The Chase Freedom earns 1% cash back on all purchases and 5% cash back on categories that rotate quarterly.Screen Shot 2016-03-18 at 4.45.50 AM

Screen Shot 2016-03-18 at 4.45.19 AM

At least that’s how it is marketed, but in fact, the card earns points that can be converted to cash back or can be converted, through a process I call the Freedom Two Step, to much more valuable airline miles and hotel points.

Screen Shot 2016-03-18 at 12.38.01 AMThe basic idea is that while the Freedom’s Ultimate Rewards do not transfer to airline and hotel partners, if you have a Sapphire Preferred or Ink Plus, you can transfer the points to those cards’ accounts, and from there to airlines and hotels.

I’ll explain that idea in detail and, more importantly, explain why you want to transfer your Freedom’s rewards to airlines and hotels.

What You Need to Perform the Freedom Two Step

  1. A Chase Freedom
  2. A Sapphire Preferred or an Ink Plus

What the Freedom Is

The Chase Freedom is a cash back card with a twist. It offers:

  • $150 cash back after spending $500 in the first three months
  • 5% cash back on your first $1,500 in purchases in bonus categories that rotate quarterly
  • 1% cash back on all other spending with no limit
  • no annual fee

The twist is that you actually earn Ultimate Rewards points that you can instantly redeem for cash back at a rate of 1 cent each. So the sign up bonus is actually 15,000 Ultimate Rewards. The 5% cash back is really 5 Ultimate Rewards per dollar. And the 1% cash back is really 1 Ultimate Reward per dollar.

These Ultimate Rewards can only be redeemed for cash or cash-like things at a maximum rate of 1 cent per point.

Screen Shot 2016-03-18 at 4.18.37 AM

This whole post is about doing better than 1 cent per Ultimate Reward.

While I can not directly link to the current Freedom offer, you may find it by clicking below if you decide to apply. (I receive a commission, and your support keeps this blog going.)

What the Sapphire Preferred and Ink Plus Are

The Sapphire Preferred and Ink Plus are cards that earn Ultimate Rewards that can be transferred directly to airline miles or hotel points in programs including United MileagePlus, Southwest Rapid Rewards, Hyatt Gold Passport, and more.

The Sapphire Preferred is one of the best personal credit cards on the market. It offers:

  • 50,000 bonus Ultimate Rewards after spending $4,000 in the first three months
  • 5,000 bonus Ultimate Rewards for adding an authorized user
  • 2 Ultimate Rewards per dollar on travel and dining purchases
  • 1 Ultimate Reward per dollar on all other purchases
  • no annual fee the first year and $95 thereafter

While I can not directly link to the current Sapphire Preferred offer, you may find it by clicking below if you decide to apply. (I receive a commission, and your support keeps this blog going.)

The Ink Plus is easily the best business card on the market. It offers:

  • 60,000 bonus Ultimate Rewards after spending $5,000 in the first three months
  • 5 Ultimate Rewards per dollar at office supply stores and on cellular phone, landline, internet and cable TV services
  • 2 Ultimate Rewards per dollar at gas stations and hotel accommodations
  • 1 Ultimate Reward per dollar on all other purchases
  • $95 annual fee

While I can not directly link to the current Ink Plus offer, you may find it by clicking below if you decide to apply. (I receive a commission, and your support keeps this blog going.)

Why You Need a Freedom and One of the Other Two Cards

If you have a Freedom and either a Sapphire Preferred or Ink Plus, you can transfer your Freedom’s Ultimate Rewards to your Sapphire Preferred or Ink Plus account inside your chase.com account. Then you can transfer Ultimate Rewards from your Sapphire Preferred or Ink Plus account to airline miles or hotel points. That’s the Freedom Two Step.

Screen Shot 2016-03-18 at 12.38.01 AM

Here is exactly how to complete those two transfers.

Sign into your Freedom account on chase.com and click on the Ultimate Rewards balance on the right side of your screen.

Screen Shot 2013-12-07 at 3.59.18 PM
I’m at zero because I already transferred!

Click Manage Ultimate Rewards and Combine Points.

Screen Shot 2013-12-07 at 3.59.45 PM

Enter your Ink Plus or Sapphire Preferred’s credit card number, and how many points you want to transfer.

Screen Shot 2013-12-07 at 4.00.10 PM

From your Sapphire Preferred or Ink Plus account, you can transfer to United, Hyatt, Southwest, and many more airlines and hotels.

Screen Shot 2014-06-20 at 7.02.42 PM

Why Do the Freedom Two Step

Ultimate Rewards are very easy to earn with the Freedom. There’s the big sign up bonus of 15,000 points for a card with no annual fee, and the 5x rotating categories. However, Ultimate Rewards in your Freedom account are worth at most 1 cent each.

Transferring points to airline miles or hotel points should allow you to get far more than 1 cent of value from those same Ultimate Rewards.

Once your Ultimate Rewards are transferred to airline miles, they become those miles, subject to that airline’s award chart and rules. And if you know how to use frequent flyer miles well, you will get way more than 1 cent of value from them.

Examples of Good Transfers

For instance, you can use 57,500 United miles for a one way trip in a flat bed from the United States to Europe, or 40,000 United miles for a one way trip in Thai First Class from Bangkok to Sydney with a free hourlong Thai massage before the flight.

Southwest Rapid Rewards are worth about 1.4 cents toward any Southwest flight with no blackouts. You can do better with other transfer partners, but that’s still 40% better than redeeming the Ultimate Rewards for cash back at 1 cent each.

For only 45,000 Korean miles, you can fly roundtrip from the United States mainland to Hawaii in Delta First Class. Or you can book amazing Korean First Class for as cheap as 45,000 miles.

Free nights at Hyatts worldwide start at 5,000 points.

Award flights with British Airways Avios start at 4,500 miles one way, and Boston to Ireland or the west coast to Hawaii is only 12,500 miles one way.

You can fly Singapore Suites Class for only 57,375 miles to Europe, or use 30,000 miles for a United First Class flight to Hawaii.

As you can see, transfers offer the opportunity to do way better than 1 cent per Ultimate Reward.

Bottom Line

If you have a Chase Freedom and a Chase Sapphire Preferred or Chase Ink Plus, you can turn points earned on the freedom into airline miles or hotel points through the Freedom Two Step.

Screen Shot 2016-03-18 at 12.38.01 AM

Just transfer Ultimate Rewards from the Freedom to the Sapphire Preferred or Ink Plus and from there to the airline or hotel. This is a fantastic way to get more than 1 cent of value per point earned on your Freedom, whose points cannot be directly transferred to airline miles or hotel points.

Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are the author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

The comments section below is not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all questions are answered.