Is Chase Freedom the BEST Cash Back Credit Card?

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While attending the most recent FINCON conference, I was able to speak with some of the best professionals in the financial industry-those with far more experience than myself. While making conversation unintended to go in any one direction, I mentioned my most recent post, the best cash back credit cards for 2013. Chase Freedom, one of the best Chase credit cards, came out on top according to my calculations. By coincidence, Chase Freedom was also recently voted as the best of all cash back credit cards for 2013, according to the financial blogging community (Congrats Chase!).

A fellow FINCON attendee overheard my conversation and mentioned another cash back credit card that he believes is better than Chase Freedom, the U.S. Bank Cash+ Visa Signature Card. Obviously I have to put it up to the same standards as the other cards Chase Freedom went up against, so let’s see if it is better than Chase Freedom after all...

Assessment Assumptions:

Before we get into our results, you need to understand what we did in our review. To start, we used the 2012 Consumer Expenditures Report from the Bureau of Labor Statistics to establish a base level of spending for all cards. That report revealed the following spending habits:

Caption: The 2012 Consumer Expenditures Report reflects an average annual income of $65,596 in a 2-3 person household, with 2 vehicles and 1-2 income providers.

For the purpose of this study, we assumed that consumers would put the following costs on their credit cards: groceries, dining, clothing, gas, and entertainment (movies), totaling up to $13,489 per year. That leaves housing (rent or mortgage), insurance, health care, and transportation (car payments and bus fees) off the card. We will also leave out the APR concerns by assuming the card holder is a bank’s least-liked customer; those that pay their balance in full every month accruing no additional charges.

 

2012 Distribution of Household Income

 

Overview of Cash Back Cards

The U.S. Bank Cash+ Visa Signature Card earns card holders 5% cash back on your first $2,000 in net purchases each quarter on the combined two categories that you get to choose (well that spices things up a bit, doesn’t it?). Earn unlimited 2% cash back on your choice of one everyday category like gas, groceries, or drug store purchases. Finally, card holders will earn 1% cash back on everything else, and also receive a $25 cash bonus when you redeem $100 or more in a single redemption (1 per calendar year). *Note –the card holder must choose those categories each quarter.

To start, the Chase Freedom Card earns you a $100 cash back bonus after qualifying purchases of $500 within the first three months of card membership. From there, card holders earn 5% cash back in select rotating categories, and earn unlimited 1% cash back on all other purchases with no annual fee.

The below results highlight our findings, describing how we found each amount and what our totals were.

U.S. Bank Cash+ Visa Signature Card

  • Bonus: $25
  • Year-long 2% category Gas: $2,549 x .05 = $127.45
  • Jan-Mar Clothing (dept. stores): ($1,736 ÷ 4) x .05 = $21.70
  • Apr-Jun Dining (restaurants & fast food): ($2,678 ÷ 4) x .05 = $33.48
  • July-Sep Entertainment (movie theaters & bookstores): ($2,605 ÷ 4) x .05 = $32.56
  • Oct-Dec Dining (restaurants & fast food): ($2,678 ÷ 4) x .05 = $33.48
  • Everything Else: ($13,489 - $434- $669.50 – $651.25 - $669.50) x .01 = $110.65
  • Total Savings: $384.32

US bank cash signature card table

This analysis was a little tricky because U.S. Bank breaks down pooled categories, such as dining (fast food vs. restaurants) and entertainment (movie theaters vs. book stores) into two categories. If you do a little math, you will see that if the entertainment or clothing category was selected as a duplicate option, the total savings would've come out a bit higher. Same goes for using groceries as a year-long category instead of gas.

 

Chase Freedom

For this study, we reviewed the 2013 Cash Rewards Calendar, which may change in the upcoming years. The results were as follows:

  • Bonus: $100
  • Jan-Mar Gas: ($2,549 ÷ 4) x .05 = $31.86
  • Apr-Jun Dining: ($2,678 ÷ 4) x .05 = $33.48
  • Apr-Jun Entertainment: ($2,605 ÷ 4) x .05 = $32.56
  • Jul-Sep Gas: ($2,549 ÷ 4) x .05 = $31.86
  • Jul-Sep Entertainment(theme parks): ($2,605 ÷ 4) x .05 = $32.56
  • Oct-Dec Clothing: ($1,736 ÷ 4) x .05 = $21.70
  • Everything Else: ($13,489 - $637.25- $669.50- $651.25 - $637.25- $651.25 - $434) x .01 = $98.08
  • Total Savings: $382.10

Chase Freedom graph

The totals above may be slightly skewed due to rounding, but the official total considers the extra digits after the decimal points. There are other rewards available for online shopping, travel, and more. Those categories did not apply to this study though. Also, the value for movies in the second quarter represents the entire entertainment budget for those months, per the averages mentioned in the "assumptions" preface. Personal spending habits could potentially alter the total.

The Conclusion

If you're part of the 29% of consumers that apply for a new credit card bin search for better rewards, the U.S. Bank Cash+ Visa Signature Card is your solution. Yea, it doesn't beat Chase Freedom by much, but that’s only showing the smallest gap in rewards difference. As mentioned above, if I had instead selected groceries as the year-long everyday purchase category, the total annual savings would have exceeded $440 (grocery rewards would've totaled $196.05 for the year). The savings would continue to increase from there as well, if I had duplicated a category other than dining (fast food and restaurants), such as department store (clothing) purchases or entertainment.

*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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