About AARP Credit Card from Chase
Sometimes the best credit card rewards can come from the most unlikely places. Take the AARP Card from Chase.
This cash rewards credit card has industry-leading rewards on certain types of purchases but you rarely see the card mentioned among the best-in-class.
What’s great about the AARP credit card is that anyone can apply for it. You don’t have to be a member of the American Association of Retired Persons (AARP), the national group that provides help for retired people.
Our first suggestion about this card is to view it as a cash rewards card instead of an AARP card.
If you think about it in terms of the branding, there’s a good chance you’ll look elsewhere for a credit card because the thought of carrying around a card emblazoned with a retirement organization’s name may not be the most appealing thing for you.
However, you’ve got to look past this card’s branding – and any card’s branding, for that matter – and get a clear picture of what the card offers you in the short-term and the long-run.
Doing so will sharpen your senses as a consumer and help you make wise decisions that will ultimately affect your financial life and provide you no-strings-attached perks.
Mastering the ability to make the AARP credit card work for you without any strings takes some skill and, above all, solid information.
Our review is going to tie all of these things together for you by looking at the AARP credit card’s short- and long-term benefits, showing you how to maximize your cash back rewards and detailing the rates and fees that could hurt you if you don’t practice sound financial principles.
At the end of this review, we’ll provide an easy-to-read section on the cards pros and cons, as well as who we think might enjoy this card the most.
The AARP Credit Card’s Short-Term Benefits
Most cash back credit cards will try and get you to become a cardholder by coaxing you in with a cash-back award if you can spend between $500 and $1,000 in the first three months of owning the card.
$200 Cash Bonus
Chase’s AARP credit card follows that trend by offering you $200 in cash rewards if you can spend $500 in the first three months. That three-month deadline starts the day you’re approved for the card, not the day you receive the card in the mail.
We read through the card’s fine print and found that you’ll actually get 20,000 points when you hit the spending limit. Those points, however, are easily converted to cash that you can use as a statement credit or that you can transfer to “a checking or savings account held by a financial institution located in the United States.”
There are several other ways you can utilize your points, but we’ll get to those later on in this review when we talk about how you can earn points on purchases.
For now, though, we want to focus on how the $200 reward stacks up against the competition. According to the research we did for our Best Cash Rewards Credit Card of 2018 guide, the AARP credit card’s bonus cash is at the top of the list:
- AARP credit card: $200 after $500
- Chase Freedom Unlimited: $150 after $500
- AmEx Blue Cash Preferred: $100 after $100 & 5% back on travel
- BankAmericard Cash Rewards: $100 after $500
- Quicksilver from Capital One: $100 after $500
- Citi Double Cash: None
- Discover it: First-year match
As you can see, the AARP credit card’s $200 bonus is at the top of the list. We could see someone getting more than that with the AmEx Blue Cash Preferred, but only if you charged at least $2,001 in travel during the promotional period.
The Discover it’s match on cash back is lucrative, but you only get the match at the end of the year so it doesn’t really compare to a $200-in-the-first-three-months kind of offer.
0% on Balance Transfers
The second short-term perk you get with this card is 0% interest on balance transfers for 12 months.
Basically, this means that any balance transfers you make in the first 12 months of owning the card won’t get hit with interest even if you don’t pay them off in full right away.
However, Chase will charge you interest on any balances still on your account after 12 months (more on that in a few minutes).
The Long-Term Benefits of the AARP Credit Card
Most cash back credit cards will give you a series of rewards rates for the various purchases you make every day. These rewards rates come in the form of percentages – 2% cash back on travel, for example.
The AARP credit card has two cash bonuses: 3% on restaurants and gas, 1% on everything else.
3% Cash Back on Restaurants and Gas
For every dollar you spend at a restaurant or a gas station, Chase will give you 3 points. One point is worth one cent, so, every time you spend a dollar on a bonus category, you earn $0.03.
In a narrow sense, this rewards rate gets you $1 back for every $33 you spend on gas. But it’s important to think about this reward in the bigger sense.
For example, based on the calculations we’ve found from the Bureau of Labor Statistics, the average American family spends about $3,000 a year eating out and about $2,000 year on gas. If you spend $5,000 combined in these categories, you’ll get 15,000 points, which is equal to $150 in cash-back rewards.
As you can see, the 3% rewards rate on restaurants and gas is actually pretty incredible considering you can get $150 a year just by using your credit card for things you’d already buy.
