Is Chase Freedom Unlimited Good for Non-Bonus Spending?

April 17, 2016

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3 min read

Is Chase Freedom Unlimited Good for Non-Bonus Spending?

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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 (No longer open to new applicants) , 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.

Your credit card strategy depends somewhat on how you tend to use rewards and which transfer partners you prefer.

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 welcome 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.

If you have any other questions, please tweet me @thepointsguy, message me on Facebook or send me an email at info@thepointsguy.com.

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