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TPG reader Jack sent me a tweet to ask about how to maximize everyday spending:
“Which card do you prefer for non-bonus spending: the new Chase Freedom Unlimited or the SPG Amex?”
Last month, Chase introduced a new rewards card with an intriguing bonus structure. The Chase Freedom Unlimited Card earns 1.5% cash back on all purchases with no monthly or annual cap. While that falls well short of the 5% rotating bonus categories on the regular Chase Freedom Card, the consistent earning rate makes Freedom Unlimited a strong option for purchases that wouldn’t otherwise earn a bonus.
There are a number of ways to earn a solid return on spending outside of bonus categories. The Starwood Preferred Guest Card from Amex has been my go-to card for non-bonus purchases; it only earns one point per dollar on most purchases, but Starpoints are valuable enough that it still comes out ahead in my books.
Jack wants to know how Freedom Unlimited stacks up to the competition, and I think it comes out ahead in the right circumstances. The standard 1.5 points per dollar is nothing special when your only option is to redeem for cash back. However, if you also have the Chase Sapphire Preferred Card or Ink Plus Business Card, then you unlock airline and hotel transfer partners, along with other lucrative ways to redeem Ultimate Rewards points.
I list Ultimate Rewards at 2.1 cents apiece in my most recent monthly valuations, so 1.5 points per dollar works out to a 3.15% return. While I think Starpoints are worth more on a per-point basis, the higher earning rate puts Freedom Unlimited ahead — again, that’s only if you use it in tandem with a premium Ultimate Rewards card.
The answer depends somewhat on your travel preferences. If your goal is to fly in Cathay Pacific first class, then you’re better off earning Starpoints, since you can transfer to Alaska Airlines and get a great deal on those premium Cathay seats. If you’re aiming for Chase partners like United and Hyatt, then you should earn Ultimate Rewards points instead.
A few other factors to consider are the sign-up bonus and annual fee. The SPG Amex is currently offering 25,000 points after you make $3,000 in purchases within the first three months. The current bonus for the Chase Freedom Unlimited, meanwhile, is earning $150 after you spend $500 in the first three months. On the other hand, the SPG Amex has a $95 annual fee, while Freedom Unlimited has none. However, the Chase Sapphire Preferred Card comes with a $95 annual fee after the first year, which you’ll need to pay in order to “unlock” Ultimate Rewards transfers.
Finally, keep in mind that some application and/or bonus restrictions may apply. Amex limits sign-up bonuses to once per lifetime (now including business cards), while Chase has been stingy about opening new Ultimate Rewards cards for anyone who has five or more applications in the past 24 months. If you think you’re unlikely to get approved for one card or the other, deciding between them becomes a lot easier.
Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards