Chase Credit Card Churning – Living with the New Reality (5/24 Rule)

[Some of this information might be outdated. Check out our updated post on 5/24 here.]

Background

We’ve discussed the fact that many people are reporting having problems being approved for new Chase credit cards. Most reports that I’ve seen indicate that it’s real and it’s bad. 

Chase seems to have severely changed their approval criteria. Specifically, if they see too many new accounts on your credit report they won’t approve you for a new card. This is even if the new accounts are non-Chase accounts. They always mention a 2-year time frame; if there were too many new cards opened within the past 2 years it’s much harder to be approved.

Basically, they’re looking at your credit report to see if you’re a churner. If you are, they’ll deny you no matter how good your credit is. And even for a basic card like the Freedom.

Typically, Chase is very good about approving a card by shifting credit from another card. For our issue here this doesn’t work.

Note that there are a few success stories in getting the cards despite having many new accounts, implying that it’s not a hard rule.

5/24

How many new accounts is too many?

Many mention the magic number of five. Having five or more new accounts will trigger denial. This number is mentioned in the Flyertalk wiki as well, and is now known as “the 5/24 rule.”

Chase Co-Branded Cards & Business Cards

Chase is only targeting Ultimate Rewards-earning cards like the Sapphire and Freedom. Business cards like INK are not included, although there is some spill-over effect there. And co-branded cards from hotels and airlines (like Southwest and United) are not included either.

Apparently the UR cards cost them more and they want to stop churners from causing them such losses. These cards are also the low-hanging fruit since it’s so easy for someone to cash out on the rewards and these cards were thus ‘abused’ more than the others.

Update: Business cards (i.e. INK) will have the 5/24 rule starting around March 2016, and Co-brands will have the 5/24 rule starting around April 2016. See also Is 5/24 In-Effect Yet on INK and Co-brands?.

Do Authorized User Cards Count toward 5/24?

When someone adds an authorized user (AU) on their credit card, the card shows up on the credit report and does affect the AUs credit score, See How Does Being An Authorized User Affect Your Credit? The account will usually pull up even when the AU was added without having given in their Social Security Number.

It appears that (somewhat illogically) even AU cards are included in the new Chase rule and having new AU accounts will deter you from being approved for new Chase cards. (This based on a Reddit data point.)

This is terrible news for someone who likes to add AU cards  on their Amex accounts in order to maximize Amex Offer promotions. Some Chase cards need an AU added to maximize the bonus as well. It’s possible that using a nickname could save the card from hitting the credit report. Also, an AU from a different address than your own may keep it off the report as well. (These suggestions are just of the top of my head.)

Since a lot is dependent on the Chase rep to decide, some reps may be smarter and not include AU cards into the equation of new accounts. There is one report of someone who was able to convince the rep not to count AU cards in the calculation.

Do Business Cards Count toward 5/24?

Do business credit cards count toward the 5/24 rule? Many card issuers don’t report business cards on the credit report and the only clue is the hard inquiry.

With regards to the new Chase rules, it seems that the main issue is the new accounts, not the inquiries on the report. As noted, AU cards do count despite the fact that there’s no inquiry on the credit report. As such, business cards can likely go undetected on that end and won’t count toward the max-account limit.

Note, however, that Chase business cards would probably count. Since they’re issued by Chase themselves, they’ll obviously know about it and they may count it toward the account-max.

Account Closures

Here’s another data point: A friend of mine has 3 INKs and applied for 2 more. Not only did they deny his applications, the reconsideration rep forced him to close two of his three existing cards.

I’ll repeat that: the rep denied his applications and forced him to close 2 of his existing cards.

Ultimately, he was able to call back and get one of the closed accounts reinstated. We wish him luck on getting the other one reinstated as well.

This case is likely an anomaly; still it could have us thinking twice before calling up and trying to convince Chase that we are worthy of another card. It may be better to lay low and keep what we have.

Summary

• 5 or more new cards can trigger denial (occasionally even less can be problematic)
• Even non-Chase cards count to this number
• AU cards should not count toward the 5-card limit, but the reps often do count them unless you specifically ask them not to
• Reps seem to have the power to approve you with more than five, but that usually doesn’t happen
• Shifting credit lines doesn’t help
• Co-branded cards are unaffected
• Business cards (INK) are unaffected
• Business cards shouldn’t count toward the 5-card max, but Chase business card may count

Final Thoughts

All-in-all, the news with Chase is terrible and it really changes the way we approach applying and keeping Chase credit cards, see Thoughts on Keeping the Chase Sapphire Card. The important thing for most of us is to keep at least one premium Chase product open so that it will be possible to use the points for travel redemptions. The Freedom and INK Cash cards can’t be used for for travel redemptions unless you have a premium product like the Sapphire Preferred or INK Plus. Paying the annual fee on the Sapphire is starting to make a whole lot of sense in many cases, unless you have an INK Plus to use for travel transfers.

So which route do we go? Limit our new accounts or keep churning and just avoid Sapphire and INK?

Being that there are so many credit cards out there to choose from, including many co-branded Chase cards, keeping up the churning would seem wiser. These cards are, however, from the best available and it’s definitely a big hit to the hobby.

Notes

Two important notes:

• You may be able to get around the new Chase rule if you have a Chase banking relationship and you apply in-branch for the card. For personal Chase cards, it’s also helpful to have $10k in a checking or savings account with Chase.
• The consensus is NOT TO CALL to expedite the approval. If you get a pending notification at the time you apply, we often pick up the phone and call to speak to reconsideration. With regards to Chase, it’s now better not to call and let it go through the approval process on its own. This will increase your chances of approval.