Chase Freedom vs Freedom Unlimited: Which to choose?

32

When I saw the new offers on the Chase Freedom and Chase Freedom Unlimited cards last week, I was pretty excited. We had the ability to add one of these cards in my household and the offer and timing were right for us. The key question for me to answer was Freedom or Freedom Unlimited? The truth is that you can’t really get this one wrong in the sense that Chase makes product changes and credit limit reallocation so easy that it really won’t matter much which you choose in most cases. However, I had to make a decision and wanted to share the logic I followed in making it.

The Offer

Both the Freedom and Freedom Unlimited credit cards recently unveiled new welcome offers as follows:

Chase Freedom Unlimited
$200 Cash Back + 5% back at groceries stores
Get 20,000 UR points (worth $200 cash back) after spending $500 in the first 3 months + 5x Ultimate Rewards points (worth 5% cash back) on grocery purchases for 1st year (on up to $12K in purchases, excludes Target & Walmart)

No Annual Fee

FM Mini Review: Great to earn 1.5X Ultimate Rewards in categories with no bonuses. Excellent companion card to Sapphire Reserve or Sapphire Preferred!


Card Type: Visa Signature or Platinum

Base
Grocery
Other

Earning rate: 5X grocery on up to $12K spend in first year, excludes Target & Walmart ⚬ 1.5X on all purchases ⚬ 5X Lyft

Noteworthy perks: Free DashPass for up to 3 months upon activation

See also: Chase Ultimate Rewards Complete Guide

Chase Freedom

FM Mini Review: Great for 5X categories. Good companion card to Sapphire Reserve or Sapphire Preferred.


Card Type: Visa Signature or Platinum

Base
Grocery
Shop

Earning rate: 5X grocery on up to $12K spend in first year, excludes Target & Walmart ⚬ 5X Lyft ⚬ 5X in rotating categories on up to $1,500 spend per quarter. Q3 2020: 5X Amazon and Whole Foods

Noteworthy perks: Free DashPass for up to 3 months upon activation

See also: Chase Ultimate Rewards Complete Guide

These cards have featured a welcome offer with 20K points after $500 in purchases for a while, but the additional inclusion of 5x groceries for a year (on up to $12,000 in purchases) is a huge bump. Ever since the debut of the Chase 5/24 rule, applying new for the Freedom cards has been hard to justify: while they are a good fit for those just starting out with credit cards, the welcome bonuses were just too low to be worth a coveted 5/24 slot to long-time rewards enthusiasts. One could get a more valuable bonus with a Chase Sapphire Reserve or Chase Sapphire Preferred and later product change to a Freedom or Freedom Unlimited. Alternatively, those who would consider applying for a business card would likely find the Chase Ink Business Unlimited more appealing than the Freedom Unlimited thanks to a much larger welcome bonus and identical earning structure.

Chase's 5/24 Rule: With most Chase credit cards, Chase will not approve your application if you have opened 5 or more cards with any bank in the past 24 months.

To determine your 5/24 status, see: 3 Easy Ways to Count Your 5/24 Status. The easiest option is to track all of your cards for free with Travel Freely.
Applying for Business Credit Cards

Yes, you have a business: In order to sign up for a business credit card, you must have a business. That said, it's common for people to have businesses without realizing it. If you sell items at a yard sale, or on eBay, for example, then you have a business. Similar examples include: consulting, writing (e.g. blog authorship, planning your first novel, etc.), handyman services, owning rental property, renting on airbnb, driving for Uber or Lyft, etc. In any of these cases, your business is considered a Sole Proprietorship unless you form a corporation of some sort.

When you apply for a business credit card as a sole proprietor, you can use your own name as your business name, use your own address and phone as the business' address and phone, and your social security number as the business' Tax ID / EIN. Alternatively, you can get a proper Tax ID / EIN from the IRS for free, in about a minute, through this website.

Is it OK to use business cards for personal expenses? Anecdotally, almost everyone I know uses business cards for personal expenses. That said, the terms in most business card applications state that you should use the card only for business use. Also, some consumer credit card protections do not apply to business cards. My advice: don't use the card for personal expenses if you're not comfortable doing so.

Unfortunately, Chase made the Sapphire-then-downgrade-to-Freedom path a lot more challenging when they instituted the 48-month restriction on Sapphire cards a couple of years ago. If you want a Freedom or Freedom Unlimited card, this leaves you to choose between getting a Sapphire card every four years that you can eventually downgrade, or biting the bullet and applying new for a pretty low offer on a Freedom variety. That’s what makes the new offers exciting in my opinion: it doesn’t feel like you’re giving up much if you can earn up to 60K points on grocery purchases in the first year (in addition to the initial 20K bonus) and you gain a valuable card in either the Freedom or Freedom Unlimited. Given that many families spend around the $12K cap on groceries over the course of a year and that many in our rewards community spend even more than that at the grocery store each year, the new offers look like easy wins for many people.

