Changes to the Chase Freedom 10% Bonus And What It Means For Your Points Strategy

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Update:  As of July 20, 2014, the Chase Sapphire Preferred Card no longer offers the 7% annual points dividend. View the current sign up offer here.

As you should know by now, using a combination of Chase credit cards including the Sapphire Preferred along with the Ink Bold and Ink Plus cards – all of which earn Ultimate Rewards that you can transfer to the programs nine travel program partners – in conjunction with the Chase Freedom card that is tied into the Chase Exclusives program with a checking account can be one of the most lucrative ways to rack up valuable travel parts.

Though the bonus structure has changed, the Freedom is still a lucrative card.
Though the bonus structure has changed, the Freedom is still a lucrative card.

Part of what made that combination so powerful is that by having Chase checking accounts (which are free if you have a direct deposit set up or $1,500 average daily balance) through the no-longer-available Chase Exclusives program, you used to be eligible for an additional Freedom bonus of 10% on all purchases plus a 10 point per transaction bonus. So even a $1 pack of gum would earn you 12 points – 1 point for the purchase, 10 points for the transaction and a 10% bonus.

Update: The Chase Freedom card no longer offers a bonus of 10% on all purchases plus a 10 point per transaction bonus additional 10% Cash Back. Instead, both of those benefits have been replaced with a 10% annual bonus at the end of the year on all purchases.

As I mentioned, the Chase Exclusives program for Freedom cardholders has been discontinued for new cardholders, and even those folks (myself included) who got in before the program ended have been noticing some changes to it lately.

Namely, that we will no longer receive a 10% points bonus for each purchase nor the 10 points per purchase bonus either. Instead, both of those benefits have been replaced with a 10% annual bonus at the end of the year on all purchases – sort of like the Sapphire Preferred’s annual 7% points dividend.

However, the previous 10% bonus, which was awarded with each monthly statement, only applied to points earned on normal purchases that earned 1 point per $1 spent, while the new 10% annual bonus also applies to the Chase Freedom’s lucrative quarterly 5x points bonus spending categories.

Chase Freedom Categories

As a reminder, you can find the current bonus spending categories here, but they include gas stations, drugstores and Starbucks until March 31, 2013, and each quarter you earn 5 points per $1 you spend at merchants in those categories up to a quarterly max of $1,500 (or 7,500 points).

While I’m sad to see the 10 points per transaction and monthly 10% bonus go away, at least we still have the annual 10% dividend and it applies to the card’s lucrative bonus spending categories as well – which makes it a good alternative. Not great, but still good.

Strategy

So what does all this mean for your Ultimate Rewards points strategy?

If you have no Chase cards right now, but want to create the most power points-earning combination, I’d recommend first getting the Sapphire Preferred card which currently has a 40,000-point bonus) after $3,000 spend within 3 months and the $95 annual fee waived the first year.

You can also apply for either the Ink Bold or Ink Plus cards, both of which has a 50,000-point bonus after $5,000 in spend within 3 months. You can get two cards on the same day – just make sure you can spend the $8,000 within three months (here are some ways to maximize spend) and if you need ideas on how to handle it, then wait at least one month before applying for the next card.

You can then apply for the Ink Plus and Freedom on the same day since the Freedom currently comes with 10,000 bonus points after $500 spend within 3 months and has no annual fee.

Then when it comes to spending, max out those Chase Freedom quarterly category spending bonuses for a total of 30,000 points each year (7,500 points x 4 quarters) and you will get an extra 3,000 points from the 10% annual dividend. I value Ultimate Rewards points at 2 cents each, so there’s $60 in value right off the bat, making this a no-brainer for a no-fee card.

When it comes to your other spending, make sure you are maximizing the specific bonus spending categories of your other Chase cards including the Sapphire Preferred’s 2x points on travel and dining, and the Ink Bold and Ink Plus’s 5x category spending bonus at office supply stores and 2x points on gas stations and hotels.

Remember, you can transfer your Freedom points to your Sapphire Preferred/Ink Bold accounts (or to anyone else’s) by logging into ultimaterewards.com -> Manage Ultimate Rewards -> Combine points.

When it comes to an overall, long-term points strategy, you’ve got to think big picture and that includes not only using several credit cards, but your overall banking profile. I’ve been a Chase customer for a long time (they have great coverage in major cities like New York, Los Angeles and Miami) and have multiple accounts with them, and that’s why they keep giving me these lucrative credit card sign-up bonuses.

Not only that, but I love their online banking software, including the ability to deposit checks by taking a picture of them on your mobile phone, pay people electronically, and the fact that they have some of the best travel credit cards and most lucrative bonuses on the market these days, which is one reason that I’ll be sticking with them and they’ll remain a central part of my points strategy.

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