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Category: Credit Card Guide

Posted on January 28, 2021

How to redeem cash back

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Surveys consistently show that no credit card reward is more popular than cold, hard cash. Indeed, cash back cards came out well ahead of other types of rewards cards in a recent CreditCards.com survey, which found that close to half of U.S. adults own a cash back credit card.

And for good reason: Instead of having to decipher a complex redemption scheme, you can opt for a simple, straightforward reward and use it in the way that fits you best.

Here we take a look at some of the most common types of cash back redemption, along with some of the restrictions you may encounter when redeeming your rewards.

How cash back cards work

Cash back cards come in a variety of flavors, but they all fundamentally work the same way: As you make purchases with your card, you earn cash rewards at a set rate. There are three major types of cash back cards.

  • Flat-rate cash back cards offer the same percentage of cash back for all purchases, usually between 1% and 2%.
  • Bonus category cash back cards typically reward some purchases, like groceries or dining, at a higher rate, while rewarding general purchases at 1%.
  • Rotating bonus category cash back cards have dynamic bonus categories that automatically change or allow you to select a different bonus category after a certain length of time.

See related: What is cash back?

Ways to redeem cash back

Depending on your card and issuer, you may have a variety of choices in how you redeem your cash back rewards. Some issuers even allow you to set up an automatic redemption, meaning your redemption would automatically initiate after a set number of days or after you earn a certain amount in rewards.

The most common ways to redeem cash back are:

  • A statement credit
  • A direct deposit to a bank account
  • A check
  • Gift cards
  • Merchandise

Redeeming cash back as a statement credit

One of the most common ways to redeem cash back is as a statement credit. A statement credit is money credited to your account that reduces your card balance. For example, if you were to spend $1,000 with a card that offers 1.5% cash back on every purchase, you’d earn $15 in cash back rewards; and if you were to redeem this cash back as a statement credit, your balance would decrease by $15 to $985.

Blue Cash Preferred® Card from American Express, for example, requires you to have earned $25 in cash back before you can redeem as a statement credit.

  • The Chase Freedom Unlimited®card lets you redeem rewards as a statement credit in any amount, anytime.
  • Once you’ve met your card’s redemption requirements, you can simply choose a statement credit as your preferred cash back redemption.

    Redeeming cash back as a check or direct deposit

    A slightly smaller number of credit card rewards programs let you redeem your rewards for “true” cash back in the form of a check or direct deposit to your bank account. Claiming your cash back in this way gives you a bit more leeway since you can save or spend your rewards however you like instead of having them “locked” into a particular card account.

    As with statement credits, the requirements for requesting a check vary from card to card, with some issuers requiring you to have earned a minimum amount of cash back before you can request a check and others imposing relatively few restrictions.

    Direct deposits tend to be a bit trickier across the board, especially if you don’t already have a banking relationship with your credit card issuer.

    • The Bank of America® Cash Rewards credit card, for example, will only let you redeem cash back as direct deposit if you have a checking or savings account with Bank of America.
    • The Citi® Double Cash Card lets you redeem your cash back as a direct deposit only if you have a linked Citi account or a checking account from which you’ve paid a Citi credit card bill at least twice. While the Double Cash card requires you to have earned at least $25 in cash back to redeem as a statement credit, there’s no minimum to redeem as a direct deposit.

    Wells Fargo Cash Wise Visa® card lets you claim your cash back via an ATM (in $20 increments only) if you have a Wells Fargo Bank account.

    Automatic cash back redemption

    Along with manually requesting a statement credit, check or direct deposit, a number of cards allow you to set up automatic cash back redemption. If your card allows automatic redemption, your cash back is generally distributed at set times or after you’ve earned a certain amount.

    • The Capital One Quicksilver Cash Rewards Credit Card and, for example, allow you to schedule automatic cash back redemption via statement credit or check at a set time once per year or once you’ve reached a cash back earnings threshold ($25, $50, $100, $200, $500 or $1,500).
    • Even some cards designed for credit-builders, like the Credit One Bank American Express® Card, allow automatic redemption as a statement credit, offering those looking to improve their financial habits a “set-it-and-forget-it” cash back savings tool that will periodically knock off a chunk of their credit card balance.