The key differences

Both the Freedom and Freedom Unlimited cards are advertised as earning cash back, but the “cash back” comes in the form of valuable Ultimate Rewards points that could be moved to a Sapphire Preferred or Reserve card if you have one in your household. We therefore talk about the cards in terms of the number of Ultimate Rewards points earned with them.

The key differences between the Freedom and Freedom Unlimited cards is of course the earning structures:

This means that there are technically more “bonus points” added to the Freedom card for this new offer: given that the Freedom card ordinarily earns 1x at grocery stores (unless grocery stores are a quarterly bonus category), this new offer adds 4 bonus points per dollar spent on grocery store purchases. The Freedom Unlimited card ordinarily earns 1.5x everywhere, so the new offer adds 3.5 bonus points per dollar spent on grocery store purchases.

That difference is likely academic. Either way, you’ll earn the same 60K Ultimate Rewards points with $12K spend at grocery stores in the first year — how much of those points are a “bonus” doesn’t matter practically-speaking (though for Freedom card holders, it might mean the chance to get 9x if the 5x quarterly bonus includes grocery stores and this extra 4x stacks with it – we don’t yet know if it will).

More pertinent to the decision as to which card to apply for now is what the difference would be in your annual point totals depending on which card you choose. Both cards will earn up to 60K points in grocery purchases in the first year, but which card will yield you more points apart from that bonus?

With the Chase Freedom card, if you were to avoid all 1x spending and you were able to magically spend exactly $1500 each quarter in the Freedom card’s 5x categories, you would earn a total of 30K points:

  • $1500 each quarter at 5x = 7,500 points per quarter x 4 quarters = 30K points

The question then becomes this: Would you earn more than 30K points in non-bonused purchases on the Chase Freedom Unlimited? If you spend more than $20K per year on purchases that you’d make at 1.5x, you would earn more total points with the Freedom Unlimited. If you’re not sure that you’ll max out the 5x categories on the Freedom card every quarter, the Freedom Unlimited breaks even at a lower threshold. For instance, if you would only max out 3 quarters of 5x spend on the Freedom card, you’d earn 22,500 points in a year. The Freedom Unlimited would therefore yield more points if you spent more than $15K on it in a year (on non-grocery spend or beyond the $12K cap).

In our case, the Freedom Unlimited fits our spending pattern much better given that we do a lot of unbonused spend. That is not to say that we wouldn’t enjoy the easy 5x categories on a Freedom card from time to time (indeed, I’ve often wished I had a Freedom card at times when the bonus category would have fit a purchase just right; with a baby on the way soon, getting 5x on diapers and wipes and baby stuff at Amazon this quarter looks appealing). But in years past, the Chase Freedom has sometimes featured a quarter with bonus categories like restaurants and movie theaters that would be more challenging for us to utilize fully. Of course, I doubt we’ll see a movie theater quarter any time soon given how things are going right now. The 2019 and 2020 quarterly bonuses would look good for us, so the Freedom may be a better fit now than before. Still, the Freedom Unlimited would likely yield us more total points each year — albeit with much more spend.

Leaning toward 1.5x everywhere

For our situation and spending pattern, I was leaning toward the need for a Freedom Unlimited card for my wife. I already have a Freedom Unlimited card, but she doesn’t. Given occasional large purchases for each of us, it would make sense for each of us to have a card that earns 1.5x Ultimate Rewards points per dollar spent.

However, Greg reminded me about the Chase Ink Business Unlimited that I mentioned above: in an ideal world, we would have that card for earning big chunks of rewards on large purchases and a Freedom card or two for easy points on low spend when quarterly bonus categories are convenient. That makes a lot of sense: The Ink Business Unlimited comes with a nice welcome bonus, there are some advantages to it being a business card, and it offers the same 1.5x everywhere that the Freedom Unlimited offers. Unfortunately, Chase has anecdotally tightened up considerably on business credit card approvals. That isn’t surprising given the current economic environment. We’ve heard a report or two of success with Chase Ink credit cards recently, but for every approval there have been dozens of denials. That said, my wife has a Chase Ink Business Preferred that could be downgraded to an Ink Business Unlimited for its preferable earning structure (albeit without a welcome bonus).

In other words, we already have a pretty easy downgrade path to 1.5x everywhere. The only downgrade path we have to the Chase Freedom card would be via my wife’s Chase Sapphire Reserve. I have certainly talked about getting rid of the Sapphire Reserve when the annual fee comes due this fall, though we aren’t there yet (and I’ve also said that while tempted to axe it, I’d likely keep it because it’s convenient to have from a blogging perspective despite the fact that I think the increased annual fee would not otherwise be worth it for us). Looking forward, Chase’s Pay Yourself Back feature certainly has me intrigued and I think we’ll likely keep the Sapphire Reserve for at least one more year, but it is possible to consider a product change on this card.

