Who should get the Chase Freedom Unlimited? Who should carry it?


Last week, Greg, Stephen, and I shared the contents of our everyday wallets. Quite a few readers seemed surprised that none of us carry the Chase Freedom Unlimited. Greg and I talked about why we don’t on last week’s Frequent Miler on the Air podcast / vlog around the 1hr 14min mark. After declaring that I thought nobody should apply for the CFU on the podcast, I thought more about it over the past few days in an attempt to answer: Who should carry the Chase Freedom Unlimited? Is there any group that should consider applying for it? I realized that my podcast statements might need amending as there are some who belong in either group.

Chase Freedom Unlimited

Quick Recap: Why the CFU didn’t make it in my wallet

Many readers questioned why the CFU wasn’t in our wallets. To be clear, we weren’t recommending our wallets as ideal but rather sharing what’s in them. However, quite a few people were intrigued by what wasn’t in our wallets. If you want to hear more about why it hasn’t been in my wallet, listen to last week’s podcast. In a nutshell, I said that I earn a decent number of Ultimate Rewards each year at 5x. Furthermore, once you get to a point where you have a healthy stash of Ultimate Rewards points, cash back makes more sense (as do better category bonuses on other cards).

That said, I recognized that the Freedom Unlimited can be a solid choice for those who do not have all of the URs they need (and in fact I admitted that my UR balance is weak; I product changed to a CFU a few days after my wallet post and will be rotating it into my wallet for a few months as I build back URs).

However, I maintained on the podcast that this isn’t a great card to apply for or carry for “everywhere else” spend. But that isn’t universally true: there are many people who should consider it. This post covers who should consider applying, who shouldn’t, and which groups should or should not consider using it for everyday spend.

Who should apply for the Chase Freedom Unlimited?

In the podcast, I explained that I thought that the CFU is a poor choice for a new card sign up. One reason I said that is because Chase allows product changing within a card family. Those ultimately interested in a Freedom Unlimited may be better off first applying for a different Ultimate Rewards-earning card like the Chase Sapphire Preferred (or Sapphire Reserve) and then product changing / downgrading later on. That provides the opportunity to earn a much more valuable initial welcome bonus.

Keep in mind that to get approved for any of the Chase cards, you’ll need to be below 5/24.

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.

That said, there is (at least) one group of people who might want to consider applying for a Freedom Unlimited:

Those just starting a credit history (students or others with no credit history). / Those who have applied for better Chase cards but not been approved might consider it.

The Freedom Unlimited could possibly be a good starter card for a student dipping their toes in the rewards credit card pool. Part of the reason this card could be a good choice is because it does not have a large minimum credit line to be approved. Whereas most of Chase’s Visa Signature cards require an opening credit line of $5,000 to be approved (and a Visa Infinite card like the Sapphire Reserve requires an opening credit line of $10,000), I’ve seen reports of Freedom Unlimited approvals with credit lines in the realm of $1,000. For someone with no credit history and limited income, this card might make for an easier approval.

Still, it might be worth trying for a Chase card with a higher bonus if you think you can qualify. If you’ve tried a Sapphire application or Ink Business application and been denied, the Freedom Unlimited might be a good place to start when you try again in a few months. That said….

Who shouldn’t apply for the CFU?

Those who can qualify for the Ink Business Unlimited

The Chase Ink Business Unlimited offers the same 1.5x-everywhere earning structure as the Chase Freedom Unlimited. However, it generally offers a much better welcome bonus (about 2.5x the size of the bonus on the Freedom Unlimited at the time of writing). The Ink Business Unlimited is a business card, so you’ll need some type of a business to apply.

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.

If you can qualify for a business credit card, the Ink Business Unlimited is a better choice than a Freedom Unlimited card. In fact, that’s exactly the conclusion that Greg determined when planning out a credit card path for his son.

Those looking for a balance transfer should probably look elsewhere

I’m not an expert on balance transfers, but I know they can be a tool that can be helpful from a number of different standpoints. The Chase Freedom Unlimited often comes with an introductory balance transfer offer.

However, Chase usually adds a fee of 3% of the balance transfer even on the introductory offer (which is typically good for transfers made within 60 days of account opening, after that the fee increases). You can alternatively often score an introductory balance transfer offer with no balance transfer fee from other issuers (like some Amex cards), so I don’t think the Freedom Unlimited is particularly compelling for this use.

Who should consider using the Freedom Unlimited as an everywhere else card?

Those who have a specific high-value use in mind for the points

Chase Ultimate Rewards points can be leveraged to high value with Chase transfer partners. If you’re collecting Ultimate Rewards points, you hopefully intend to use them with those transfer partners when possible in order to maximize value.

If you’re working toward a specific high-value use, it could certainly be well worth making the Freedom Unlimited your “everywhere else” card. For example, if you’re saving up to fly ANA First Class  from the US to Tokyo using Chase transfer partner Virgin Atlantic (110K round trip from the Western US or 120K from the Eastern US) or you need to travel during a peak period when rates are high but you can reliably find Hyatt award availability, it can make a lot of sense to earn Ultimate Rewards points on everyday purchases at the 1.5x rate. Chase partners in general offer many oppprunities to get great value out of your points.

If you know with reasonably certainty that you’ll use the points for experiences you highly value, I think this can be a great everyday card for otherwise unbonused spend.

Those who don’t yet have more points than they can reasonably use

If you are building or re-building a Chase Ultimate Rewards balance and don’t yet have a comfortable cushion of points, it can make sense to use the CFU to pad your stash. In many instances, I’d say that it would be faster and more efficient to pad your stash with the Ink Business Cash card at office supply stores (perhaps buying 3rd party gift cards for the stores you frequent), but the Freedom Unlimited could be part of a great one-two punch.

