Chase Freedom Card Review

The Chase Freedom card is a great credit card for people who want to earn a cash back for purchases, but who don’t want to pay an annual fee. Why? Well, mostly because the freedom card’s cash back bonus categories and earning rates are among the best in the industry.

Let’s take a look at the Chase Freedom card bonus categories for 2013 where you will earn 5% cash back on up to $1,500 in purchases during the quarter.

January –  March

Gas stations, Starbucks, Drugstores

April – June

Restaurants, Lowe’s, Movie Theaters

July – September

Theme Parks, Gas Stations, Kohl’s

October – December

Amazon, Select Department Stores

If you maximize your spending in each category throughout the year you could earn a maximum of $300 cash back after spending $6,000. That’s a pretty good return! Most cash back credit cards only pay about 1% cash back, which would net you only $60, so you could earn an additional $240 by using your Chase Freedom Card. Review the bonus category quarterly or once a month and activating the bonus is very important. Most credit card companies only make about 1 – 1.5% on a typical transaction, so Chase is definitely losing money when they are paying you 5% on a purchase. The question is, how do they make money then?

How Chase Limits The Money They Lose on The Freedom Card

  1. Rotating categories – First, they impose tactics to reduce the number of people who qualify for the bonus. The first tactic is to rotate the categories. By changing the categories every quarter they hope that people will forget what to use their Freedom card for that month and on many of the purchases the person will earn just 1%. In addition, Chase hopes that by making it difficult to remember what bonus categories were in effect they can get people to simply use the card for all purchases, which again would earn only 1% and they would be thrilled by!
  2. Bonus Activation Registration – Chase makes you register and activate the bonus every month in order to earn the 5% cash back. This is a clever tactic that is commonly used by companies who offer rebates. The concept behind rebates is the fact that there are multiple discrete steps that the customer must complete before they can get the rebate. Most people are not good at estimating the probability that they will complete all of the necessary tasks required to earn a reward. In fact, they will often overestimate the probability. For example, let’s say that the probability that you will fill out the rebate form is 75% based on the last few rebates you bought. Hence, you estimate there is a 75% chance you will get the rebate. However, filling out the form is only one task in a set of discrete events. You must not only complete the form, you need to cut out the proof of purchase, fill out the address on the envelop, go to the post office and mail the rebate. In addition, you may need to follow up with the company if you don’t receive your rebate. Even if the probability of each event is 75%, the probability that all the events take place is 0.75 x 0.75 x 0.75 x 0.75 x 0.75 = .235 or 23.5%. That is nowhere near the 75% chance the person initially estimated! In the case of the folks at Chase, the customer would need to 1) Register for the Chase Freedom card category bonus, 2) Look up the bonus category, 3) Remember the bonus category when making the purchase, and 4) Carry the card and use it for payment. This is quite a lot of effort and I’m sure that people make mistakes at every point along the way.

Bonus Category Reminders

One of the nice features of this card is the fact that Chase does a good job of notifying you of when you need to register for the bonus.  If you sign up for text message alerts, Chase will automatically send you a text message before the bonus period even starts reminding you about the bonus categories and allowing you to activate the bonus by replying to the text with the word “BON.” This is a fantastic feature and it makes it really easy to register. In addition, Chase will send you a confirmation email that confirms your registration and reminds you of the Freedom category bonuses.

Integration With Ultimate Rewards Shopping Portal

Another hidden feature of holding this card is access to the Chase Ultimate Rewards shopping portal where you can earn cash back online by going through the portal. The cash back you earn from the portal is in addition to the rewards you earn on your Freedom card. For instance, if you shop at Kohl’s and go through their portal before you buy something, you will earn cash back through the portal, plus cash back on your card. Starting July 1, 2013 you can earn 10% cash back by going through the Ultimate Rewards mall, plus the 5% bonus on the Chase Freedom card.

Chase Freedom Card Review Summary

This is a great card to hold if you want to increase your cash back earnings. I don’t know of any cards currently out there that offer such a generous cash back bonus while offering no annual fee. Chase imposes tactics like requiring you to register and rotating the categories to reduce the number of people who qualify for the bonus, but by paying attention and keeping up to date on the bonus categories, you are on your way to earning $300 or more in cash back every year!


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