In 2016, there were around 453 million credit card accounts owned in the United States. Credit cards are common among consumers, and there are so many options. It’s time to look at one of the most popular options — the Chase Freedom card.
Before making a decision on requesting a Chase Freedom card, you need to review the basics:
A Great Place to Start
This credit card is especially valuable for people who don’t have much credit. Chase doesn’t require high credit scores from those who submit request forms.
Plus, the beginning of your experience is easy. There is no annual fee standing in your way of building your credit with this card.
Bigger Earnings on Purchases
If you’re approved for the card, you can start making money on your everyday purchases through the cash back rewards.
You gain access to the Chase Ultimate Rewards site. This acts as an online store, with purchase options that give you up to 10% cash back.
The Chase Freedom cash back program is tailored to everyday spending. In fact, their slogan says it all: The card is for the essentials. The cash back is for the fun.
The cash back bonuses work like this. For every purchase you make in specific categories, you make 5% back.
Every quarter, Chase changes the categories. In the first quarter of this year, the categories included gas station purchases and spending on internet, cable, and phone services.
In the second quarter, the categories were announced as groceries, Chase Pay purchases, and Paypal transactions.
Previous cash back categories also included purchases at Walmart and other department stores. Sometimes, it even includes nights out on the town, like dining at restaurants and going to see a movie.
Every other purchase outside of these 5% cash back categories earns 1%.
This card is popular because of the several advantages it provides:
The most obvious benefit of the Chase Freedom card is the whopping 5% cash back options. You can earn a lot back spending on your basic living expenses if the categories align. For example, those $100 grocery store bills put $5 back in your pocket.
Between filling up your gas tank, paying the internet bill, and enjoying a night out, these little expenses add up. The cash back rewards do too.
What’s more, the rewards don’t expire while you have an account open with Chase. You can redeem them at any time. This is unique because many cash back programs set a minimum.
Big Bonuses Upfront
Aside from not having an annual fee, the Chase Freedom card also has some cash bonuses if you’re approved.
When you spend $500 on purchases in your first 3 months, you earn a $150 bonus. Plus, it comes with an introductory APR of 0% on both balance transfers and purchases during the first 15 months.
Researching credit cards can be confusing. This is especially true if you only look at the promotions run by the credit card company. They often just highlight the best parts of the credit card.
As with every credit card, this card has some disadvantages:
High Interest and Fees
While the APR is 0% in the beginning, it jumps to a higher range: 16.24 to 24.99%.
In 2017, the overall average card APR was at 16.15%. As you can see, with the Chase Freedom card, you’re likely facing above-average interest rates.
This puts the pressure on you to establish responsible spending habits. You can avoid paying this high interest if you pay your balance in full every month. However, if you don’t, your debt will snowball and become harder to get control over.
The transfer option allows you to roll debt from other credit cards onto a lower interest card. The average balance transfer fee that banks charge on credit cards is between 3% and 5%.
This card charges one of the higher-end fees for these transfers — 5%. This can be costly. If you’re moving $1,000 to your Chase Freedom account, that transfer will cost you $50.
Another fee to keep an eye on is the foreign transaction fee. It is 3%. While that sounds small, it can add up quickly. So if you’re traveling abroad, all of your purchases are going to cost you 3% more than the price tag.
Complex Rewards System
Some people love the strategy involved in keeping up-to-date with the 5% cash back categories. However, it can be a hassle if you don’t stay in the loop.
The rewards program requires some homework on your end. You have to know when the cash back categories change and what specific purchases (and limitations) exist.
This is especially frustrating if the new categories don’t align with your spending habits. For example, if you don’t shop at Walmart, you miss out on those 5% cash back purchase options.
Another part of their complex rewards system are the limitations. There is no limit to the 1% cash back rewards you earn on all your Chase Freedom purchases. That being said, the 5% cash back options are another story.
Chase puts a cap on how much you can earn. Every quarter, you earn 5% back on up to $1,500 you spend on the 5% categories.
For every quarter, the most you can earn back from these categories is $75.
The Verdict on the Chase Freedom Card
There is no perfect credit card for everyone. But there are credit cards that act as great solutions for every consumer.
The Chase Freedom card isn’t for you if:
You want a simple, hands-off cash back program.
Flat-rate cash back credit cards are better if you don’t want to adjust your spending habits drastically to fit the 5% rewards categories.
You regularly travel abroad.
If you’re spending a lot of time overseas, you’re going to be paying more for all your purchases.
On the other hand, this card is a great solution if you’re new to building credit. As mentioned above, here are the big benefits for credit card rookies:
- You don’t pay an annual fee.
- You learn cash back spending strategies.
- You can earn hundreds of dollars in cash back rewards.
- You don’t need excellent credit to submit a request.
At Bonsai Finance we help you find the best credit cards and personal loans to suit your needs. Visit our blog for the best advice.