By now, everyone has seen the Chase Freedom credit card commercial with their catchy jingle promising “triple rewards where you spend the most”. You get three points or three percent back for the three categories you spend the most on each month. The categories where you earn triple automatically change each month based on your spending habits.
Here is a portion of their website ad for the card:
So, if you spend a lot one month on car repairs, buy a ton of stuff at warehouse and discount stores, and pay for airline tickets or a cruise on your card, at three percent cash back, you will make a lot of money that month, right? Wrong on several counts.
*MOUSE PRINT: Three percent back only applies to certain categories of purchases, in fact, only 15 particular categories qualify, and that fact is virtually invisible in the disclaimer in their commercial. The categories are:
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.
Car repairs, warehouse and discount stores, travel, and many other big ticket potential purchases are not included according to Chase’s terms and conditions.
Okay, so it is just their 15 categories that qualify for three percent back. Let’s say in a particular month you spent $400 at the grocery store; your gas, electric and water bills total $400; and you had to spend $1000 on prescription drugs for your ailing mother. That’s $1800, and should qualify for $54 back. Not bad. But not true.
*MOUSE PRINT:
There is no maximum amount of base rebates or base points that can be earned on net purchases. Maximum bonus rebate accumulation per billing cycle on net purchases is $12 in bonus rebates or 1,200 points monthly, which equates to $600 in net purchases.
Translation: Only the first $600 in purchases in your combined three categories earns three percent back. So on that $1800 hypothetical purchase, you will receive only $18 back on the first $600, and one percent on the rest.
Chase’s concept is a great one to automatically adjust your rewards to match your purchase habits. Too bad many of your most expensive purchases do not qualify for the three percent back at all, and other purchases only qualify for a maximum bonus of $12 a month.
I don’t want to be overly cynical, but I think it is in general wise to not select your credit card based on the perks they claim to give you, but on the annual fee and interest rates they offer. Usually, – unfortunately – the perks are useless. The only ones that I find are usefull is my AAA card that gives 3% off my fuel purchases, and for some people airmiles cards may be useful. For the rest, you might as well ignore it. Sad but true.
Jasper, you are not being cynical, just foolish. First of all, smart money means you pay off your credit card
in full every month so the interest rate is unimportant. Most cards have no annual fee, so that is also a moot
point. Now, if you use intelligence, and make the card work for you, the rebates DO matter in that you can
earn up to 5% back on gas, and other purchases that add up fast. You just need to discipline yourself and
learn not to build up balances. This is NOT very difficult. I don’t make a
fortune, so if I can do it, ANYONE can do it
@ David. Paying of your credit card is a given for me, but not everybody is that lucky. Interest rates DO matter. In fact I’d say it’s the most omportant thing to look at when taking a cc. Furthermore, there are plenty of cards that try to charge you an annual fee, and often one that is way higher than the perks you can get. It is something to pay attention to.
Yes, you can beat the system. However, credit cards make it as hard as they can. Also, they make the perks as marginal as they can. Edgar gives a very good example here. Most people don’t have to time to slip between the rules and actually get their perks. If you do, good for you. However, if you compare the time you spend comparing cards, figuring out which one has the best perks, applying, and using it to get your perks, and the actual value you retrieve from the perks, I’d be surprised if you can beat minimum wage ($5.25 an hour).
@jasper I don’t think CC companies make it too hard if you’re smart with your money and purchases. Often you can get a lower interest rate by calling the company and asking (you can ask for limit increases the same way), and don’t even get me started on CC with annual fees (not worth it!). I also don’t think rewards are useless. I have earned $75 in Amazon gift certificates using my Chase Amazon rewards card over the past few years which means I get a few movies or a video game free every year for doing nothing more than using the card(which the balance is paid in full each month). Of course if you aren’t able to pay off the balance, the rewards are less helpful, but they shouldn’t be ignored or discounted.
It’s a shame the rewards limit is set at such a low monetary value; however, the %3 back for what you can get isn’t too shabby and the leftover still gets %1, which is better than nothing. I couldn’t tell on the website or the mouse print if the user gets to choose which form the rewards come in or if they are decided based on the category. Anyone know for sure? I get mixed answers when I call to ask.
