Huge Changes Coming To The Chase Freedom?

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Update: See my follow up post for an updated analysis on why these changes could actually be very positive.

The Chase Freedom is one of my all around favorite no annual fee credit cards, as it offers 5% cash back on up to $1,500 of spend in rotating quarterly categories.

For 2016, these bonus categories include things like gas stations, Uber, grocery stores, restaurants, and more.

Why I like the Chase Freedom Card

The best part of the Chase Freedom is that points earned on the card can be converted into Ultimate Rewards points in conjunction with the Chase Sapphire Preferred® Card or Ink Plus® Business Credit Card. So that means 5% cash back really gets you five Ultimate Rewards points per dollar spent.

The Chase Freedom also offers 1% cash back on all other purchases, with no limits. I don’t personally consider that to be all that lucrative, since there are other no annual fee cards which offer the equivalent of 2% cash back. For example, the Citi® Double Cash Card offers 1% cash back when you make your purchase, and then 1% cash back when you pay for those purchases.

So to recap, the reason I have the Chase Freedom is twofold:

  • The 5x bonus categories are a fantastic way to increase my balance of Ultimate Rewards points
  • It’s good for your credit score to hold onto some credit cards long term, so a no annual fee card is a great one to hold onto (the reason this helps your credit score is because a large part of your score is made up of your average age of accounts)

New Chase Freedom Unlimited being introduced?

Angelina Travels has the scoop on some changes which will be happening to the card, which should apparently kick in starting in March.

What are the details of the new Chase Freedom Unlimited, apparently?

  • A sign-up bonus of $150 after spending $500 on purchases within the first three months, and an additional $25 after adding an authorized user and having them make their first purchase within three months
  • Unlimited 1.5% cash back on every purchase

So the new Chase Freedom Unlimited will offer a flat 1.5% cash back on every purchase, rather than the 1% cash back presently offered by the Chase Freedom. However, the Chase Freedom Unlimited won’t offer rotating quarterly 5x points categories.

For me that sort of eliminates the value of the card. If I just want flat cash back I’ll get the Citi® Double Cash Card, which offers the equivalent of 2% cash back with no annual fee. And that’s a fantastic card that a lot of people should be considering.

Citi-Double

Without the 5x rotating quarterly categories, I don’t see any advantage of the Chase Freedom Unlimited over some other cards in the market.

Angelina claims that existing Chase Freedom cardmembers will be grandfathered in under the old system, and continue to earn 5x points in rotating categories. Personally I wouldn’t count on that being the case permanently. Maybe for a year or two, but I can’t imagine they’ll keep the program long term without accepting new cardmembers.

Bottom line

These potentially represent some huge changes to the Chase Freedom. While I can’t confirm anything directly, Angelina did post a screenshot, so it seems fairly legitimate.

The Chase Freedom is an awesome card, so if you’ve been considering getting it, I’d really consider signing up before any changes are made to the card. At a minimum, hopefully you’ll still get a couple of years of bonus categories out of the card.

After that I just don’t see much value in the card, if it were to offer a flat 1.5% cash back, given the other cards out there in the market.

Still, I’d say it’s probably a smart change for Chase to make. I know plenty of people who use the Chase Freedom for their everyday spend (it kills me, but most people aren’t educated consumers), and they’d probably come out ahead under the new system. Only those of us who strategically use the Chase Freedom in conjunction with other cards would come out behind.

What do you make of the potential changes to the Chase Freedom?

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Comments

  1. So, outside of bonuses categories, this new card will offer 50% more points per dollar than Sapphire Preferred or Ink? As long as you can transfer the Freedom points to Ultimate Rewards points, this could be huge! Don’t see why you’re so down on it, Ben.

  2. Bummer. I don’t make any purchases on the Freedom card except for the quarterly bonus categories and I transfer all points over to my Sapphire Preferred card. A strategy I learned from this site (thank you). If these changes are true, I’ll close the account.

    Unrelated, long time reader of the site. I really enjoy all the trip reports and other informative content. Thanks, Lucky!

  3. But just like the current Freedom offers “cash back” that can be converted to transferable UR points if you have another UR card, presumably the same would be true here? So you could earn 1.5 UR points on all spend? For non-bonus spend that’s a pretty good option, especially on a no-fee card with no minimum monthly transaction requirements like the Everyday cards.

  4. This is fantastic news assuming the points are still transferable — this would be my go-to card for non-bonused spend!

  5. Doesn’t this kill the United Club Card? 1.5x UA miles is one of the key draws of that card. If I can just transfer from Freedom, without the $395 fee, then I realllly need to value cheese and crackers to keep both.

  6. They should allow you to transfer these points to partners without having to have a premium card. They would set this card apart from the AMEX Everday and the Quicksilver. Otherwise its just another 1.5% boring cash back card.

  7. A very timely post. I was contemplating applying for a 1.5 no annual fee card to fill in the missing rewards points in my portfolio. Now I’ll wait to see if the Freedom morphs into one. Thanks Lucky!

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