Posted by Chuck on June 11, 2015
Credit Cards

Published on June 11th, 2015 | by Chuck

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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[Some of this information might be outdated.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:



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Correction: Ink Plus points definitely do transfer to travel partners. You’re thinking of the Ink Cash.

Hey Chuck good article. Btw I think you mean “INK Cash” instead of “INK Plus,” when you mention a card that can’t be used for travel redemption. (Assuming that by “travel redemptions” you mean transferring to transfer partners).

Oh thank god, I just had a heart attack (just opened Ink Plus a few days ago but don’t have a CSP)

The Freedom and Ink Cash Plus cards can’t be used for for travel redemptions unless you have a premium product like the Sapphire Preferred, Ink Plus, or Ink Bold (no longer offered to new applicants).

Uh oh…my first chase card ever is the Ink Plus, I can’t use these points until I open a CSP?

I just got denied a UA chase bus card because of too many new accounts. Tried 3 recons. No dice.

Same thing happened to my mom and dad for this same card. I thought biz cards were easier, but both were rejected and recon didn’t help.

Just got denied with a ‘too many 2 year account’ letter despite having only 2 chase cards with a 779 credit rating.

I can vouch for this. Was turned down and told the same by diff rep when HUCA many times on my Ink Cash app…..too many credit inquiries….that’s it…even I have a perfect credit score of 800.

I guess it’s time to close some of my old Chase cards then…I have 7 cards with them (personal and business) so far now. Will keep the one that I need such as Freedom, CSP and Ink, and close the Southwest, Ritz, United one. Chuck what is your thought on this move?

I don’t see how this will help. You’ll lose th aaoa and what Chase is concerned about are new accounts not total accounts.

David,

Don’t want to break your bubble, but 800 is not perfect anymore; 850 is the new 800.

I’m at 833 and still got denied for the Bus card; two other Bus cards granted this year. They would not budge on reconsideration line.

Always close the SW card so you can re-apply in 2 yrs and get the Companion Pass again. Best value in the sky, but I hope the new card rules don’t kill this b/c you need two cards (personal and bus) to get the 100K miles.

Geoff

I have had exactly these criteria cited to deny a Chase co-branded card application recently. Analyst counted all applications for two years, including non-Chase applications, and applications as AU. Says they want to see some payment history on the new accounts. That means that opening new non-Chase accounts would likely affect future Chase applications.

Under this new regime, in addition to keeping a premium card open to permit transfers, another consideration is how to keep a WN companion pass.

Well Chase has gone off the deep end and I hope they drown. Everything about their methodology smacks of some bean counter idiots in finance making the call on this. I would expect the bloggers eventually respond and get off the Chase bandwagon. It’s a really bad move to recommend anyone to apply for Chase cards when they likely will result in a denial(and wasted hard pull) for their average reader. It’ll also be intriguing because the only reason Chase cards grew so much in popularity so much is because of churners and points chasers that speculatively valued UR points so highly. It’s funny, they are literally eliminating their entire popularity base from access to their products with these new standards. I wonder if the mega bloggers will reveal the truth.

So, everything is Chase’s fault? They are running business & if the business is causing “loss”, what would you do?

They’re entitled to do whatever they want. However they are certainly not taking a loss here. Maybe on a fraction of consumers they lose but credit cards for US banks are huge revenue generators as a whole. They are simply in an ultra competitive market and having a hard time meeting their numbers so they brought in the bean counters to fix it. The problems with banks and your comment is you can’t treat consumers like financial assets which you treat accordingly callously. That is completely disconnected from the human and social side of things in the economy as a whole. Simply weeding out consumers that don’t perform to their standards based on a few attributes that only tell part of the story anyway means you’ll harm the brand and ultimately growth. Blogs run by and read by the very same people you would call a loss helped propel UR pts to the top of the list. Their valuation is artificial and was popularized by them. Chase doesn’t seem to think much of that. Honestly I don’t care much for churning as much as holding cards that I do well on. In this case I already have the core Chase cards so this doesn’t effect me. I just think Chase is making a really dumb move here and I’m looking forward to seeing the results.

“However they are certainly not taking a loss here.”

Your opinion or fact? If it’s a fact, please provide the balance sheet.

“Our analysis shows how every $1b of card signup bonuses could generate $25b of billed business/$3b of loans and 27 cents of EPS over 12 months.”

http://blogs.barrons.com/stockstowatchtoday/2015/06/09/american-express-why-the-loss-of-costco-might-not-be-a-total-disaster/

Hold on, let me post a balance sheet from Chase Bank. It might take me a minute and I might crash this blog since they have almost 3 trillion in assets. Lol… in all seriousness though…

Fact. I don’t have time to go pull up Chase’s public financials to show you credit cards make them money, but it’s there and you can find it with a little google magic on your own time. It’s common knowledge.

Opinion: They’re trying to make it more profitable by extracting the less profitable consumers even though they tend to be the mavens that many less informed folks turn to when considering credit cards. I don’t object to that, they’re a business and that’s what they do, seek profit and growth. I just think this approach was heavy handed and will do them more harm than good. They’ll sink to the bottom and other banks will grab market share while the worlds marches on.

Since these bloggers target mostly newbies with their “OMG CSP 3x Dining on Friday” propaganda, sadly they won’t be affected by this at all.
But it does makes sense for newcomers to be getting CSP and Freedom among their first 5 cards.

Agreed. I wouldn’t tell my family and friends not to get Chase cards simply because they don’t like people like me. 🙂 It’s still obnoxious to see TPG valuate UR points so high, see them quoted in Chase Sapphire commercials, and then say absolutely nothing about it even though they do talk about churning often as a strategy for gaining more points.