I would have to agree with Jasper, almost all offers I have looked with “perks” will either charge you an annual fee or a higher interest rate which means you really end up paying for your perks. Of course, there a few who can beat the system but many others are suckered into these so called perks or should I say “gotchas” and those are the people credit card companies are really going after.
@jt4703: And how much did you have to spend to get your $75 certificate? 1% or 3% is not a very good return on your investment. If you just get yourself an easy savings account you get around 4-5%. If you invest smartly, you get easily get 8-10%.
The problem is that cc companies sucker in people with marginal perks, and then don’t talk about the massive fees and interest rates that come with the cards, and in most cases easily cancel the card’s benefits. Especially if your credit is bad.
And yes, they cc companies are happy to take on the few that are smart enough to beat the system. What you/we win is easily off-set by what other people loose.
@ jasper
What I spent wouldn’t have been saved or invested for any length of time, so that point is moot. I let my points accumulate over a whole year from my normal daily purchases for things I need, plus my bigger bills like insurance. It took roughly 2 and a half years to earn 3 certificates, but had I used a different card with no rewards I would have nothing extra, so to me, it is a perk. If you go on a big buying spree for the sole purpose of getting rewards, then yes, the ‘return’ on the ‘investment’ would be worthless.
I just got my 1st bill for this card and boy was I disappointed. I thought the cash back would have been
deducted from my monthly bill – we are talking 1 to 3% here – retail stores do it, grocery stores do it. This
is how CHASE does it: the 1-3% was barely 1% or $5.89 to be exact. I have to build up $50 to see this
$5.89. Then I have to APPLY to Chase (God knows how – probably fill out a 10 page form) to receive a CHECK
(Is this a paperless revolution? why not a credit to my monthly bill?) that will probably get “lost in the
mail” — if MY MONEY doesn’t get lost first: because MY MONEY EXPIRES in 12 MONTHS.
Chase would do better to forget the tv advertising the flying butterfly and just be honest with customers.
What a rip off!
The Cards rebate con is only half the problem. Did anyone note that Kmart, Walmart and Meijers DO NOT QUALIFY for the 3% rebate! That is absolutely correct, they are classified as “Discount Stores”. I did not find this out until I scanned my card activity and saw that they had “(Other)” after each transaction instead of “Department Store” which is what I was expecting. In fine print on the back of the letter it says “Discount Stores” do not qualify for the additional 2% rebate. The 3 largest store chains in the world and they do not qualify? I had to call Chase 3 times to get this answer and they already knew my question (very quick answer!).
This is extremely misleading advertising.
I’ve made over $700 over the past 3 years off of chase rewards. Just for spendign money that I would have spent anyway. I don’t carry a balance… ever.
All in all, Chase is one of the most corrupt banking companies out there. So corrupt and miserly that they have largely stayed afloat in the sub-prime fallout. The only thing that they’ve swindled me on is the “international transaction fee”. I am traveling to Bermuda – The currency is the British Pound, but in reality they use the U.S. dollar. Even though there is no currency conversion, they will charge me 3% on all purchases. BS.
I’m going to have to get a Capital One card before I go. Chase may stay in business, but its customers can’t wait for the opportunity to twist a knife in their backs.
To Chris W: As far as I am aware charging the “International Transaction Fee” started 1-2 years ago and is NOT a Chase “invention” – ALL credit cards charge it now! So before you go off and get a Capitol One card you better call them and find out if it is not standard to charge 3% ANYWHERE outside the US border (even if the country uses/accepts the US dollar)!
I really don’t like any of these rewards type cards except for the rewards program that Regions Bank has: you actually get cash back on your purchases at specific stores and it’s deposited into your account the next day!
Have to agree than interest rate is irrelevant. Annual fee is valid point. But how can you not like reward cards? i charge everything i would normally buy on my cards and pay in full each month. I get $25 from amazon every one or two months plus a good pair of air tickets each month all for just remembering to pay on time. whats not to like?