this card worth considering. New applicants who maximize the rotating quarterly bonus categories and earn the sign-up bonus earn at least $450 Cash Back in the first year of card membership! Quite rewarding indeed. Sadly, the card does not waive foreign transaction fees which has become somewhat commonplace for the no annual fee credit card space.
Chase Freedom Unlimited
As the card name implies, this card is more or less of an enhanced version of the above mentioned Chase Freedom card. Similar to the standard Freedom card, the Freedom Unlimited card is a no annual fee Cash Back credit card. There are however a few key differences which separate these cards.
Key Benefits
- Unlimited 1.5% Cash Back on all purchases.
- 0% APR for the first 15 months following account opening.
- No Annual Fee.
- Easy to redeem Cash Back, either from statement credits or direct deposit.
- $150 sign-up bonus after spending $500 in the first 90 days following account opening.
Unlimited 1.5% Cash Back
As you can see, the Chase Freedom Unlimited offers 0.5% more cash back on everyday purchases, but sacrifices the rotating bonus categories. Otherwise, the cards are essentially the same.
Chase Freedom Unlimited Summary
This card is simpler to use than the Chase Freedom because there are no rotating bonus categories to ‘activate.’ That being said, depending on spending habits you may miss out on some extra Cash Back when compared to the standard Freedom card. Lastly, like the Freedom card, this card does not waive foreign transaction fees which is again disappointing.
Chase Freedom vs. Chase Freedom Unlimited
Choosing between these cards is actually pretty easy. If you are on-top of the rotating bonus categories and believe you can max out each category, each quarter, then the Chase Freedom is for you. If you’re looking for a very simple 1.5% cash back credit card, the Chase Freedom Unlimited is best.
That being said I have to declare a winner. Now remember, I don’t have any formal criteria setup and this is exactly why. I could adjust my “standard” spending habits to maximize rotating bonus categories and the standard Freedom would win. Likewise, if I set standard spending habits which avoided bonus categories, the Freedom Unlimited would win. With that in mind…
… The Winner Is!
The standard Chase Freedom! Although these cards are basically interchangeable the rotating bonus categories make the standard Chase Freedom the better option, in my opinion. Activating the quarterly bonus takes only a few seconds and Chase should send you email notifications reminding you to activate the category each quarter.
Analysis
Assuming you spend $20,000 on the standard Chase Freedom card annually and maximize the quarterly bonus you’d earn approximately 2.2% Cash Back annually. As annual total spend increases this number becomes smaller. Until annual spending reaches nearly $48,000 does total annual cash back drop below the 1.5% offered from the Freedom Unlimited. I personally hope anyone spending $48,000 on a credit card is probably using a more rewarding card than either of these options.
Transferring to Ultimate Rewards
I want to mention that both of these cards earn ‘Cash Back’ credits which are transferrable to the Ultimate Rewards program if card holders also carry the Chase Sapphire or Chase Sapphire Reserve. Transferring points from either card to the UR program can be significantly more rewarding than simply receiving cash back.