On the other hand, if you have more points than you can reasonably use any time soon, I would argue that choosing Ultimate Rewards points over cash back is a questionable choice. For example, if you could qualify for the Bank of America Premium Rewards card with Platinum Honors, you could be earning 2.625% back everywhere. By choosing to instead use the Freedom Unlimited, you’re giving up 2.625c for every 1.5 Ultimate Rewards points — an opportunity cost of about 1.75c per UR point. As your UR balance grows, that price is likely to seem fairly high.

Those who can make strong use of Hyatt

Many people love Ultimate Rewards specifically for Hyatt. With Hyatt hotels ranging from 5,000 points per night at Category 1 to 30,000 points for top-tier Hyatt hotels (or 40K from some of the SLH properties), there are opportunities to leverage Hyatt for great value.

A couple of years ago, as a Hyatt Globalist, I used a suite upgrade at the Park Hyatt Mallorca to book a confirmed suite for the standard room award price 20,000 points per night. This suite was going for about $2,000 per night at the time I booked. Hyatt definitely yields many similar opportunities for outsized value.

Chase Freedom Unlimited

Who shouldn’t use it as an everywhere else card?

Those who will primarily book chain hotels through the Chase portal.

Chase Freedom Unlimited

Many people justify the use of the Chase Freedom Unlimited because they say they will get a “minimum” of 2.25% in value when they combine points with a Chase Sapphire Reserve card.

Here’s the math on that: If you earn 1.5 Ultimate Rewards points per dollar spent using the CFU and then you combine those points with a Chase Sapphire Reserve card to book travel through the Chase Travel portal, you can get 1.5c in value for each point. Multiplying 1.5 points per dollar earned with 1.5c in value for each point redeemed, you arrive at a value of 2.25c per dollar spent on the CFU.

While that’s true if you’re booking travel through Chase at the same price at which you’d have booked it elsewhere, I think it’s overly optimistic to view the CFU as yielding 2.25c in value per dollar spent.

That’s because booking through the Chase portal eliminates your ability to shop around and stack other discounts / opportunities.

For example, let’s say that you want to book a Marriott hotel with a standard rate of $200. If you book through Chase, you’ll pay 13,333 points if you have the CSR.

However, if you book through Marriott.com, you can first click through a shopping portal. At the time of writing, the best rate for stays in the US is 3%. That’s $6 you could earn back. Then you’ll additionally earn Marriott points  — 10x base points for a member with no status means 2,000 points earned. Even if we conservatively value Marriott points at half a cent each, that’s at least $10 worth of points. The $200 stay has a net cost of $184.

$184 / 13,333 points = 1.38c per point

If you earn 1.5x on the CFU and use it for a real-world value of 1.38c per point, you’re getting a real-world return of about 2.07c per point used.

If you were able to have originally booked a AAA rate for 10% off, your net cost could be even lower and using the CFU starts to compare poorly to a 2% cash back card.

If you’re going to book chain hotels where you could be earning hotel points and elite credit and/or using discounts like AAA or other hotel promo codes, I think you’d probably be better off long-term with a cash back strategy.

That brings me to the last group who shouldn’t consider the CFU as an everywhere else card:

Those who can do BOA Premium Rewards with Platinum Honors

Chase Freedom Unlimited

The BOA Premium Rewards card with Platinum Honors offers those who can deposit, invest, or move retirement savings to BOA/Merrill the chance to earn 2.625% back everywhere. That’s a great ongoing return on unbonused spend.

As I mentioned earlier in this post, if you have the ability to move money and/or investments to take advantage of this card, it makes the opportunity cost of using the Freedom Unlimited seem pretty high.

Let’s say you have both cards — the CFU and the BOA Premium Rewards with Platinum Honors. Each time you spend $1, you have a choice between earning 2.625 cents or 1.5 Ultimate Rewards points.

Put another way, when you choose to earn Ultimate Rewards points in that scenario, each point is costing you the chance to earn about 1.75 cents.

2.625c / 1.5 Ultimate Rewards points = 1.75c per UR point

In pennies, the choice to take UR points might not seem like a big deal. Let’s imagine you were planning to eventually spend a total of $100,000 on one of these two cards. You could either have:

$2,625 with the BOA Premium Rewards card w/ Platinum Honors
150,000 Ultimate Rewards points

While I think we can all agree that it is certainly possible to get far more than $2600 in value for UR points, imagine two envelopes in front of you. If you take the points, you give up the cash. It’s not necessarily a bad trade — but would you continue to make that trade over and over in perpetuity? If you have 0 Ultimate Rewards points, it’s easier to consider taking the points. If you already have a million URs, the cash likely starts to look more and more appealing — or at the least the choice to take the points becomes suspect when you could have cash in your pocket to save / invest / use. If you get to the point where you have enough UR points to meet your transfer partner needs, the flexibility of taking the cash (which could be used for travel or pizza or anything in between) becomes more and more appealing. Likewise, the cost of choosing to earn URs over such a high rate of cash back likely seems high.

Bottom line

Last week, readers found out that none of us on #TeamFM are carrying a Freedom Unlimited in our wallets and many asked why. In our podcast, I asserted that it doesn’t make sense to apply for the card and that the opportunity cost of using it for everyday spend is high. When I thought about it more, I came up with some scenarios where it could make sense to pick the card up and/or to use it, though I think that most readers could do better with other methods / combinations.

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