How does the pandemic affect the choice?

In an ideal world, it makes sense to have a high credit limit on a card that earns an excellent return everywhere. Whether my wife ultimately has a Freedom Unlimited or Chase Ink Business Preferred card in her wallet, we would want her 1.5x-everywhere card to have a sizable limit for large purchases.

On the other hand, the Freedom card is only likely to see $1500 in action per quarter in a normal environment. The first year grocery bonus means that the card will likely get a bit more exercise in year one, but beyond the first year the Freedom likely won’t need access to much of a credit line.

My wife’s Sapphire Reserve card has a pretty healthy credit limit. If we were to product change that card, it wouldn’t make a lot of sense to have that credit limit associated with a Freedom card. Of course, Chase makes it pretty easy to reallocate credit limits, so we wouldn’t have to keep that limit associated with that card if we product changed to a Freedom card — but at the same time, she doesn’t have other Chase personal cards where we’d want/need to shift that limit at the moment (keep in mind that Chase only allows you to reallocate limits consumer card-to-consumer card or business card-to-business card — you can’t move credit limit from a Sapphire Reserve to a business card or vice versa). I think her Sapphire Reserve could be a good candidate for an eventual downgrade to a Freedom Unlimited as that’s the card on which we would ultimately want the type of limit she currently has. If we were to downgrade her Sapphire Reserve to a Freedom Unlimited, we would downgrade her Ink Business Preferred to an Ink Cash rather than the Ink Business Unlimited.

Another consideration is that given the current environment, I thought that Chase may be stingier than usual. If they were going to be stingy with an extension of more credit, it would make sense to have that lower limit associated with a Freedom card. Of course, if she was approved with a limit that didn’t satisfy our needs, we could easily call Chase and move some limit from one of her other Chase personal cards.

Ultimately, my wife decided to keep it simple: we figured Chase would be stingy given the pandemic (and the fact that my wife has several other Chase credit cards) and we’d rather save ourselves from a phone call to reallocate limits if possible (with a very active and talkative toddler at home, avoiding an unnecessary phone call is a win). We decided that the Freedom card was the right call for now: it would give us long-term access to the quarterly categories and my wife would retain two easy downgrade paths to 1.5x everywhere.

I was right. Chase was super stingy on the approval. In my post about the new Freedom offers last week, I noted that these cards tend to be easier approvals for many folks in normal times and in the current times may be a good choice since they can be approved with lower credit limits (thus likely an easier approval). I almost mentioned in the post that I think you can be approved with a limit as low as $500 on the Freedom cards, but I didn’t look it up to confirm that Chase does approve them quite that low. Well, now I can indeed confirm that.

The good news is that the card was approved and immediately showed up online. The inconvenient news is that she’ll still have to call to reallocate limits because the $500 limit will make it hard to take advantage of quarterly bonuses and will make it impossible to make $12K in grocery purchases in the first year without cycling the credit limit. Since cycling is a common trigger of account shut downs, I’d rather have a limit of at least a couple thousand dollars on this card. Again, that’s easy enough with Chase – we’ll just move some from another card — so the low approval is no big deal even if surprisingly low.

Update: A couple of readers commented below to note that you may be able to reallocate limits via secure message and save yourself a phone call. We tried that after publishing this post. It took 13 minutes to receive a response that the limits were reallocated as requested. That’s terrific and meant no phone call after all!

Bottom line

In our case, the 1.5x earning structure of the Freedom Unlimited would probably yield us more points in a year, but we still ultimately added the Freedom card instead since we have easy downgrade paths to 1.5x everywhere (and one such card in the household already) and expected a lower credit line that would more suitably fit the Freedom card. We didn’t anticipate just how low that credit line would be, so we ultimately didn’t save ourselves from a phone call to reallocate limits after all. Still, it will be good to have access to some easy 5x quarterly bonuses. If we decide that we really like having access to those, we can consider downgrading her Chase Sapphire Reserve to another Freedom card in the future (and picking up a Chase Ink Business Unlimited for 1.5x-everywhere). If we don’t think we’ll max out a second Freedom card, we can product change the Reserve to a Freedom Unlimited and have a useful credit limit straight out of the gate. Any way you slice it, the ability to pick up a Freedom card without feeling like we’re wasting a 5/24 slot feels like a win — and as noted at the top, since we ultimately have so many product change and reallocation options, there really wan’t any wrong answer to which one to get right now.

Email:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide
Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

32 Comments
oldest
newest most voted
Inline Feedbacks
View all comments