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Chase Q4 2019 rotating categories: Are they worth it?

You can earn up to $300 a year in cash back, but there are ways to do even better

Summary

From October through the end of December, Chase’s categories include department stores, PayPal and Chase Pay. Here’s how to maximize that 5 percent quarterly bonus.

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Dear Cashing In,

I keep reading about the Chase Freedom card. It sounds like a good deal because you get 5 percent cash back in different categories.

Should I get that card? What is the catch? – Brian

Dear Brian,

The Chase Freedom® is a popular card, mainly for the reason you describe: You earn 5 percent cash back in spending categories that rotate every quarter.

Chase just released its bonus category for the fourth quarter of 2019. You can now earn 5 percent cash back on department store, PayPal and Chase Pay purchases.

That is impressive because 5 percent cash back is a high rate of return. The highest flat-rate cash back cards – that is, those that give you consistent cash back no matter where you use the card – offer usually 2 percent cash back or less.

Check out all the answers from our credit card experts.

Ask Tony a question.

See related: Chase Freedom vs. Chase Freedom Unlimited

What you need to know

For the fourth quarter, that 5 percent cash back at department stores could really come in handy.

The quarter lasts from Oct. 1 to Dec. 31, so it includes the holiday shopping period. Online purchases from department stores should count, too. Chase has the full list of department stores that are eligible on its website. Unfortunately, the list doesn’t include Walmart, Target, Kmart and electronics stores.

PayPal and Chase Pay bonuses could be helpful, too, especially when purchasing items online and you’re given the option to pay using PayPal. However, the department store bonus will probably be used more.

Still, before you get too excited about cash back in these categories, there is a little more to the story that you should know.

  • First, the 5 percent back is capped at $1,500 in spending per quarter on specific categories that rotate every quarter. Any other purchases outside those categories earn cash back at a rate of 1 percent.
  • That is a cap of $75 in cash back per quarter from that 5 percent rate. Any additional spending over $1,500 per quarter on those categories is just 1 percent back.
  • Second, you have to register each quarter for the bonus categories. That means that in order to receive that 5 percent back for the fourth quarter, you have to tell Chase that you want those bonuses by activating them online.

Limited rewards

There’s nothing wrong with the Chase Freedom card.

  • It has no annual fee.
  • There’s a $150 sign-up bonus, after you spend $500 on purchases in the first three months.
  • In addition, Chase offers a sister card, the Chase Freedom Unlimited®, which also has no annual fee and gives a flat 1.5 percent cash back (with no 5 percent rotating bonuses).

Just keep in mind that if you use the Chase Freedom, the rewards you earn on those bonus categories are limited to $300 a year.

That’s not bad, but there are a lot of other rewards cards that have perks worth more.

Are there better cash back options?

If it’s cash back you’re after, you might be better off with a card that gives a base rate higher than 1 percent and that doesn’t cap the rewards – such as the no-annual-fee Citi® Double Cash Card or Fidelity Rewards Visa Signature card (each at 2 percent with no cap- Citi Double Cash earns 1 percent as you buy and another 1 percent as you pay for your purchases).

Depending on how you spend your money, it might make sense to go with a card that gives fixed category bonuses, such as the Capital One® Savor® Cash Rewards Credit Card. The card offers unlimited 4 percent cash back on dining and entertainment, plus 2 percent at grocery stores. The Savor also comes with a $300 sign-up bonus if you spend $3,000 in the first three months – but charges a $95 annual fee, waived the first year.

However, there is a way to make the rewards from a Chase Freedom or Chase Freedom Unlimited more valuable. The answer: get a second Chase card.

See related: Chase Freedom and Chase Freedom Unlimited – the ultimate cash back combo?

Pair up

If you have a Chase card that earns Chase Ultimate Rewards – such as a Chase Sapphire Preferred® Card ($95 annual fee) or the Chase Sapphire Reserve® ($450 annual fee) – you may transfer your rewards to one of those cards from Chase Freedom.

That way, you can use the Chase travel portal to pay for flights, hotels and other travel expenses using points – at a greater value than cash back.

Furthermore, if you have the Preferred card, you get a 25 percent bonus if you redeem Chase Ultimate Rewards points for travel – and a 50 percent bonus if you have the Reserve card.

Once your points have been transferred to either card, you can also transfer them directly to an airline or hotel frequent flyer program, which can yield a better value than cash back as well.

That option will appeal to you only if you are interested in travel rewards, and if you don’t mind paying the annual fee that those other Chase cards have.

Also, keep in mind that Chase limits the number of cards from any card issuer that you can receive in a 24-month period to five.

Taken by itself, Chase Freedom is a fine card, with the rotating cash-back rewards of 5 percent a strong draw.

But the card can become even better if you pair it with a second Chase card and use it wisely.

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Credit Card Rate Report Updated: October 16th, 2019
Business
15.18%
Airline
17.11%
Cash Back
17.25%
Reward
17.13%
Student
17.29%

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