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Moderator Emeritus
Posts: 6,794
Registered: ‎09-29-2007
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Blue Cash vs Chase Freedom: Which is better? The numbers.

There has been some discussion of what level of spending is required on Blue Cash in order for it to beat Chase Freedom in terms of cash back.  As we've discussed, the answer to that question depends on what percentage of one's monthly spending falls in the bonus categories for each card.
 
I decided to crunch the numbers so we can have a hard answer to this question.  After all, there is a better card for each person.  It's just a matter of doing the math to determine which one it is.
 
As a reminder, the rewards for each of these cards are:
 
Chase Freedom
  • 3% cash back on top three spending categories each month
  • 1% cash back on all other purchases
  • Cap of $600 per month at the 3% tier.  All purchases in excess of $600 per month earn rewards at the 1% rate.
  • $200 cash back is redeemable for $250.

Blue Cash

  • For annual spending amounts of $6500.00 or less, 1% cash back at gas stations, grocery stores, and drugstores.  0.5% cash back on all other purchases.
  • For annual spending amounts of $6500.01 or greater, 5% cash back at gas stations, grocery stores, and drugstores.  1.5% cash back on all other purchases.
  • No cap on cash back at any tier.

There are a few assumptions I had to make to run these numbers.

First, I assumed that the top three monthly spending categories on Chase Freedom will correspond to the three bonus categories on Blue Cash (gas stations, grocery stores, and drugstores).  This may not be true for many people, but is probably true for a great number of people, considering that these categories do account for a great deal of most people's budgets, and also considering that most of the other Chase Freedom categories are relatively obscure (such as video rentals and dry cleaners).  In any case, if this assumption is not true, then a direct comparison of the two cards is not possible in the first place, unless we crunch an infinite number of spending scenarios.

Second, I assumed that spending would be uniform throughout the year, and would not vary widely from month to month.  If it does vary, it will affect the level at which the monthly 3% cap kicks in on Chase Freedom, making predictions impossible.

I also assumed that the Chase Freedom cardholder will maximize returns by waiting until $200 in cash back has accumulated in order to redeem it for a $250 check.

For lower levels of overall monthly spending, Chase Freedom is always the better card, but once a certain threshold in monthly (and annual) spending is reached, Blue Cash quickly catches up.

The dollar amount for each percentage level of spending in the bonus categories is the level of total monthly spending above which Blue Cash earns better returns.  For any level of total monthly spending below this figure, Chase Freedom will be the better card.

If 100% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $978.

If 90% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,031.

If 80% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,096.

If 70% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,178.

If 60% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,284.

If 50% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,428.

If 40% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,632.

If 30% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,872.

If 20% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,926.

If 10% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $2,012.

I hope someone finds this helpful. :smileyhappy:

 

----------------------------
App free since 7/11/08.
TU 744 / EX 710 / EQ 694 (Starting to slip. :smileysurprised: )
Senior Contributor
Posts: 3,017
Registered: ‎06-03-2008
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.

Uh. Wow. You must either be a math major or do something in the computer field...or both!
That's really cool.
 
P.S.
I ended up with the Chase Freedom Plus which has 6 categories instead of 3 for the 3% cash back and no cap on the rewards as far as I know. I think that would easily win over the Blue Cash. Though, I'm not sure if you can app for it directly or they just give it to you?
Valued Contributor
Posts: 1,291
Registered: ‎02-26-2008
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.

Now Cheddar, show us how the Blue Cash compares to your Citi Plat Amex for the first two years :smileywink:
Senior Contributor
Posts: 3,017
Registered: ‎06-03-2008
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.



athensguy wrote:
Now Cheddar, show us how the Blue Cash compares to your Citi Plat Amex for the first two years :smileywink:


:smileyvery-happy:
Established Contributor
Posts: 640
Registered: ‎03-28-2008
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.

Wow, Cheddar - thank you so much for doing all that number-crunching, that is very cool indeed!! :smileyhappy:

I'm eagerly awaiting the arrival of my Blue Cash (and even more eagerly waiting to add my husband as an AU on it - I'm resisting the urge to add him as an AU on the Blue RIGHT NOW just so that his AU-ness is automatically transferred when AmEx does the product change)... as I've posted ad nauseam in other threads, I know there's no way I'd be able to make the card pay much on my own, but if I bring my husband and his $$$$ gas station spending into the mix, it'll definitely be worth it.

I was figuring all this out on the basis that just by spending as normal and treating the things as debit cards, we'll have no problem running $1600 - $1800 through them a month between us (and that's just in a normal month, not taking into account any bigger purchases), at least $800 of which can pretty much be counted on to be in the higher earning spending categories.

