5% Cash Back at Costco

The Chase Freedom, a card both Erin and I each have, offers 5% cash back in rotating categories each quarter up to $1,500 spent in that category (or $75 cash back). It also has no annual fee, so it’s pretty much a win-win. The first quarter this year was gas, the second was grocery stores and wholesale clubs, the third will be restaurants starting in July, and the fourth will be holiday shopping (which was Amazon last year).

Chase Freedom Calendar

Chase just decided to extend 5% cash back on wholesale clubs through the end of the year! Costco, probably the largest wholesale club, has been exclusive with Amex for a long time, but actually switches to Visa on June 20th. So, from that date on, you’ll be able to use any Visa card at Costco, including the Chase Freedom.

The 5% cash back in this case will still be subject to the $1,500 in total spending per quarter. So, from July through September, you’ll only get 5% back on your cumulative purchases at restaurants and wholesale clubs up to that amount. Then, it will reset in October for the fourth quarter. But still, that’s pretty great if you’re like my parents and visit Costco just for fun. Love you mom and dad!

Double the Value

Although you’re earning cash back with the Chase Freedom, you’re earning it in the form of points; one point is worth one penny when you cash them in. But, you can actually transfer those points into a Chase Sapphire Preferred Ultimate Rewards account, which gives you the ability to transfer them to programs like Hyatt, Southwest and others. This is a fantastic way to double the value because Hyatt points are generally worth two cents each. Southwest points are worth around 1.6 cents each.

So, if you or someone you live with, like a spouse, has the Chase Sapphire Preferred card, you can transfer the points you’ve earned to that account and then on to any of the 11 travel partners. So, the five points you earn spending one dollar at Costco on your Chase Freedom, which are worth five cents when you cash them in, can be worth 10 cents when you transfer them to a CSP card and then out to Hyatt (or eight cents with Southwest).

Imagine, every time you shop at Costco knowing you’re effectively getting 10% toward your next stay at a great Hyatt hotel like the Hyatt Regency Grand Cypress or Hyatt House in Anaheim! It’s why we each have a Chase Freedom in our house.

Chase Freedom

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  • What kind of points: Cash
  • Sign Up Bonus: $150 after spending $500 in three months, and another $25 for adding an authorized user
  • Annual Fee: $0
  • How to Earn Points: 5% cash back up to $1,500 each quarter in rotating categories, 1% cash back on everything else
  • Value of a Point: 1.0 cents
  • How to Spend Points: Redeem for cash or combine with Chase Sapphire Preferred points
  • Our favorite Use: Combine with Chase Sapphire Preferred points and use for stays at Hyatt hotels