The recently revamped American Express Blue Cash card seems to be giving some of the other top rewards credit cards a run for their money (if you’ll pardon the pun!) One of the few cards without caps on 5% rewards or tiered rewards programs that actually earn less than 1%, Blue Cash keeps it simple. The card offers 3 % cash back on groceries, 2% on gas and department store purchases, and 1% on everything else, every day.
Chase Freedom, arguably Blue Cash’s biggest competitor (side-by-side with Discover More), has stepped up its offering to customers with excellent credit. No, the big bank card isn’t offering lower interest rates or better rewards or even lifting earning caps… but it is switching from Visa to MasterCard and providing all the benefits of a World MasterCard.
Currently, the Chase Freedom Visa offers the benefits of a Visa Signature card, the credit card company’s top of the line offering. But World MasterCard is renowned for its top tier benefits, too.
- New travel benefits that include Accident Insurance and Lost Luggage reimbursement included when you book your travel with your Chase Freedom card
- Access to exclusive events, VIP ticket packages, and Broadway tickets
- “Overwhelming Offers” through the World MasterCard marketplace
- Special travel deals
If you already have a Chase Freedom Visa Signature card, you may not notice a significant difference in your benefits. The Visa Signature line has similar benefits through the Visa Signature portal. If you currently have a Chase Freedom MasterCard, you’ll lose Master RoadAssist, the MasterCard roadside assistance program, but gain the benefits of a World MasterCard.
Perhaps the biggest difference for Chase Freedom customers who are upgrading from a regular Visa or MasterCard to the World MasterCard is that the card comes with no pre-set spending limit.
Instead of a credit limit, you’ll get something called a “Credit Access Line.” A credit access line permits you to charge as much as you want without over-the-limit fees — as long as the bank approves the transaction. Any transactions that exceed the credit access line (which will be set at the amount of your current credit limit) must be paid in full by your next due date. The amount will be included as part of your minimum payment. You can take as long as you want to pay the rest of your balance.
Having no credit limit may sound like a desirable offering for a credit card. American Express has turned the concept into something that sounds “high-end,” or a benefit of the wealthy. In reality, though, it may not be as good as it sounds.
No pre-set spending limit can come in handy if you have an emergency expense and you know you’ll have the money coming in to pay for it by the end of the month. It can also help you earn even more cash back rewards — imagine putting the down payment for a car on your credit card with no pre-set spending limit and then paying it off immediately. Vacations. Christmas shopping. New furniture. You can earn substantial cash back using your card this way.
But there are a few problems:
1. You never know when Chase will decide to deny transactions that exceed your credit access line. This can lead to embarrassment at the cash register or even leave you in a tight spot. Your best bet is to call Chase ahead of time to pre-authorize a large purchase that would exceed your credit line.
2. Because you have no credit limit, this card may not factor into your debt utilization ratio, which accounts for approximately 35% of your credit score. Additionally, your “high balance” is reported on your credit reports, so if you charge a large purchase, even if you pay it off within days, this could reflect negatively to anyone evaluating your credit report.
Having no pre-set spending limit could be a convenience to credit card customers but, like other aspects of managing credit, you’ll have to handle it carefully.
The changes to the Chase Freedom card go into effect on November 1, 2011, and customers will receive a new Chase Freedom card. Your expiration date may change, so if you are set up for automatic payments or online payments through your Chase card, you’ll need to update your accounts.
You can opt out of the new benefits — and keep your current Chase Freedom card — by calling 1-888-290-4681 between 8 AM and 10 PM Eastern time, Monday through Friday, before October 7, 2011.
Credit RequiredExcellent Credit
Rewards ProgramEarn 5% cash back on popular rotating categories and unlimited 1% cash back on all other purchases without limits on what you can earn.
Signup Bonus$200 Cashback Bonusafter $500 in purchases during your first 3 months.