    Travel, gift cards and merchandise on an issuer’s online portal

    Most credit card issuers also give you the option of redeeming your cash back through a rewards portal for online shopping or as gift cards to select department stores, restaurants, video streaming services and more.

    • The Discover it® Cash Backcard, for example, lets you redeem your cash back for gift cards from shopping partners once you’ve earned $5 in cash back (gift cards range from $5 to $200, in increments of $5).
    • The Amazon Prime Rewards Visa Signature card*lets you redeem your points for purchases on Amazon.com, as a statement credit or deposit, or for gift cards and travel – all at a rate of 1 cent per point.

    Having the option to use your rewards for travel allows you to enjoy the benefits of travel rewards with a cash back card and is especially common among cash back cards that use points or allow you to choose between cash back and points.

    • The Chase Freedom Unlimited is a great example. You can earn unlimited cash back at a rate of 5% cash back on every purchase, which translates to 1.5 points per dollar if redeemed for travel in the Chase Ultimate Rewards portal.
    • Similarly, the Citi Double Cash Card lets you transfer your cash back to Citi ThankYou Rewards and redeem for travel rewards, as well as gift cards, merchandise and other purchases through the Pay with Points program.

    Cash back redemption options on popular rewards cards

    As you can see, cash back redemption options vary considerably from issuer to issuer and card to card. Here’s a closer look at how cash back redemption breaks down with some of the most popular cash back credit cards.

    Card Redeem as a statement credit? Redeem as a check? Redeem as a direct deposit?
    Blue Cash Preferred® Card from American Express Yes (once you’ve earned $25 in cash back) No No
    Bank of America® Cash Rewards credit card Yes (once you’ve earned $25 in cash back) Yes (once you’ve earned $25 in cash back) Yes (into a Bank of America checking or savings account, once you’ve earned $25 in cash back)
    Capital One Quicksilver Cash Rewards Credit Card Yes, anytime Yes, anytime No
    Chase Freedom Unlimited® Yes, anytime Yes, anytime Yes
    Citi® Double Cash Card Yes (once you’ve earned $25 in cash back) Yes (once you’ve earned $25 in cash back) Yes (to a linked Citi savings or checking account or to a checking account from which you’ve paid your Citi credit card bill at least twice)
    Discover it® Cash Back Yes, anytime No Yes

    Best cash back redemption options

    With all those options for redeeming for cash, which one is best?

    The key point to consider is whether your rewards lose any value when redeemed in a certain way. You want to make sure you are getting the most value back, so be careful if you redeem for merchandise, which can be worth less than rewards redeemed for straight cash.

    That said, unless your issuer offers a bonus for claiming your rewards as a statement credit instead of “true” cash back, you should simply stick to whichever option is most convenient.

    One drawback to cash rewards is they often don’t feel like actual rewards because they get swept up into your ongoing finances. If that bothers you, you might consider taking note of how much you are receiving in cash rewards, then rewarding yourself by spending that amount on something you want, so that you feel like you’re getting a reward.

    Either way, that’s the best aspect of cash back rewards: It’s your decision.

    Choosing the best cash back credit card for you

    Your redemption options are just one consideration when choosing a credit card. Consider these factors:

    Bonus categories

    When shopping around for cash back cards, find the card that will work the hardest for you, not the other way around. In other words, a cash back rate of 5% at restaurants is great, but not if you rarely eat out. Bottom line: Find a credit card that matches the largest portions of your budget.

    Also, be honest about how much thought you want to give to your credit card. If you prefer a “set and forget” approach, a flat-rate card is a better choice than a rotating bonus category card.

    Annual fees

    With so many great no annual fee cards, you might wonder why you would ever get a card with an annual fee. But often, the rewards rates are so much better that it actually makes sense to get the card with the annual fee. For example, comparing the Blue Cash Everyday® Card from American Express and the Blue Cash Preferred® Card from American Express, we found that consumers who spend more than $3,200 annually at U.S. supermarkets ($267 per month) were actually better off with Blue Cash Preferred, which has a $95 annual fee.

    From redemption options to bonus categories, each cash back card is designed for a different type of consumer. If you haven’t found your perfect match yet, try our CardMatch™ tool, which can deliver personalized credit card offers in seconds with no impact on your credit score.

