The Chase Freedom card is popular because it's a very accessible cash back bonus card. There's no annual fee and you get a $150 bonus after just $500 on purchases in the first three months – an amount many can achieve without difficulty.
With the Chase Freedom Card, you need to activate the bonus cash back on the rotating quarterly categories. It's not automatic. You get 5% cash back on up to $1,500 in combined purchases each quarter but you need to activate it each quarter.
Fortunately, you earn the cash back as long as you activate. You can even activate after you make the purchase, it'll apply retroactively (from their FAQ):
Here are the known categories for 2020:
- January – March: Gas stations, internet, cable & phone services, plus select streaming services
- April – June: Grocery stores, gym membership and fitness clubs
- July – September: Amazon.com, Whole Foods Market
- October – December: Wal-Mart and Paypal purchases
(we will update this as the categories are released)
My guesses on the future quarters is as good as yours but given their historical choices (which you can see below), I suspect one of the quarters will include entertainment (like restaurants and movies) while the other will include some kind of shopping component, like department stores or perhaps an online retailer they've partnered with.
Previous Chase Freedom Calendar Categories
Since Chase doesn't release the categories ahead of time, unlike issuers like Discover, we're left to guess what the rest of the year will hold. Fortunately, we know what they've done in the past.
Here are the categories from 2019:
- January – March: Gas stations, tolls, drugstores
- April- June: Grocery stores (not Walmart and Target), home improvement stores
- July – September: Gas stations, streaming services (Netflix, Hulu, Sling, Vudu, SiriusXM, Pandora, Spotify, FuboTV)
- October – December: Department stores and all purchases made using Paypal or Chase Pay
- January – March: Gas stations, internet/cable/phone services, mobile wallet “Pay” services (Chase, Google, Apple & Samsung).
- April- June: Grocery stores, Paypal, Chase Pay
- July – September: Gas stations, Lyft, Walgreens
- October – December: Department stores, wholesale clubs, Chase Pay
- January – March: Gas stations, local transportation
- April- June: Grocery stores, drug stores
- July – September: Restaurants, movies
- October – December: Walmart, department stores
- January – March: Gas stations, local transportaiton
- April- June: Grocery stores, drug stores
- July – September: Restaurants, wholesale clubs
- October – December: Wholesale clubs, drug stores, department stores
How Does Chase Know the Category?
Every store that takes Visa or Mastercard is assigned a four-digit merchant category code (MCC). Chase groups different MCCs together to form their own categories. When they see a transaction, they look at the MCC of the merchant and awards bonuses based on which category they are in.
In most cases, they're accurate. There are sometimes inconsistencies, where you might think a merchant is one category when it's technically in another one. This happens in cases where a store has several business areas. Visa's prime example of this is a bookstore that sells books, stationary, newspapers, and music. Each one of those is a separate category but since the bookstore is primarily a book seller, it falls under the Book Stores MCC of 5942.
Chances are the categories will match up without issue but in case there is a problem, this is how they know whether a transaction is a bonus category or not. Unfortunately, there's nothing you can do about it. If you want, you can read VISA's data standards manual for more (or if you want to fall asleep).
Are There Better Alternatives?
Remembering to activate the bonus categories can be a pain (fortunately it is retroactive) and the base cash back rate is 1%, but are there cards that offer similar cash back without the hoops?
To help decide, calculate how much the bonus is worth based on your spending. The card offers 5% cash back on up to $1,500 in purchases – which amounts to $75. That's if you spend $500 a month in those specific bonus categories, which is likely a stretch in some categories.
The Chase Freedom Unlimited Card gives you 1.5% cash back on all purchases, a 50% increase in the cash back rate. And that rate is on all purchases with no limit. There is a new account bonus of $150 when you spend $500 on purchases in the first 3 months.
With the Chase Freedom Unlimited, you lose the bonus categories but you get 50% more cash back on all other purchases. That's not even considering the first year bonus cash back rate of 3%.
If you don't mind the rotating category game, the Discover it Cash Back card is a good option too. You can earn 5% cash back on bonus categories (you'll have to activate it and it's on up to $1,500 in spend), 1% cash back on all other purchases, and it also has a cash back match for the first year. There's no annual fee.
The bonus categories for 2019 are (Discover releases them ahead of time):
- January – March: Grocery stores
- April- June: Gas Stations, Uber, Lyft
- July – September: Restaurants
- October – December: Amazon.com
The Chase rotating category shuffle can be fun but it's not the only game in town!