My take on Chase Freedom’s Q1 2021 categories

From Jan. 1 through March 31, 2021, the Chase Freedom and Chase Freedom Flex℠ cards will offer 5% cash back at wholesale clubs; select streaming services; and internet, cable and phone services.

The promotion includes up to $1,500 in combined spending as long as you activate by March 14, 2021. If you wait to activate (but still make the deadline), you’ll retroactively earn 5% back on bonus category purchases made after Jan. 1, 2021. Once you reach $1,500, you’ll earn 1% cash back.

At first glance, I’m not particularly excited about these categories, but your mileage may vary. It’s a big win for people who frequent wholesale clubs (I don’t). These stores haven’t been a Freedom 5% category since Q4 2018. But it makes sense, as many people are stocking up more frequently at warehouse clubs due to the COVID-19 pandemic.

Read more from our credit card experts.

Ask Ted a question.

Earning at wholesale clubs

Note that Costco, the largest wholesale club, only accepts Visa cards in-store. The original Chase Freedom card was a Visa card, but it stopped accepting applications in Sept. 2020. Cardholders who still have one can take advantage of this 5% promotion in Costco stores. The Freedom Flex essentially replaced the Freedom, with some new perks like enhanced travel, restaurant and drugstore rewards. But it’s a Mastercard, so it’s not accepted in Costco stores. It is accepted at Costco.com. Freedom Flex cardholders can, of course, earn 5% back in Q1 at other warehouse clubs such as Sam’s Club, BJ’s and others.

See related: Best credit cards for Costco purchases

The Q1 list in 2020 also rewarded Freedom cardholders for spending money on certain streaming services and internet, cable and phone services, but gas stations were on the list instead of wholesale clubs. Chase included gas stations during Q1 rotating categories each year going back to 2016. Amid the pandemic, it’s likely a favorable trade to wholesale clubs if you have a membership, and many Americans do. Costco has over 100 million members, Sam’s Club has more than 50 million and BJ’s has more than 5 million. There’s some overlap (and some of Costco’s members live in other countries), but it’s reasonable to estimate that about half of U.S. adults have a wholesale club membership.

Spending at gas stations is more universal, but the average gas expenditure is around $175 per month, according to the Bureau of Labor Statistics. I think there’s a good chance we’ll see gas on the calendar later this year, probably in the summer when a lot of Americans tend to hit the open road. And don’t fret if you do most of your food shopping at grocery stores rather than warehouse clubs. Groceries tend to be a Q2 Freedom bonus category.

How I’ll use my card in 2021

Since I don’t belong to any wholesale clubs and I spend very little on streaming, my Q1 Freedom Flex strategy will focus on internet, cable and phone services. By paying my April bills a little early, I’ll be able to squeeze four months’ worth of expenses into Q1. I’ll probably end up a little more than halfway to the $1,500 limit for 5% transactions.

Assuming the Freedom calendar follows its typical blueprint, Q1 should be my weakest of the year. As long as groceries are included in Q2, I won’t have any trouble maxing out that quarter. In 2020, Q3 included Amazon.com and Whole Foods Market. I spend a lot at Amazon.com, and if I’m right about gas, that would make the summer quarter even more lucrative. Q4 generally focuses on holiday shopping, and especially if it includes PayPal again, that will be easy to optimize.

Bottom line

Even though I won’t use it a ton in Q1, the Freedom Flex remains a strong player in my overall cash back strategy. Subsequent quarters should be even stronger. This no annual fee card provides a lot of other benefits, too, like purchase protection (which saved me $299 in 2020) and 3% cash back at restaurants and drugstores. I haven’t traveled in a while because of the pandemic. But when I do, I plan to take advantage of 5% cash back on travel booked through the Chase portal. The Freedom Flex is a very valuable all-around card, even if your spending doesn’t line up with every rotating category.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.