    All information about the Capital One Savor Cash Rewards Credit Card and the Amazon Prime Rewards Visa Signature Card has been collected independently by CreditCards.com. The issuers did not provide the content, nor are they responsible for its accuracy.

    Source: creditcards.com

    Posted on January 18, 2021

    Earn a cash back bonus of up to $200 with the Chase Freedom Flex and Freedom Unlimited cards

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    If you’re looking for a way to get a large influx of Ultimate Rewards points, there is great news for Chase members: Both the Chase Freedom Flex and Chase Freedom Unlimited cards offer a high cash bonus for a low spend threshold.

    Currently, both cards are offering a $200 bonus if you spend $500 in the first three months.

    Which Chase Freedom card is better in the first year?

    That depends largely on your spending habits. While the two cards share certain earning categories, they still have different rewards earning structures.

    The Freedom Unlimited offers the same flat rate of 1.5% cash back on purchases outside of bonus categories, and the Freedom Flex card offers 5% cash back in rotating bonus categories that you must activate each quarter (on up to $1,500 in purchases, then 1% cash back).

    Comparing the Chase Freedom Flex and Freedom Unlimited cards

    For many cardholders, the Chase Freedom Flex card should offer greater value, assuming you are able to maximize your spending in its quarterly bonus categories.

    That said, if you’re not able to maximize the Freedom bonus categories, the Freedom Unlimited card might be a better choice thanks to its higher rewards rate on general purchases.


    Chase Freedom Flex
    /
    Chase Freedom Unlimited
    Rewards rate
    • 5% cash back on rotating bonus categories (up to $1,500 per quarter)
    • 5% cash back on Lyft purchases (through March 2022)
    • 5% cash back on travel purchased through Chase Ultimate Rewards
    • 3% cash back on dining
    • 3% cash back on drugstore purchases
    • 1% cash back on other purchases
    • 5% cash back on Lyft purchases (through March 2022)
    • 5% cash back on travel purchased through Chase Ultimate Rewards
    • 3% cash back on dining
    • 3% cash back on drugstore purchases
    • 1.5% cash back on all other purchases
    Annual fee $0 $0
    Introductory offer $200 if you spend $500 in first 3 months $200 if you spend $500 in first 3 months
    Estimated earnings in first year (Assumes maxed-out bonus categories and a $15,900 annual spend) $666 $526

    Of course, there’s nothing to stop you from applying for both cards and potentially earning both cards’ sign-up bonuses. The Chase Freedom Flex and Freedom Unlimited cards go nicely together – you can use the Chase Freedom Flex card to earn 5% cash back on its quarterly bonus categories and the Chase Freedom Unlimited card to earn 1.5% cash back on everything else. Then, use either card at drug stores, restaurants and on travel purchases in the Ultimate Rewards portal.

    Recent changes to the Chase Freedom cards’ sign-up bonus

    While some rewards cards frequently update their sign-up bonuses, the offers on the Chase Freedom cards are fairly consistent. Recently, however, we have seen increased welcome offers, with both cards offering a $200 bonus. For a limited time, both cards also offered a higher rate on grocery store purchases in the first year of card membership, but that offer has expired.

    Chase Freedom Flex card recent changes
    Current $200 if you spend $500 in first 3 months
    Previous $200 if you spend $500 in first 3 months, plus 5% cash back on grocery store purchases in first year (on up to $12,000 in spending, not including Target® or Walmart® purchases)

     

    Chase Freedom Unlimited card recent changes
    Current $200 if you spend $500 in first 3 months
    Previous $200 if you spend $500 in first 3 months, plus 5% cash back on grocery store purchases in first year (on up to $12,000 in spending, not including Target® or Walmart® purchases)
    Previous $150 if you spend $500 in first 3 months

    Who is eligible to apply for the sign-up bonus?

    New cardholders who have not received a sign-up bonus for the same card within the past 24 months are eligible to earn the bonus with the Chase Freedom cards. Of course, you have to qualify for the cards first, which means you’ll need a credit score in the good to excellent range (at least 680).

