Which Credit Card Is Better for Dining — Chase Freedom or Chase Sapphire Reserve?

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

The third quarter just started and the Chase Freedom card is offering an intriguing bonus category for the next three months. (No longer open to new applicants.) But TPG reader Rochelle wants to know if she should forgo points for the extra cash back...

[pullquote source="TPG Reader Rochelle"]Chase Freedom is offering 5% cash back on restaurants from July 1-September 30. Is this a better deal than 3x points on the Chase Sapphire Reserve?[/pullquote]

Chase Ultimate Rewards points are one of the most valuable loyalty currencies out there, so if you're going to give them up for cash back, then you'd better be getting an even better return. But in this case, there's actually a way to have the best of both worlds.

First though, let's consider the value of 5% cash back versus 3x Ultimate Rewards points. According to TPG's most recent points valuations, Ultimate Rewards are worth 2.2 cents apiece. That means if you're getting 3 points on your dining purchases using your Chase Sapphire Reserve, you're effectively earning 6.6 cents per dollar spent. With the Chase Freedom restaurant bonus category this quarter, you're only getting 5% cash back or 5 cents per dollar spent.

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Now, there's always something to be said about the flexibility of cash versus points. Cash is king — you can spend it anytime, anywhere, without having to worry about award availability or redemption charts. It's also possible if you already have a ton of Ultimate Rewards points sitting in your account that you don't really need to earn any more at the moment, while almost no one has ever been worried about having too much cash available to spend. So there might be a reason to give up earning an extra 1.6 cents worth of points in order to get the cash, but it'd have to be a pretty compelling reason.

However, here's where the good news comes in — in this case, you don't have to choose one over the other at all. That's because cash back earned with the Chase Freedom actually comes in the form of Ultimate Rewards points. Normally with just the Chase Freedom, those points can only be redeemed for cash at 1 cent per point. But if you also have the Chase Sapphire Reserve, the points can be combined between the two cards and used just like normal Ultimate Rewards points. So basically, you can earn 5% cash back in the form of 5x Ultimate Rewards points by dining out with the Chase Freedom card during the months of July, August and September. Then instead of redeeming those points for cash, combine them with the CSR to get 2.2 cents per point in travel value for a whopping return of 11 cents per dollar spent.

Just don't forget that you'll need to activate your Chase Freedom bonus category and bonus spend is capped at $1,500 per quarter, so you'll want to switch back to your Chase Sapphire Reserve if you hit that cap before September 30.

Thanks for your question, Rochelle, and you're a TPG reader who'd like us to answer a question of your own — or teach me something new! — tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.