While this may surprise you, one of my favorite credit cards in my wallet today is the Chase Freedom card. I say this may surprise you because at face value the card isn’t that appealing. The card is a no annual fee 1% cash back card with limited benefits. However, the card also offers 5% cash back on quarterly rotating bonus categories. This 5% cash back is what potentially makes the card so valuable. Let me explain.
Chase Freedom 5% Cash Back
As I mentioned, the Chase Freedom card is a simple no annual fee cash back credit card. Cardholders receive 1% cash back on all purchases, so it’s definitely not the most lucrative cash back card around. What makes this card so valuable is the 5% cash back you can earn on the first $1,500 spent on rotating bonus categories. By maximizing this benefit, you’ll earn up to $300 worth of cash back each quarter.
Each quarter Chase publishes a list of qualifying purchases where cardholders can earn 5% cash back. The only trick to this benefit is that you have to log-in and “activate” the benefit, but it’s incredibly easy. Once activated you’ll earn 5% cash back on the first $1,500 of qualifying purchases, or $75 a quarter.
Chase Freedom Q1 2018 5% Cash Back Categories
For the first quarter of 2018 Chase is offering a fairly generous rotating bonus category.
For Q1 2018 Chase Freedom cardholders can earn 5% cash back on all gas station purchases, internet, phone, and cable services, and purchases made through Mobile Wallets. It’s that final piece, Mobile Wallets, that makes the Q1 2018 5% cash back benefit so valuable. Mobile payments are becoming widely available at many merchants which should make it easy to maximize the Q1 2018 5% cash back benefit this year. Though I’m not particularly interested in earning cash back.
Earning 5X Ultimate Rewards Points On Apple Pay Purchases
Another reason I absolutely love the Chase Freedom card is that I can transfer cash back “points” into my Chase Sapphire Reserve Ultimate Rewards account. As you accrue cash back on the Chase Freedom card you actually earn points. If you don’t have an Ultimate Rewards card you can redeem Chase Freedom points as cash back at a rate of $0.01/point. If you do have a Chase Ultimate Rewards card (Chase Sapphire series) you can transfer those points into your Ultimate Rewards account.
The good news is that by transferring Chase Freedom cash back “points” to a Chase Sapphire Reserve Ultimate Rewards account the points instantly become worth $0.015/each when used for travel through Chase Travel. That means your $300 of cash back is now worth $450. The even better news is that you can then transfer these points to airline transfer partners. Once you transfer points you can easily get $0.05 of value when redeemed for premium cabin flights. This means your $300 of cash back could potentially be worth $1,500 or more. That’s great value from a no annual fee 1% cash back credit card!
Applying For The Chase Freedom Card
While I’m clearly excited about the Chase Freedom card I can’t actually recommend that anyone actually apply for this card. That’s because there is a much more lucrative way to get your hands on this card. Instead, I’d recommend that you first apply for the Chase Sapphire Preferred card. That card comes with a generous 50,000 Ultimate Rewards sign up bonus and waives the $95 annual fee for the first year.
As your annual fee comes due transfer all of your Ultimate Rewards points to an airline transfer partner to empty your Ultimate Rewards account. Then, call Chase and ask to downgrade the Chase Sapphire Preferred card to the Chase Freedom card. Then, 24 months after applying for the Chase Sapphire Preferred card, apply for the Chase Sapphire Reserve card. You’ll earn a second 50,000 point sign-up bonus and then be able to transfer Chase Freedom points into your Chase Sapphire Reserve account.
If you apply directly for the Chase Freedom card you’ll only receive a $150 sign-up bonus which is the equivalent of 15,000 Ultimate Rewards points. Sure the above method takes a bit longer, but there’s no denying that this strategy is significantly more rewarding.
Final Thoughts
When I started opening credit cards and trying to maximize value I never assumed I’d find a no annual fee cash back credit card so valuable. I traditionally avoid cash back cards because I don’t find much value in cash back. I’d much prefer to earn flexible points currencies which I can then transfer to airline and hotel partners. Luckily, by pairing the Chase Freedom and a Chase Sapphire product you can get the best of both worlds. In Q1 2018 it means that I can earn 5X Ultimate Rewards points on all Apple Pay purchases.