The Fine Print About Restaurant and Gas Spends
Whenever Chase says you get 3% rewards on restaurant and gas purchases, what they’re actually saying is that they hand out rewards based on merchant codes that fall within the restaurant and gas categories.
Merchant codes are digit-based codes that businesses use to identify themselves to credit card issuers when someone swipes a credit card at their point-of-sale terminals.
Chase doesn’t have any control over how a business codes themselves, so there’s a chance that certain gas or restaurant purchases may not get the rewards you were expecting.
We read through Chase’s fine print and found that the following businesses won’t get the 3% restaurant and gas rewards:
- Truck stops
- Boat marinas
- Oil and propane distributors
- Home heating companies
- Some merchants selling food in stadiums, hotels, and casinos
Earlier we mentioned that the rewards you get from qualifying restaurant and gas purchases, as well as your 1% rewards on everything else, can be redeemed for cash.
After doing a little reading about the AARP credit card rewards program, we found out that you can use your rewards points for other things, too, like AARP memberships, gift cards, merchandise and travel purchased through the AARP website and AARP’s Rewards for Good shopping portal.
We set up a dummy account and browsed through Rewards for Good and found, surprisingly, that prices on merchandise were equivalent to what you’d find on Amazon, BestBuy.com, and other big-box stores.
For example, the Amazon Tap was $129 on Amazon.com and on Rewards for Good. However, we discovered a huge drawback to the program. If you wanted to use all your points to buy the Amazon Tap, you couldn’t. You’re only allowed to use up to 2,400 points, which equates to a $24 discount on the Tap.
In one sense, that’s great because you’re getting a discount based on your points. But, in another sense, it’s not so great because AARP is limiting how many points you can use. Even if you had enough points to make the Tap free, you couldn’t use them all.
We called the Rewards for Good program and found that only four categories of purchases let you use as many points as you want to pay for your purchases: sweepstakes, auction, local offers, and the Daily Deal.
Sweepstakes are like drawings and you’re charged a point for every ticket you purchase. Auctions are the Rewards for Good version of eBay. Local offers are similar to Groupon, where you get deals on dining, shopping, and entertainment in your area. Daily Deals are flash sales that change every day.
We don’t see any real advantage to using the Rewards for Good portal, mainly because the prices on their site are equal to other sites like Amazon and BestBuy. And, if you were to buy a product or service on those sites, you could use your cash-back points for the entire purchase and not just part of it.
Pro tip: There is no cap on how much cash back you can earn.
Donations to Drive to End Hunger
Every time you make a purchase with your AARP credit card at a restaurant, then Chase will donate $0.10 to the Drive to End Hunger via the AARP Foundation.
Donations are capped at $1 million, which means that Chase will stop making the $0.10 donations once total donations from AARP cards hit $1 million.
Rates and Fees of the AARP Credit Card
Your AARP credit card will have the following interest rates and fees:
- Purchase APR: 17.24-23.99%
- Balance Transfer APR: 0% for 12 months, 17.24-23.99% after
- Annual fee: None
- Late/returned payment: Up to $35
- Foreign transaction fee: 3%
The one big thing we noticed here is that the low-end APR on this card is 1.25% higher than most other Chase credit cards. The Chase Freedom Unlimited, for example, has a low-end APR of 15.99%.
However, the AARP credit card’s high-end APR of 23.99% is average for Chase cards.
The Pros of the AARP Credit Card
We believe, based on our research of cash-back cards, that the AARP credit card’s greatest strengths are its $200 cash back bonus and the 3% rewards on restaurant and gas purchases.
None of the cards in our Best Cash Back Credit Card guide matched the AARP card’s bonus and rewards rate, which is especially unique considering that the rewards many of those competing cards offer have a cap on how much cash back you can get.
The Cons of the AARP Credit Card
We’d say the biggest drawback to this card is that its low-end APR is pretty high and that consumers with good to excellent credit scores could probably get a better interest rate on other cards.
Who Is the AARP Card Good For?
We believe the best fit for this card has nothing to do with age even though the card is branded with an organization associated with retired folks.
The person who would most enjoy this card is the one who spends average or above average amounts on gas and restaurants, and who is looking for an industry-leading, upfront cash bonus.
If the idea of having an AARP credit card doesn’t sit well with you and you want to explore your options, take a look at the Chase Freedom Unlimited card. It has a single cash-back rate of 1.5% and offers a $150 up-front reward.
When the card is paired with the Chase Sapphire Preferred or the Sapphire Reserve, you can transfer your rewards points to Hyatt, Marriott, Southwest, United and other hotel and travel loyalty programs.