Freedom vs. Freedom Unlimited


Last year, I detailed my plan for increasing my Chase Ultimate Rewards point balance.  The reason for focusing on Ultimate Rewards?  I’m a huge fan of transferable points programs, especially Ultimate Rewards.  Chase has several very useful transfer partners, but the one I transfer to the most, by far, is Hyatt.  By keeping a large Ultimate Rewards point balance, awesome hotel stays are always easy to secure.

Examples of great Hyatt stays (in which I transferred points from Chase) include Hyatt Carmel Highlands, Grand Hyatt Santiago, Park Hyatt Vendome, and many more.

The plan I had detailed last year was to earn points through signup bonuses and through Chase Ink and Chase Freedom 5X spend.  Since the Freedom card limits 5X spend each quarter to only $1500, part of the plan was to collect additional Freedom cards.  At the time, my wife and I had one card each.  Since then, we each got another Freedom card by downgrading our Sapphire Preferred cards (and therefore opening the door to future Sapphire Preferred applications).  So, we now have 4 Freedom cards altogether.  Mission accomplished.

Freedom Unlimited: 1.5X everywhere

Recently, Chase introduced a brand new no-annual-fee Ultimate Rewards card: Freedom Unlimited.  The card is marketed as an unlimited 1.5% cash back card.  Well, that’s pretty boring considering that Citi offers a no annual fee 2% cash back MasterCard (Citi Double Cash), and Fidelity offers a no annual fee 2% cash back Visa card (Fidelity Rewards Visa).  But… in reality, it’s not boring.  Not at all!

Freedom Unlimited

Just like the regular Chase Freedom card, and the Chase Ink Cash card, the Freedom Unlimited card’s “cash back” comes in the form of Ultimate Rewards points.  You can redeem those points for cash back if you want to, but you can do better.  If you also have a premium Ultimate Rewards card (Sapphire Preferred or Ink Plus, for example), you can move points to that card and then transfer those points to and airline or hotel program.  See: Chase point transfer rules made simple [Infographic].

You can also use the points (once moved to a premium card) for 1.25 cents each towards Ultimate Rewards Travel purchases (e.g. flights, cruises, car rentals, etc.).

Freedom Unlimited: Is it a good deal?

Every dollar spent on the Unlimited card earns 1.5 Ultimate Rewards points.  If you plan to redeem points for cash, then compared to a 2% cash back card, it’s a terrible option.  If you plan to redeem points for Ultimate Rewards Travel purchases after moving the points to a premium card, it’s still a bad choice.  When points are used in that way, your effective rebate is 1.5 points per dollar X 1.25 cents per point = 1.875%.

In order to just break even when compared to a 2% cash back card, you need to get better than 1.33 cents per point value when redeeming points.  In my experience, that’s easy to achieve by transferring points to Hyatt or to airline programs for international travel.

So, the answer is yes, it’s a great card, but only if you use the points in ways that deliver high value.

Good old Freedom

So, as described above, Freedom Unlimited is, conditionally, a great card, but the good old Freedom card is pretty great too.  It too has no annual fee and earns Ultimate Rewards points.  The regular Freedom card only earn 1 point per dollar for most spend, but every quarter they offer certain categories in which the card earns 5 points per dollar.  5X is obviously quite a bit more appealing than 1.5X.

And, now that Chase has promised to include Wholesale Clubs in the 3rd and 4th quarter 2016 categories, the card is more appealing than ever.

Which is better?

I’m glad that I already have 4 Freedom cards to work with because I would otherwise have a hard time deciding whether my next Freedom card should be a regular Freedom or the Freedom Unlimited.  The regular Freedom card is great for its 5X categories.  Freedom Unlimited is great for it’s 1.5X everywhere.  Which is better?

The regular Freedom card’s 5X categories are capped at $1500 spend per quarter, which works out to $6,000 spend per year.  At best, one could earn 30,000 points for $6,000 spend.  With the Freedom Unlimited card, one would have to spend $20,000 to earn 30,000 points.  But, a very heavy spender could earn much more.

The regular Freedom card is best for low spenders, or for those willing to get many cards and who don’t mind running around buying gift cards to use up each quarter’s $1500 limit.  The Freedom Unlimited is best for those with high amounts of otherwise unbonused spend.

The ideal situation is to have both: collect a bunch of regular Freedom cards so as to maximize the 5X category bonuses; and have one Freedom Unlimited card for all non-bonused spend.

My plan adjustment

Thanks to Chase’s 5/24 rule (they usually won’t approve applications for those who have opened 5 or more accounts in the past 24 months), most people today don’t have the luxury of following the plan I laid out last year.  However, I seem to be at least partially immune to 5/24.  I was approved for a new Sapphire Preferred card in January, two Marriott cards in March, and the United card earlier this month (I’m still waiting for approval for my Ink application).

My next Chase application will likely include the Freedom Unlimited card, along with an authorized user card for my wife.  That will then become our new “everywhere else” card once my Discover It Miles card’s first year is over (at that point the Discover It Miles card becomes a regular 1.5% cash back card instead of a 3% cash back card).  If I don’t get approved through a new application, I can always downgrade my Sapphire Preferred card instead.  One way or another, I want to round out my Ultimate Rewards collection with this new card.

A case could be made that I should instead get another regular Freedom card.  That would give me even more 5X capacity.  But, truthfully, there’s a limit to how much I’m willing to run around buying gift cards within the Freedom’s 5X categories.  It turns out that 4 cards is my personal limit.

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