... so it's very good to read the above and have my thoughts confirmed that it will definitely be worth it for us - YEAHHHH!!! :smileyhappy:
EQ: 723 / TU: 760 (August 2009)
Moderator Emeritus
Posts: 3,417
Registered: ‎12-27-2007
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.

Uh WOW!  Very well done Cheddar!
 
Have you considered comparing Blue Cash with Chase Freedom Plus?  Hehehehe!
~*~*~*~*~*~*~*~*~*~*~
From 700 in 2008 to 498 in 2012...
4/23/12 -- BK 13 date of filing EQ = 505
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12/5/13 -- EQ 669
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Established Contributor
Posts: 844
Registered: ‎09-23-2007
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.

This is very helpful, Cheddar. thanks!

I have both cards and I'm now planning my strategy for upcoming rewards year - begins in October! Thanks again.

P.S. To date, I have earned a little over $190 on both cards --- the Chase $190 is about to turn in to $250! 2 months more to go.
__________________________________________________
Time to clean house and get rid of CCs from bad CCCs. Opt'd Out and Paying off the Balance: BofA. Closed: Chase Freedom. Keeping: Amex Blue, Amex Costco Cash back, Citi Forward, USAA MC, USAA Amex, and PenFed Platinum Cash Back. Next up for review: Chase Sapphire...
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Community Leader
Epic Contributor
Posts: 28,098
Registered: ‎04-01-2007
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.

I'm stickying this puppy, because this question gets asked A LOT!

Thanks for keeping me from having to work all this out on the back of an old envelope. :smileywink:
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Super Contributor
Posts: 8,172
Registered: ‎03-25-2007
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Re: Blue Cash vs Chase Freedom: Which is better? The numbers.



cheddar wrote:

There has been some discussion of what level of spending is required on Blue Cash in order for it to beat Chase Freedom in terms of cash back.  As we've discussed, the answer to that question depends on what percentage of one's monthly spending falls in the bonus categories for each card.

 

I decided to crunch the numbers so we can have a hard answer to this question.  After all, there is a better card for each person.  It's just a matter of doing the math to determine which one it is.

 

As a reminder, the rewards for each of these cards are:

 

Chase Freedom


  • 3% cash back on top three spending categories each month

  • 1% cash back on all other purchases

  • Cap of $600 per month at the 3% tier.  All purchases in excess of $600 per month earn rewards at the 1% rate.

  • $200 cash back is redeemable for $250.

Blue Cash



  • For annual spending amounts of $6500.00 or less, 1% cash back at gas stations, grocery stores, and drugstores.  0.5% cash back on all other purchases.

  • For annual spending amounts of $6500.01 or greater, 5% cash back at gas stations, grocery stores, and drugstores.  1.5% cash back on all other purchases.

  • No cap on cash back at any tier.

There are a few assumptions I had to make to run these numbers.


First, I assumed that the top three monthly spending categories on Chase Freedom will correspond to the three bonus categories on Blue Cash (gas stations, grocery stores, and drugstores).  This may not be true for many people, but is probably true for a great number of people, considering that these categories do account for a great deal of most people's budgets, and also considering that most of the other Chase Freedom categories are relatively obscure (such as video rentals and dry cleaners).  In any case, if this assumption is not true, then a direct comparison of the two cards is not possible in the first place, unless we crunch an infinite number of spending scenarios.


Second, I assumed that spending would be uniform throughout the year, and would not vary widely from month to month.  If it does vary, it will affect the level at which the monthly 3% cap kicks in on Chase Freedom, making predictions impossible.


I also assumed that the Chase Freedom cardholder will maximize returns by waiting until $200 in cash back has accumulated in order to redeem it for a $250 check.


For lower levels of overall monthly spending, Chase Freedom is always the better card, but once a certain threshold in monthly (and annual) spending is reached, Blue Cash quickly catches up.


The dollar amount for each percentage level of spending in the bonus categories is the level of total monthly spending above which Blue Cash earns better returns.  For any level of total monthly spending below this figure, Chase Freedom will be the better card.


If 100% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $978.


If 90% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,031.


If 80% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,096.


If 70% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,178.


If 60% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,284.


If 50% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,428.


If 40% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,632.


If 30% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,872.


If 20% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $1,926.


If 10% of monthly spending is in the bonus categories, the minimum level of total monthly spending to make Blue Cash worthwhile is: $2,012.


I hope someone finds this helpful. :smileyhappy:


 






Cheddar - you need to get a life :smileyvery-happy:

Very, very cool. Thank you!!
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Valued Contributor
Posts: 1,185
Registered: ‎03-04-2008
0

Re: Blue Cash vs Chase Freedom: Which is better? The numbers.

Abraham Lincoln wrote the Gettysburg Address on the back of an old envelope...

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