I Just Received My Chase Freedom Card -- I Have Some Thoughts/Tips

This past weekend I received my Chase Freedom Cash Visa Card in the mail (I plan to use it as part of my strategy to make 2.6% cash back.) I called and activated the card right away and thought I'd share some of my thoughts on the experience as well as a few tips to make the most out of the card. Here goes:

1. Make sure your card is part of the Chase Freedom Dynamics Cash Rewards program. If it isn't, request for it to be. Mine already was part of the program, so I was set to go here.

2. The card gives you 3% cash back on the three of fifteen categories where you spend the most (to see the 15 categories, see Actions to Take If You Get a Chase Freedom Card). My most likely top three are going to be grocery stores, gas stations, and drug stores. But since I'm already in the 5% cash back category with these with my Blue Cash from American Express card, I plan on using the Amex card for them and using the Chase card in other areas until January (my Amex anniversary date) when the Amex card resets.

3. But here's the rub on #2. How your charges are allocated (whether they are assigned as a grocery transaction, a gas station transaction, etc.) is based on the category the store uses in processing its card transactions. Hence what you may think is a grocery store is not classified that way and hence you'll not receive 3% cash back on charges there. And Chase can't tell you in advance how a store is classified. So your only solution is to run test charges and then look at your statement to see how various stores come out. Then you can plan your charges accordingly.

4. Most notably, mass merchant stores are NOT included in the list of 15. Whether or not any particular Wal-mart (for instance) is classified as a mass merchant or a grocery store can only be determined by doing a test charge as noted above. But it appears that a Wal-mart (or Target or Kmart) that doesn't have a good bit of space devoted to groceries will have no chance of being in the 15 categories.

5. I talked to the Chase rep who activated my card (actually, the guy they assigned to try and sell me extra services once I had activated the card myself) about the issues noted above and he said I was "already way ahead of most people in my thought process on how to use the card." Little did he know how much I write on the issue. :-) 

6. We made a charge on the first day we had the card just to make sure the first statement will have something on it (we have three months to settle out the other issues, so I'm not sure when we'll charge again on it.) I wanted to get at least one charge in so we'd be able to collect our bonus (there's currently a $50 sign-up bonus on the Chase Freedom Cash Visa Card) asap.

7. I also do my banking with Chase and while on their site the other day I noticed that a Subaru credit card I have with them also showed up when I logged on. Cool. It's nice to have everything in one spot. I asked the phone rep and he said I should see my new card show up soon as well.

Comments

[Chief Family Officer]

Unbelievably, Ralphs, Whole Foods and Trader Joe's don't register as grocery stores for my Borders Chase Visa. It really is a lot of guess work on the category until you get that statement.

[Kevin]

RE: #4, I wondered how Target & Wal-Mart would be classified, since I think there is a category for department stores included in the magical 15. I guess dept stores are more like Macy's, etc.

I got my first bill with my new Chase card this week - it was only $65.95, but I made $2.02 in rewards off that, so it appears I got the full 3% on my 4 charges during that period.

[Kurt]

I go with the cashreward card (or whatever it is). 1% credited to my balance each month (no rewards, not special categories, no points, no waiting to reach a threshold). It's the best for people that want a little cash back but don't want to waste time and brainpower getting it.

[Brendan]

I think it is important to point out to others that there is a cap on the rewards you can earn with this card. Notably, You can only earn the 3% for the first $600 in purchases each month for a total reward of $12 per month. After you hit that $600 mark, every charge after that only earns 1% with no cap.

[MelMoitzen]

Here are the magic 15 categories for Chase Freedom: Grocery stores (that are not affiliated with or departments of superstores, warehouse clubs or discount stores), gas & convenience stores, quick service payment/fast food restaurants, telecommunications, cable/satellite TV/Internet Service Providers, video rentals, department stores, dry cleaners, drugstores, movie theatres, local and suburban commuter passenger transportation (including ferries, bridges, tolls, parking garages, taxis/limos), pet supply stores and veterinary services, utilities, beauty shops (salons and spas), or gym/recreation memberships.

CFO, that really seems weird. Chase classifies Whole Paycheck and TJ's as grocery stores on my Chase Rewards VISA and I get the full bonus rebate. You may want to give them a call and ask--if they're not grocery stores, then what exactly are they?

Also note that while quick service payment/fast food restaurants are one of the categories, full service restaurants aren't. So yes, you might wind up earning 3% on your McDonald's or Chipotle, but you'll never get more than 1% back on much bigger meal tabs at a real restaurant. If you're big on eating out, there are cards that will get you 3% on all classes of restaurants in either unlimited amounts or a lot more than $12/month.

After reading about all the restrictions on Chase Freedom and questionable merchant categorizations earning you 1% when you think you're getting 3%, there's something to be said for the Orchard Bank MasterCard, which gets you 2% across the board on everything...no ifs, ands or buts, other than a $400 maximum rebate/year.

[rocketc]

I love the Chase banking interface. I can pay any of my Chase cc's instantly simply by transferring money from my Chase checking account. I originally opened the account for the bonus, but now I am going to keep it because of how easy it is to work with the card I use the most: chase freedom.

[Jim]

Just to clarify a point about the category - Chase (or any other card issuing bank for that matter) has no control over how the category code is set. The Merchant Category Code (or "MCC") is set by the merchant's bank, not your credit card's bank. Many rewards programs that offer rebates on categories (Amex Blue Cash included) completely depend on the *merchant* setting this code correctly. If a fast food restaurant misclassifies itself as a discount store, you're out-of-luck as far as Chase being able to detect your fast food rebate.

[Derek]

How do I get cash back at Meijer stores? I'm looking for a discount card that works there.

[FMF]

Derek --

See the comments on this post -- there are some thoughts on Meijer there:

http://www.freemoneyfinance.com/2007/09/how-you-can-ear.html

[Anne]

Is this site run by Chase or are you being paid by them to hype this card? I just got my first bill from using this card and it is a rip off. MY CASH BACK totalled a little over 1% of the bill which wouldn't be so bad IF: MY CASH BACK can only be redeemed in $50 increments - where I have to APPLY for a CHECK (no credit to my card? A PAPER CHECK? What about the paperless revolution where they don't even want to send a bill--but I have to APPLY for a PAPER CHECK to get my money back?). MY CASH BACK EXPIRES IN 1 YEAR. I don't think I'll be seeing much cash back on this card. Another credit card rip off in my view. How much are they spending in advertising for this card? They'd build up more good will just giving everyone 1% back on their bill without all the hype. What a joke! This is a black eye for Chase.

[FMF]

Anne --

Rule #1 in getting ANY credit card is that you have to get a card based on your needs and spending habits -- you can't simply pick out a card and "hope" it will work for you. To pick the best card for you, see this post: http://www.freemoneyfinance.com/2007/08/the-keys-to-get.html

In this case, if you don't have any spending in Chase's 15 categories that earn you 3% cash back (see this post for a list of them: http://www.freemoneyfinance.com/2007/10/actions-to-take.html ), the card isn't likely to be the best option for you.

[Kevin]

Anne - I don't see how getting 1%+ back from spending money you would anyway is a "rip-off". As far as the paper checks go, in my experience they usually come within 5-10 business days, so you have them in plenty of time for the due date of the bill.

[FMF]

And if you wait to get your rebate, Chase throws in a $50 kicker bonus.

[Wayne]

If you bank with Chase you can simply transfer the payments from your checking. Which I like, if on vacatiion etc, don't have to worry about missing payments. My question is: If you don't bank with Chase,is this possible with another bank.
Thanks