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Chase Freedom categories for Q1 2020 are improved

The bonus categories – gas stations, streaming services and internet, cable and phone services – are more desirable for me than last year’s Q1 offerings

Summary

Chase Freedom’s Q1 2020 bonus categories are more desirable for my household than the offerings in the same quarter last year. Here’s how I plan to maximize my cash back savings.

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The Chase Freedom bonus categories for Q1 2020 are gas stations, select streaming services and internet, cable and phone services.

After activation, cardholders will earn 5% cash back on up to $1,500 of spending in these categories (then 1% cash back after that). The promotion runs from Jan. 1 through March 31, 2020.

This should be a pretty good quarter for me, and I’m guessing it will be for you, too. I like these selections better than the Q1 2019 offerings (gas stations, tolls and drugstores) because internet, cable and phone services are back on the Chase Freedom calendar for the first time since early 2018.

Those are much more desirable for my household than tolls and drugstores, and I imagine most others would agree.

I can maximize my return by paying four months’ worth of internet, cable and phone bills in the January-March time frame. My cellphone bill ($81) is due on the 14th of each month, and my internet, cable and home phone bill ($156) is due on the 19th, so I can submit my January, February, March and April payments between Jan. 1 and March 31. That will get me to $948, almost two-thirds of the way to the quarterly cap.

I average roughly $100 per month in gas spending, which will leave me approximately $250 shy of the limit. (I probably won’t put any streaming spending on this card because my Blue Cash Preferred® Card from American Express gives a higher return.)

I could make up the difference by buying gas gift cards. In addition to the Chase Freedom’s 5% return, I’d also benefit from the cash price at the gas pump (typically about 10 cents per gallon cheaper than credit in my area).

See related:  6 worst ways to redeem your credit card rewards

Don’t make it a habit, though

I’m sure Chase wants cardholders to enroll their Freedom cards in autopay programs for streaming, internet, cable and phone services. But if you set and forget these recurring charges, you will probably miss out on future rewards. Starting April 1, your Freedom card will only pay you 1% cash back on these purchases, a figure that’s easy to exceed with other cards.

Scoping out the competition

Discover has already announced its entire 5% cash back calendar for next year (eligible cards include Discover it® Cash BackDiscover it® Student Cash Back and Discover it® Balance Transfer). The same stipulations apply (cardholders need to activate the promotion each quarter, it’s capped at $1,500 in quarterly spending and additional spending earns 1% cash back).

In 2020, participating Discover cards will give 5% back on:

  • Grocery stores, Walgreens and CVS (Q1)
  • Gas stations, Uber, Lyft and wholesale clubs (Q2)
  • Restaurants and PayPal (Q3)
  • Amazon.com, Walmart.com and Target.com (Q4)

The changes from 2019 were:

  • Adding Walgreens and CVS in Q1
  • Adding wholesale clubs in Q2

I liked Discover’s 2019 calendar better than Chase’s 2019 calendar. Last year, the Chase Freedom gave 5% back on:

  • Gas stations, tolls and drugstores (Q1)
  • Grocery and home improvement stores (Q2)
  • Gas stations and select streaming services (Q3)
  • Select department stores, PayPal and Chase Pay (Q4)

The key differences are that Discover had a restaurants quarter and Chase did not. And Discover optimized retail purchases in Q3 and Q4, whereas Chase only did so in Q4. Plus, Amazon.com was not among Chase’s 5% options at any point in 2019 (I could get 5% back at Walmart.com and Target.com using my Chase Freedom card in Q4 via PayPal, but Amazon does not accept PayPal).

See related:  Use these credit cards to earn cash back at department stores

What I’m looking for in my next card: Sign-up bonus, high return rate

While I would probably choose the Discover it Cash Back card over the Chase Freedom if I were starting fresh, I don’t think the differences are great enough to justify adding the Discover it Cash Back card to my wallet at this point.

For my next credit card, I’m most interested in a generous welcome bonus, a high everyday earn rate or both (the Capital One® Venture® Rewards Credit Card is a good example). Discover’s introductory bonus (doubling all of the cash back you earn in your first year as a cardholder) is compelling, but I’d rather get the payout upfront. And I think I’d experience peaks and valleys with the Discover card, particularly beyond the first year.

Since I already have one rotating 5% cash back card, I’m looking for something steadier in my next sign-up.

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Credit Card Rate Report Updated: September 30th, 2020
Business
13.91%
Airline
15.50%
Cash Back
15.94%
Reward
15.78%
Student
16.12%

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