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Looking to make a big purchase? Here's how the Chase Freedom Unlimited can help with that

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If you are looking to open a credit card in 2020, Chase has a lot to offer in the new year. Just this month, the card issuer announced additional cardholder perks through partnerships with DoorDash and Lyft.

For Chase Freedom Unlimited® cardholders, a DashPass membership (which gets you free delivery on orders over $12 and lower service fees from hundreds of restaurants) is free for the first three months and half off for the next nine months. (You must activate by December 31, 2021.)

Chase Freedom Unlimited cardholders can also benefit from earning 5% cash back on Lyft rides through March 2022.

But you don't have to think small to really benefit from the Chase Freedom Unlimited card. Thanks to the 0% APR for the first 15 months (then a 16.49% to 25.24% variable APR), cardholders don't have to pay interest on new purchases for over a year. So, if you're wanting to open a new credit card because you're planning to buy a big ticket item soon, this is the card to use.

Below, CNBC Select breaks down the Chase Freedom Unlimited® rewards, benefits and fees to help you decide if it's the right card for you.

Chase Freedom Unlimited review

  • Rewards
  • Additional benefits
  • Fees
  • Bottom line

Chase Freedom Unlimited® Card

  • Rewards

    1.5% cash back on every purchase

  • Welcome bonus

    $150 cash back after you spend $500 on purchases in your first 3 months from account opening

  • Annual fee

    $0

  • Intro APR

    0% for the first 15 months on purchases and balance transfers

  • Regular APR

    16.49% to 25.24% variable on purchases and balance transfers

  • Balance transfer fee

    3% intro balance transfer fee when you transfer a balance during the first 60 days your account is open, with a $5 minimum. After, 5% ($5 minimum).

  • Foreign transaction fee

    3%

  • See our methodology, terms apply.

Pros

  • No annual fee
  • Long intro 0% APR period for purchases and balance transfers
  • Rewards can be transferred to a Chase Ultimate Rewards card
  • Generous welcome bonus

Cons

  • Below average 1.5% cash back
  • 3% fee charged on foreign transactions
  • Estimated rewards earned after 1 year: $478
  • Estimated rewards earned after 5 years: $1,789

Rewards totals incorporate the cash back earned from the welcome bonus

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On Chase's secure site

Chase Freedom Unlimited rewards

Cardholders earn 1.5% cash back on every purchase without having to deal with rotating bonus categories or activation requirements. There is no minimum to redeem cash back. For this reason, the Chase Freedom Unlimited made CNBC Select's picks of the top credit cards for shopping at bulk discount retailer Costco.

The card also has a generous welcome bonus of $150 cash back after you spend $500 on purchases in your first three months from opening an account. That's like earning 30% back.

CNBC Select calculated how many rewards the average American can earn if they optimize the way they use their Chase Freedom Unlimited card. We worked with the location intelligence firm Esri, who provided us with a sample annual spending budget of $21,852.

The budget includes six main categories: groceries ($5,019), gas ($2,394), dining out ($3,365), travel ($2,154), utilities ($4,959) and general purchases ($3,961).

Here's a breakdown of how much cash back you can roughly earn in each category, annually:

  • Groceries: $75.29
  • Gas: $35.91
  • Dining out: $50.48
  • Travel: $32.31
  • Utilities: $74.39
  • General purchases: $59.42
  • Total: $328

Cardholders can earn an estimated $478 in cash back the first year (including the cash back from the welcome bonus) and a total of $1,789 over five years.

The rewards don't expire as long as your account is open, and they can also be transferred to a Chase Ultimate Rewards® card, such as the Chase Sapphire Preferred® Card, which allows you to redeem rewards for travel through the Ultimate Rewards portal and receive 25% more value.

Additional benefits

Cardholders can take advantage of a three-month complimentary DashPass membership through DoorDash and 5% cash back on Lyft rides. These perks are great for cardholders who are regularly ordering food or taking ride-hailing services.

The Chase Freedom Unlimited is a contactless card, as the number of merchants accepting chip payments is expected to increase in 2020. You can also get access to an online shopping portal that provides extra rewards on purchases made through a special Chase-provided link.

Cardholders can benefit from purchase protection and extended warranty protection.

Fees

There is no annual fee with the Chase Freedom Unlimited®, but there is a 3% fee charged on foreign transactions. (Check out CNBC Select's best credit cards with no foreign transaction fees.)

It's the long intro 0% APR period for purchases and balance transfers (then a 16.49% to 25.24% variable APR) makes this card stand out. There is a 3% balance transfer fee when you transfer a balance during the first 60 days your account is open, with a $5 minimum. After the first 60 days, it goes up to 5% ($5 minimum).

Bottom line

The simple 1.5% cash-back program offered by the Chase Freedom Unlimited® card makes it easy to use, and its 15-month 0% APR sets the card apart from the Apple Card when it comes to purchasing a big-ticket item, like the iPhone 11. You don't have to worry about paying the balance in full because you can pay it off over time without incurring any interest. Just make sure you make at least the minimum payment on time and have a repayment plan set up.

If you want to earn a higher cash-back rate, consider the Citi® Double Cash Card, which offers 2% cash back: 1% on all purchases and an additional 1% after you pay your credit card bill.

Our methodology

To determine which credit cards offer the best value, CNBC Select analyzed 234 of the most popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

CNBC Select teamed up with location intelligence firm Esri. The company's data development team provided the most up-to-date and comprehensive consumer spending data based on the 2018 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri's data team created a sample annual budget of approximately $21,852 in retail spending. This budget is comprised of the most common spending categories, including groceries ($5,019), gas ($2,394), dining out ($3,365), travel ($2,154), utilities ($4,959) and general purchases ($3,961). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

While the five-year estimates we've included are derived from a budget similar to the average American's spending, you may earn a higher or lower return depending on your shopping habits.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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