Why the Chase Freedom Unlimited should be the first card in every student’s wallet

Feb 21, 2021

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Editor’s note: This post has been updated with new information.

College students are at a big disadvantage when it comes to racking up points and miles, since most have limited income and little to no credit history. This makes some of the best points and miles cards just out of their reach.

Related: Best credit cards for college students

The Chase Freedom Unlimited resolves this dilemma, while still providing outsized benefits to those with limited credit history. Read on to see why it should be the first card on every college student’s list.

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1. No annual fee to worry about

They really put the “free” in Freedom Unlimited — as long as you pay your bills on time and avoid using the card abroad, Chase will never charge you a penny for renewing this card. That means more cash in your pocket to spend on food and activities while you’re traveling. But there’s a long-term benefit to this as well: You can keep this card open forever without worrying about an annual fee, and boost your credit score at the same time.

A variety of factors determine your FICO score, the most widely used credit score.

As 15% of your credit score is determined by the length of your credit history, you can keep your no-annual-fee card open for a long time and see a boost in your credit score.

Before you apply for your first credit card, it’s important to know what your credit score is and to fully understand the factors that influence it. If you miss payments or spend money that you don’t have just to earn points, it will wind up costing you in both the short term and long term — and you’ll end up paying way more than any value you get in rewards.

Related: How to check your credit score for free

2. It’s relatively easy to get approved

(Photo by John Gribben for The Points Guy)

Because the Freedom Unlimited has a moderate sign-up bonus — earn $200 after spending $500 on purchases in the first three months from account opening — and fewer perks than some of Chase’s more premium alternatives, it’s generally one of the easier entry-level cards to get approved for.

Building credit is like chutes and ladders; a few approvals can boost your score quickly, but a rejection early on can set you back in the short term. It helps to be conservative in the early stages and apply for cards that you’re more likely to get approved for.

Related: What credit score do you need to get the Chase Freedom cards?

3. Build credit and establish a good relationship with the issuer

It takes years of consistent payments and responsible spending to build up your credit score, but it helps to make some friends along the way. If you’re new to credit and you show Chase (or any credit issuer) that you can be responsible with the first card it gives you — make all your payments on time, keep a low balance-to-limit ratio, etc. — they will be much more likely to approve you for other valuable cards down the line.

Related: 6 things to do to improve your credit in 2021

4. Low minimum spending requirement for the sign-up bonus

Many of the best credit cards on the market have minimum spending requirements of $3,000 to $5,000 in the first three months, but how are you supposed to do that if you don’t even have that much money in the bank? Fortunately, the Freedom Unlimited is much more manageable as it comes with a $200 bonus after spending $500 in the first three months for new applicants. This low minimum spending requirement should be attainable for most and start you on your way to earning some easy cash.

In addition to the generous sign-up bonus on the no-annual-fee Freedom Unlimited card, new cardholders will earn 5% cash back on travel purchased through Chase, 3% on dining — including takeout — and drugstores, and 1.5% on all other purchases.

Related: Ways to meet minimum spending requirements

5. The bonus can easily be worth several hundred dollars

The Freedom Unlimited has a sign-up bonus of $200 (or potentially 20,000 Ultimate Rewards points) after spending $500 on purchases within the first three months. While on the surface, you’re getting $200 back after meeting minimum spending requirements, you can also convert the $200 into 20,000 points and redeem for travel, shopping at Amazon.com or buying gift cards through the Ultimate Rewards portal.

If your income situation improves and you’ve demonstrated responsible credit card habits over a period of time, you can consider adding a card that earns Chase Ultimate Rewards points, such as the Chase Sapphire Preferred Card. With a more premium card like the Chase Sapphire Preferred, you can convert the cash back into Ultimate Rewards points — and transfer the points to 13 airline and hotel travel partners or redeem through the Chase travel portal. TPG values Ultimate Rewards points at 2 cents apiece, so the 20,000 points earned from the sign-up bonus could be worth up to $400 or more.

6. Amazing long-term earning potential

After you open your Freedom Unlimited you’ll be one step closer to possessing the “Chase Trifecta” of credit cards. Here’s how it breaks down:

  • Chase Freedom Unlimited: 5% cash back (5x Ultimate Rewards points) on travel booked through the Ultimate Rewards portal, 3% cash back (3x points) on dining and drugstores, and 1.5% cash back (1.5x points) on every purchase.
  • Chase Sapphire Reserve: The Sapphire family offers either 2x (Preferred) or 3x (Reserve) points on dining and travel. The Reserve has a high annual fee of $550 but comes with plenty of premium travel benefits.
  • Ink Business Preferred Credit Card:  This card offers 3x points on travel, shipping, internet, cable, phone services and advertising purchases made with social media sites and search engines (up to $150,000 in combined spending each account anniversary year). It might not make sense when you’re a college student, but it could become a useful card down the line.

Remember: While the Freedom Unlimited has strong earning potential on its own, it’s technically just a cash-back card. To unlock Ultimate Rewards sweet spot redemptions, you need to pair it with a premium UR-earning card like the Sapphire Preferred. In addition to all the reasons mentioned above, it’s wise to start with the Freedom Unlimited card as you’ll begin accruing valuable points without paying an annual fee. When you eventually get around to opening a Sapphire card, you’ll already have plenty of points earned in your account and ready to use for a graduation trip.

Related: The best Chase credit cards

7. The 5/24 rule

When you first start collecting points and miles, you’re bound to be overwhelmed by a bunch of jargon. Abbreviations such as URs and MRs (Chase Ultimate Rewards points and American Express Membership Rewards points, respectively) are commonly used among points and miles enthusiasts and can be quite confusing for those starting off and that’s okay.

You can and should learn as you go, but it helps to be aware of one thing from the start when it comes to applying for Chase cards: the issuer’s infamous 5/24 rule. Simply put, if you’ve opened five or more credit cards in the last 24 months (across all issuers), Chase will automatically reject you for most of its credit cards. This means that you generally want to start by filling up your five “slots” with Chase before moving on, and the Freedom Unlimited is a great way to start.

Related: The best ways to use your Chase 5/24 slots

Bottom line

College (if not sooner) is the perfect time to start establishing a credit history, and the Chase Freedom Unlimited is an excellent beginner credit card for students. If you’re a college student or entering the points hobby with a limited credit history, there’s no shame in starting small and applying for cards that you can actually get approved for as you go. By the time you’re ready to upgrade to the Chase Sapphire Preferred, you’ll already have built up a meaningful stash of points and be well on your way to a free vacation.

Related: Your guide to responsible credit card use for college students

Additional reporting by Juan Ruiz.

Featured photo by The Points Guy.

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