    Chase doesn’t appear to have a hard limit on how many cards you own, though they may deny your application if you have too large of a credit limit across your other Chase cards. Also, while there is no strict rule on how many Chase cards you can apply for within a certain timeframe, many applicants report a limit of one to two new cards per month.

    Chase has recently cracked down on applicants who have opened several credit cards at once. Though it’s not an official policy, Chase appears to be enforcing a “5/24” rule on new credit card applications. What this means is – if you have opened at least five credit card accounts in the past 24 months with any issuer (not just Chase) – your application will likely be denied. The rule seems to apply to any credit card account that shows up on your credit report, including co-branded store cards and authorized user accounts. (On the plus side, business credit cards that don’t appear on your personal credit report do not affect your chances of being approved.)

    How to earn and use Ultimate Rewards points

    As cash back cards, the Chase Freedom cards offer a flat 1 cent value on most redemption options. However, there are a few options that you want to avoid. Our table below shows that Amazon.com and Chase Pay purchases are valued at only 0.8 cents per point:

    Redemption options for Chase Freedom cards

    Redemption option Point value (cents) Value of 20,000 points
    Statement credit 1 $200
    Direct deposit 1 $200
    Gift cards 1 $200
    Ultimate Rewards portal travel 1 $200
    Amazon.com purchases 0.8 $160
    Chase Pay purchases 0.8 $160

    You can also transfer points from the Chase Freedom cards to certain Chase Ultimate Rewards cards, such as the Chase Sapphire Preferred Card* and Chase Sapphire Reserve cards. As you can see from the table below, transferring your points to one of these cards will allow you to get more value out of your sign-up bonus. You get a 25% to 50% bonus on your points if you redeem for travel through the Chase Ultimate Rewards portal, depending on which card you own.

    Also, both the Sapphire cards allow you to transfer your points at 1:1 value to one of Chase’s many travel partners to get even higher values on your points. For instance, we value Southwest Airlines points at 1.6 cents on average (note the value can vary widely on the ticket that you purchase), which means the 20,000-point bonus can net you $320 of value on average when used for Southwest airfare:

    Redemption options for Chase Sapphire cards

    Redemption option Point value (cents) Value of 20,000 points
    Chase Sapphire Reserve – 50% redemption bonus 1.5 $300
    Chase Sapphire Preferred – 25% redemption bonus 1.25 $250
    Singapore Airlines transfer 2.36 $472
    British Airways transfer 1.4 $280
    Southwest Airlines transfer 1.6 $320
    JetBlue transfer 1.53 $306
    United Airlines transfer 1.52 $304
    World of Hyatt 1.43 $286
    Air France transfer 1 $200
    Virgin Atlantic transfer 0.8 $150
    Marriott Rewards transfer 0.8 $160
    IHG transfer 0.65 $130

    An extra $500 per year

    In addition to a sign-up bonus, the Chase Freedom cards offer a referral bonus worth up to $500 each year. Chase’s “Refer-a-Friend” program gives Freedom cardholders $100 cash back for each person they refer who is approved for the Freedom card – up to five people per year.

    To take part in the promotion, enter your last name, zip code and last four digits of your credit card on Chase’s Refer-a-Friend page. On the following page, enter the first name and email address of each person you wish to invite. You also have the option to post an invitation link to Facebook or Twitter or refer friends through the Chase app.

    *All information about the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. This card is no longer available through CreditCards.com.

    Source: creditcards.com

    Posted on January 14, 2021

    Chase Freedom Flex vs. Chase Freedom Unlimited

    The Chase Freedom Flex℠, or the Chase Freedom Unlimited®? The card names sound the same, and at a glance the rewards are similar.

    Not so fast: Though the cards have a lot in common, there are a few key differences to keep in mind when deciding which is the best fit for you.

    Both the Chase Freedom Flex and Chase Freedom Unlimited offer hefty sign-up bonuses, along with bonus cash back on dining and drugstore purchases, as well as travel purchased through Chase Ultimate Rewards. The difference is their rewards structures: The Freedom Flex card offers 5% cash back on rotating quarterly categories, while the Chase Freedom Unlimited offers a flat-rate 1.5% cash back on everything.

