Chase is beefing up the rewards categories on its flagship consumer credit cards, announcing on Monday significant changes coming to the Freedom card lineup.
The changes, which will take effect on Sept. 15, add cash-back bonus rewards on dining and drugstore purchases as well as travel purchases made through Chase’s Ultimate Rewards online portal. These will be available on a new Mastercard called the Chase Freedom Flex—which will effectively replace the Chase Freedom card—as well as on the existing Chase Freedom Unlimited.
- Chase is overhauling the rewards on its Freedom lineup of no-annual-fee cards
- Any existing Freedom cardholder has the option to get Chase’s new Freedom Flex card with no application
- The new Freedom Flex card and a revamped Freedom Unlimited card will offer competitive cash-back rewards rates on travel, dining (including takeout and some delivery) and drugstore purchases
- The Chase Freedom Flex card will come with Mastercard World Elite benefits such as cellphone insurance and Lyft rideshare credits, unlike the existing Freedom Card, which is a Visa
- The Chase Freedom card will be closed to new applicants starting Sept. 15, 2020
Chase’s makeover adds appealing everyday spending categories at a time when many people aren’t traveling. The new Freedom Flex and the revamped Freedom Unlimited card will now more squarely compete with other no-annual-fee cash-back cards like the Capital One SavorOne and the Wells Fargo Propel American Express, which also offer rewards on dining and other routine expenses.
The Flex is "certainly a credit card product designed to respond to the pandemic environment," John Cabell, director of banking and payments intelligence at J.D. Power, wrote in an email to The Balance. "The combination of everyday spending and flexible rewards earning categories is an adaptation to the way many customers are now spending funds."
While the new Freedom Flex card is technically not a replacement of the Freedom card—current Freedom cardholders can keep their card and an upgrade is not automatic—no application is needed for those who want to upgrade to the Flex card, according to a bank spokesperson. Chase will stop offering the Freedom card to new applicants on Sept. 15.
The new Freedom Flex card will have an intriguing blend of rotating and fixed rewards categories, adding to the rewards offered by the current Freedom Card. As with both current Freedom cards, cash-back rewards will be issued as Chase Ultimate Rewards points, but they have a standard cash-back value of 1 cent per point.
Specifically, cardholders with the Freedom Flex will earn:
- 5% back on varying purchase categories (capped at a combined $1,500 spent per quarter) that rotate each quarter. The categories, such as grocery stores and online streaming services, must be activated by the cardholder.
- 5% back on travel purchased through the Chase Ultimate Rewards portal
- 3% back on dining purchases, including takeout and eligible food delivery services
- 3% back on drugstore purchases
- 1% unlimited cashback on everything else
New cardholders will be eligible for two bonuses as well: 5% back on grocery purchases (on up to $12,000 spent) made their first year with the card until January 13, 2021, and a $200 bonus after you spend $500 within your first three months.
The new fixed rewards categories on travel, dining, and drugstore purchases make the Freedom Flex card far more competitive against rotating bonus cards like the Discover it Cash Back Card that also offer 5% cashback on categories that change every quarter. These competing cards often don’t pay as much of a bonus, if anything, in other spending areas.
The earning rates on travel are top-notch compared to other no-annual-fee travel rewards cards right now, too, which typically offer just 3% back on such expenses, if that.
Until now, the Freedom Unlimited card was a simple cash-back rewards card that offered 1.5% back on all purchases, regardless of what you bought.
After Sept. 15, 2020, the card will offer:
- 5% back on travel purchased through Chase Ultimate Rewards
- 5% back on Lyft rides (through March 2022)
- 3% back on dining (including takeout and eligible food delivery)
- 3% back on drugstore purchases
- 1.5% back on everything else
The combination of the new rewards-earning rates and the baseline rate—which will still be 1.5% back on all purchases—helps set the card apart. Most competing cards only offer 1% back on purchases that don’t fall into a bonus earning category.
Just like the Chase Freedom Flex card, cashback is issued in the form of Ultimate Rewards points, which can be redeemed for a number of things including traditional cashback and travel, or transferred to a premium Chase travel card to further boost their value.
Unlike Chase’s Sapphire and Sapphire Reserve cards, the Freedom cards don’t offer the option to transfer points to airline or hotel loyalty programs. Freedom cardholders can, however, transfer their points to these premium cards, opening up additional redemption options that are more valuable.