Why Chase Freedom Isn’t Just Another Cash Back Card

Apr 27, 2015

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Chase Ultimate Rewards are among the most valuable loyalty points out there; today, TPG Senior Points and Miles Correspondent Jason Steele explains how you can maximize your earnings with one of the program’s less heralded credit cards.

Chase is one of the largest credit card issuers in the United States, and its Chase Freedom Card (No longer open to new applicants) is clearly one of its most popular, but you could read everything Chase writes about this card and you still wouldn’t know its most valuable feature. While Freedom is advertised as a cash back card, the points you earn can actually be transferred to airlines and hotels or redeemed for 1.25 cents each toward travel reservations. The key is knowing what you have to do to unlock these better options.

How this feature works

All of the Chase Freedom literature describes its reward program using the term “cash back.” While that description is accurate, it’s incomplete, and doesn’t convey exactly how cardholders receive their rewards. As a Freedom cardholder, you actually earn Chase Ultimate Rewards points, much like what you’d earn on the Chase Sapphire Preferred Card or Ink Plus Business Card. The distinction is that there are two tiers of the Ultimate Rewards program. Although Chase doesn’t describe it this way, for the purpose of this article I’ll call them Tier 1 and Tier 2.

Ultimate Rewards points quickly add up if you make the most of the bonuses.

Credit cards in Tier 1 (such as Freedom) earn points that are worth one cent each toward merchandise, gift cards, travel reservations (made through the Ultimate Rewards travel portal), and of course, cash back.

Credit cards in Tier 2 (like Sapphire Preferred) earn points that are also worth one cent toward merchandise, gift cards, or cash, but these points get a 25% bonus when you redeem them through the travel portal (that is, they’re worth 1.25 cents apiece. In addition these points can be transferred to the following travel partners:

  • Airlines — British Airways, Korean Air, Singapore Airlines, Southwest Airlines, United Airlines, and Virgin Atlantic
  • Hotels — Hyatt, IHG Hotels, Marriott, and Ritz-Carlton
  • Other — Amtrak

The bottom line is that regardless of which credit card you use to earn them, the Ultimate Rewards points you earn are the same. The ability to transfer points to travel partners and redeem for 1.25 cents toward travel reservations depends entirely on which credit card account you redeem them from — a Tier 1 account or a Tier 2 account.

Most importantly, Chase allows you to transfer your Ultimate Rewards points between all of your different accounts. For example, if you have both a Freedom card and a Sapphire Preferred card, then you can transfer points from your Freedom account to your Sapphire Preferred account. Once the points are in your Sapphire Preferred account, they can be redeemed just like the points you earned from that card.

Thankfully, transfers are free and instantaneous, and can be made in any desired amount. In addition, you don’t even need to have a Tier 2 card when you earn points on Freedom. You can accumulate Ultimate Rewards points for years with the Freedom card, and later open up a Tier 2 account like Sapphire Preferred. All the points you earned previously will then be eligible for use via your Sapphire Preferred account.

Ultimate Rewards points earned with Chase Freedom can be transferred to airline and hotel partners IF you also have a Tier 2 card like Sapphire Preferred.

Here are the Ultimate Rewards cards that belong to each tier. Note that many of these cards are either discontinued or are not publicly available:

Tier 1

  • Chase Freedom
  • Ink Business Cash Credit Card
  • Ink Classic, Chase Sapphire (not currently offered to new applicants).

Tier 2:

  • Sapphire Preferred
  • Ink Plus
  • J.P. Morgan Palladium Card (for private banking clients)
  • Ink Bold, J.P. Morgan Select (not currently offered to new applicants)
Consider a luxurious spa treatment at the Andaz Papagayo
Chase allows transfers between spouses and domestic partners, so you can pool points and redeem together at, for example, the Andaz Papagayo.

Leveraging relationships

Chase used to let you transfer Ultimate Rewards points not just between the accounts in your name, but also to other members. Chase later specified that you could only transfer points to a spouse or domestic partner, and last year the Ultimate Rewards website was coded to enforce that rule.

Nevertheless, being able to transfer points between spouses and domestic partners opens up even more possibilities to pool points and maximize cards that are part of Tier 1. For example, if you have the Freedom card, but your spouse or domestic partner has Ink Plus or Sapphire Preferred, you could send points to his or her account, and then redeem them with transfer partners or book travel at 1.25 cents per point.

The advantages of using Chase Freedom

The benefits of using this feature might not be obvious at first glance. After all, you could just get the Sapphire Preferred or Ink Plus to begin with instead of earning points through Freedom and then having to transfer them. However, all of the Tier 2 cards have an annual fee of at $95 or more, while the the Tier 1 cards have no annual fee. So a couple would only need to have one Tier 2 card between them (and pay only one annual fee) in order to enjoy its advantages on the points earned from all of their Tier 1 cards like Freedom, Ink Cash, etc.

In addition, there are strong opportunities to earn Ultimate Rewards points from Freedom that are unavailable in any other Tier 1 or Tier 2 Ultimate Rewards card. Specifically, Freedom cardholders earn 5x rewards on up to $1,500 spent each quarter in rotating categories.

How to transfer points from Freedom to another account

It’s easy to transfer points from your Freedom account to another of your credit card accounts, or to a spouse or domestic partner. However, the transfer feature is pretty well hidden.

Here are some step-by-step instructions:

1. Log into your Chase account at Chase.com.
2. Click on Go to Ultimate Rewards in the top right corner.
3. Select your Chase Freedom account to go the Ultimate Rewards portal.
4. Click on the dropdown menu next to your points total on the top right, and choose “combine points.”

You can transfer points through your online Chase account; you just have to track down the option in your account.

5. Select an account of yours to transfer the points to, or Add spouse/domestic partner.
6. Specify an amount of points, and click review.
7. Confirm your selection.

Other reasons to consider Chase Freedom

The ability to earn 5x points on purchases from bonus categories, and then transfer those points to a Tier 2 account belonging to you or your spouse/domestic partner, makes Chase Freedom much more compelling than a simple cash back card. Maxing out the 5x categories each quarter would earn you an extra 30,000 Ultimate Rewards points each year. Using TPG’s most recent monthly valuations, that’s $630 worth of travel rewards when combined with a Tier 2 account.

In addition, Chase is offering a sign-up bonus of $100 cash back (10,000 Ultimate Rewards points), when you use your new card to make $500 in purchases within three months of account opening. You also earn another $25 cash back (2,500 Ultimate Rewards points) when you add an authorized user who makes a purchase within three months of account opening. Finally, this card includes 0% Intro APR for 15 months on both new purchases and balance transfers, with a 3% balance transfer fee.

Final word

For years I rolled my eyes when I saw people use their Freedom card, because I thought that they were foregoing more valuable travel rewards by earning cash back instead. However, when used in conjunction with other Chase cards, Freedom can be a lucrative travel rewards card as well. For The Points Guy’s review of the Chase Freedom, watch the video below.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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