    Read on to get a rundown on the pros and cons of each card, as well as which card is best suited for you, based on your spending habits.

    Chase Freedom Flex versus Chase Freedom Unlimited

    Chase Freedom Flex
    Chase Freedom Flex℠
    Chase Freedom Unlimited
    Chase Freedom Unlimited®
    Rewards rate
    • 5% rotating quarterly categories (upon enrollment, on up to $1,500 in spending per quarter, then 1%)
    • 5% cash back on travel purchased through Chase Ultimate Rewards
    • 3% cash back on dining
    • 3% cash back on drugstore purchases
    • 1% cash back on other purchases
    • 5% cash back on travel purchased through Chase Ultimate Rewards
    • 3% cash back on dining
    • 3% cash back on drugstore purchases
    • 1.5% cash back on all other purchases
    Sign-up bonus $200 if you spend $500 in first 3 months
    • $200 if you spend $500 in first 3 months
    Annual fee $0 $0
    Estimated yearly rewards value ($1,325 monthly spend, including sign-up bonus) $532 $405
    Pros
    • No annual fee
    • High rewards rate on both specific categories year-round and on rotating categories
    • Large sign-up bonus
    • Can transfer rewards to other Chase cards
    • No annual fee
    • High general rewards rate
    • Large sign-up bonus
    • Can transfer rewards to other Chase cards
    Cons
    • Requires some maintenance
    • Can be difficult to max out rotating categories (may not always align with spending)
    • Low cash back rate on general purchases
    • Not the highest rate available on general purchases
    Who should get this card?
    • Rewards maximizers
    • People who want to collect Ultimate Rewards points
    • People who like cash back variety
    • People who want to earn Ultimate Rewards points without paying an annual fee
    • People who want to keep it simple
    • People who want to earn bonus cash back in both specific categories and general purchases
    • People who want to earn Ultimate Rewards points without paying an annual fee

    Chase Freedom Flex overview

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    The Chase Freedom Flex card offers a combination of year-round and quarterly-rotating bonus cash back categories. Each quarter, you can enroll in a new bonus category from the Chase cash back calendar and earn 5% back on the first $1,500 you spend in that category (then 1% back after you reach the $1,500 threshold). Throughout the year, you’ll also get 5% back on all travel booked through the Chase Ultimate Rewards portal, 3% back on dining and drugstore purchases and 1% back on all other purchases.

    Upsides: The opportunity to earn bonus cash back in select categories year-round and in a variety of categories each quarter.

    Downsides: The complex rewards program. To get the most out of the card, cardholders must track their spending, since the 5% rate only applies to certain categories that rotate frequently and is limited to $1,500 per quarter.

    Furthermore, cardholders must log in to their Chase account and activate their rewards category by the deadline each quarter to earn the 5% rate. For example, to earn 5% cash back during the first quarter of 2021 (on select streaming services, phone, cable and internet services and at wholesale clubs), you must activate the category by March 14, 2021.

    Chase 5% cash back calendar 2021

    Winter Spring Summer Holiday
    January – March April – June July – September October – December
    • Select streaming services
    • Phone, cable and internet services
    • Wholesale clubs
    TBA TBA TBA

    Chase Freedom Unlimited overview

    Like the Freedom Flex, the Freedom Unlimited earns bonus cash back on Ultimate Rewards travel (5% back) and dining and drugstore purchases (3% back). However, instead of rotating cash back categories, the Freedom Unlimited offers 1.5% cash back on general purchases. There’s also no annual fee, and no interest on purchases for 15 months from account opening (after which a variable APR of 14.99% to 23.74% applies). The card is currently offering a $200 bonus for spending $500 in the first three months.

    Upsides: The Freedom Unlimited card offers a straightforward rewards program that allows cardholders to earn at least 1.5% on every purchase they make – with no earning caps or rotating categories.

    Downsides: Although 1.5% cash back is a substantial amount to earn on general purchases, it’s not the highest rate out there.

    trio of Ultimate Rewards cards.

    See related: Chase Ultimate Rewards guide: The best ways to earn and use Ultimate Rewards points

    *All information about the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. 

    The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we do receive compensation when you click on links to products from our partners. Learn more about our advertising policy

    Source: creditcards.com

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