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The premise is that he has the Chase Sapphire Preferred® Card, and wants to apply for one of those no annual fee cards, given that they’re great complements to the Sapphire Preferred. Which is worth more — 5x points in select categories on the Freedom Card, or 1.5x points across the board on the Freedom Unlimited Card?
Ultimately there’s no “one size fits all” answer, as it all depends on your spend pattern. So the best I can do is to provide a general outline by which you can decide.
What’s the incremental return on the Freedom Unlimited?
The Chase Freedom® Unlimited offers 1.5x points on all spend, and in conjunction with a card accruing Ultimate Rewards points, those points can be converted into Ultimate Rewards points as well.
Earning 1.5x Ultimate Rewards points per dollar on non-bonused spend is better than the return offered on any other card accruing Ultimate Rewards points. What’s the value of that incremental return?
- I value Ultimate Rewards points at ~1.7 cents each, so since the return is 0.5 points better per dollar spent, it’s an incremental return of 0.85 cents per dollar spent
- However, a further consideration is if you have another card that offers a compelling return on spend; I also have The Amex EveryDay® Preferred Credit Card from American Express, which offers 1.5x points on non-bonused spend, assuming you make at least 30 transactions per billing cycle
So as much as I love the Chase Freedom® Unlimited and it’s a card I have myself, personally the incremental return for me isn’t that high, since it’s also spend I could put on the Amex EveryDay Preferred, which offers a similar return; however, that’s not a card that everyone has.
What’s the incremental return on the Freedom Card?
The Chase Freedom® Card offers 5x points in rotating quarterly categories, on up to $1,500 of spend per quarter. So how do you calculate the incremental return on that? Well, let’s use the 2016 bonus calendar as an example:
I don’t think it’s fair to say that the Freedom Card offers four additional points per dollar spent in all those categories. Instead the incremental return should be measured based on what the next best card is for spend in those categories. For example:
- You can earn up to 3x points on gas station spend with the Amex EveryDay Preferred
- You can earn up to 4.5x points on grocery store spend with the Amex EveryDay Preferred
- You can earn up to 3x points on dining spend with the Chase Sapphire Reserve℠ Card
- Department stores is a tougher category; based on my card portfolio, I’m earning at most 1.5x points in those categories, using either the Amex EveryDay Preferred or Chase Freedom® Unlimited
So in reality I view this incremental return as being anywhere between 0.5 points and 3.5 points per dollar spent, depending on the category and which other cards you have.
There’s big value to be had with both the Chase Freedom® Card and Chase Freedom® Unlimited. I have both of these cards, and find them to be fantastic. It’s great to have a no annual fee card long term card that not only helps you improve your credit score, but also helps you earn more points.
But if I had to give general advice, I’d say you’re more likely to get an all around better return earning 1.5x points with the Freedom Unlimited on virtually all purchases, rather than maximizing the bonus categories on the Freedom Card.
However, it all depends on what other cards you have, what you spend most on, etc.
To those of you who have either or both cards, which do you get more value out of — the Freedom or Freedom Unlimited?