When Is the Chase Freedom Unlimited Better Than a 2% Discover Card?

Jun 30, 2017

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“Reader Questions” are answered three days a week — Mondays, Wednesdays and Fridays — by TPG Senior Writer Julian Mark Kheel.

The Discover it card has a pretty terrific sign-up offer — it doubles all your cash back for the entire first year you have the card. So TPG reader Christopher sent us a Facebook message to ask if that makes it a better choice than the Chase two-step…

I just got 2% cash back for a year from Discover. I also have the Chase Freedom Unlimited that I usually use and Chase Sapphire Reserve to redeem those points at 1.5 cents each. Which should I use for everyday spend?

TPG Reader Christopher

Well, this is a pretty nice problem to have, Christopher. The Discover it card offers 1% cash back on all purchases plus a rotating set of quarterly 5% bonus categories. But since new cardholders get all their cash back doubled at the end of their first year, it’s effectively a 2% cash-back card for the first year you have it, which is why we consider it one of the top cash-back cards on the market.

However, the combination of the Chase Sapphire Reserve with the Chase Freedom Unlimited is a powerful one. Those are two of the three cards in the “Chase trifecta” that TPG himself thinks should be in your wallet, especially when it comes to everyday spend.

So which one is better? Well, first we need to take a look at the basic math. Since the Chase Freedom Unlimited earns 1.5x points per dollar spent on all purchases, and those points can be redeemed with the Chase Sapphire Reserve to get 1.5 cents per point on travel redemptions at the Ultimate Rewards travel portal, if you’ve got both cards you’re getting 2.25 cents in final value per dollar spent on the Freedom Unlimited. That’s slightly better than the 2% cash back of the Discover it card in the first year.

But when the values are so close, it’s a good idea to consider a few other variables. First, even though we like to consider ourselves experts on points and miles here at The Points Guy, we’re also the first to acknowledge that cash is king. When you’re earning cash, you’ll never have to worry about award availability or whether you travel enough to redeem points at their maximum value. Cash never has any restrictions, so there’s something to be said for collecting cash-back rewards, even if you’re earning slightly less of them.

The First Class Terminal is decorated beautifully and spacious.
The Lufthansa First Class Terminal in Frankfurt isn’t a place you’ll likely be able to visit using cash back.

However, the flip side of that coin is that you can often use points for travel options that you’d likely never be able to afford with cash. For instance, if you transfer 110,000 Ultimate Rewards points to United, you can use them for a Lufthansa first-class ticket between the US and Europe. If you had to pay cash for that ticket, it’d easily cost several thousand dollars, meaning you’re getting well more than 1.5 cents per point in value for that redemption. Not to mention that you’d be unlikely to even consider paying that much cash for an airline ticket in the first place, which means you’d never get to enjoy the fun and excitement that is the Lufthansa First Class Terminal in Frankfurt. That’s part of the fun of points — you can travel in ways you’d never be able to do with cash.

So that’s the real answer, Christopher — it depends on your priorities. If your main focus is flexibility, then you might choose the Discover it 2% cash back to keep in your wallet because cash is infinitely flexible. But if you really enjoy traveling in style, then make the Chase Freedom Unlimited your everyday use card and rack up the points. Thanks for the question, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

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