I don’t understand how that would be. The bonuses are tempting and there will be new people coming to this site and learning about this game we keep playing. These new recruits are what keeps people blogging about it. Chase just doesn’t care for these people who know too much about the game.

“[T]he reconsideration rep forced him to close two of his three existing cards.”
I don’t understand how that happened. Why didn’t he just say no and hang up? How can they force you to close an account?

I was thinking same thing. Just feign cell signal drop. I’m guessing once they are manually reviewing your account you’re already in their line of sights and simply hanging up may make them more determined to shut everything down or invoke a freeze of some sort until you talk to them.

I just recently applied for the Chase Freedom with the increased signup bonus. I’ve had Sapphire Preffered since the day it started as I had an older product that converted to it. I haven’t opened a lot of cards over the last few years except Citi AA and Barclays US Air since I was chasing those point before they combined. (It worked too, 350k and I haven’t flown AA in years). 800 level credit.

I was just informed by the reconsideration agent that I was declined due to too many credit applications. He was very clear and emphasized that this was only in regards to the Chase line of products, Freedom, Ink and Sapphire and that I was free to apply for any other products. This is very disappointing as the Sapphire has been my main card and I love UR. I am reconsidering my loyalty & really hope that Citi is able to add AA to their ThankYou partners as this would likely enable me to make the jump.

“I haven’t opened a lot of cards over the last few years except Citi AA and Barclays US Air… It worked too, 350k and I haven’t flown AA in years).”

So, you obtained 350,000 AA miles without having flown AA at all and you did this entirely through credit card applications and acceptance and you say that you “haven’t opened a lot of cards over the last few years….”

Ha Ha!

What gall.

Yes, you might not have opened up that many compared to the hogs that like to post here, but you sure opened a lot of cards in the last few years, dontcha’ think???

Little wonder they rejected you.

And as for you throwing around that word — “LOYALTY” — that’s a joke, right??

Sure have shown a great deal of “loyalty” to AA over the years, right??

You have been hoisted on your own petard!!

No doubt that some credit card issuers will have you, but it would appear that at least for the moment, the gravy train of ABUSE is over at Chase!

Wow, just wow. I was just about to come due for another Chase Sapphire Preferred, but may just wait on that… As far my Chase strategy, I’m thinking I’ll grab the cards I’ve been eying — the Hyatt CC (although I was really hoping they’d introduce a spend threshold to attain Diamond status), and either United or Marriott business card (because, you know, why not?)…

Another unfortunate introduction is they’re taking meticulous notes on calls now, so HUCA no longer works. Denied for an Ink Plus, regrouped and called back and the CSR had all the info from my last two calls and had no interest in discussing any new reasons I gave.

What about maximizing chances for an auto approval? Any shot at an auto approval for ink cards or does that never happen? Does anyone have any experience here?

I greatly appreciate your blog but I am not a fan of those who churn credit cards and therefore, I am wholly supportive of Chase doing this. As such, I agree with Mr. Who and accept that I am in the minority here.

I think that a reasonable approach to “churning” by actually holding onto the card and actually paying the annual fee for at least a year will probably prove helpful in permitting Chase to accept your new credit card applications. Those who don’t like the idea — TOO BAD. PIGS FEED — HOGS GET SLAUGHTERED.

There is a reasonable middle between those who just keep the card forever, and those who churn, churn, churn. Perhaps, if you hold onto the card, the retention bonus may be sufficient for you to reduce the annual fee to what you consider a reasonable level.

have you ever gotten retention bonus from Sapphire? I have never heard of it…

also, just this week I called twice to ask for retention bonus for Ink Bold… both times i was told flat out NO… that was not the case in the past… they used to offer 10 k bonus points for $5k spend in 3 months as anniversary retention… but not any more sadly.

They still give credit of $95 if they like you. I just called last week. And, I have spent no more than 6-7K total last year with that card.

That was for the INK Bold

I got the same offer for Ink Bold : I got credit of $95 10 days ago. I have spent about 9K last year .

i have spent way more than that on the card… at least $20k… maybe they didn’t like the fact that most of it was at Staples.

Yes, that may be it. Perhaps they don’t like MS people as well and think they can make more profit off those who actually have “legitimate” charges and those who use their cards reasonably.

Obviously, I don’t feel sorry for you and your ilk though, for their decision to weed out your sort can only benefit those who take a measured approach to these bonuses.

But Chase isn’t just denying churners. It is basically anyone who they consider has opened too many new cards in the past 2 years. I just started signing up (based on the lure of the sign up bonuses) for new cards last year. I have not gotten rid of one single card I signed up for – so no churning. Every one of them has been the first time I have ever gotten that card despite having a long and excellent credit history. I’ve gotten about 7 cards in that time with 3 of them being Chase. My husband is an authorized user on most of them. He got denied (reason given was too many new credit cards in past two years) when he applied for the Chase Freedom despite never having had one before. I have never gotten a card and then closed it to avoid an annual fee and neither has he. Fairly “regular” (in contrast to churners) are also being caught in Chase’s new way of doing business. My husband has been a long time Chase customer (he has had a Slate card for years), has an excellent credit history, has never had a Freedom card, has never closed a card with any creditor to avoid an annual fee, has a credit history with his oldest card being almost 30 years ago, and he was still denied the Freedom card. That is NOT a hog, not even a pig. Chase is going to end up alienating customers with this new road they are taking.

You mean you did not have the OPPORTUNITY to get rid of one single little card.

You all make me laugh.

You were intending to churn the card, as well. You just got caught with your panties down, that’s all!

Oh Gawd. Another holier-than-thou bloviator. Chase doesn’t owe many churners who played the game anything :). Some of us already received a life time’s value out of their cards 🙂

The pathetic thing is we have a guy telling us we should pay the annual fees on cards and actually put spend on them, just like moronic sheeple do…

The heck with that. I a proud MS’er and churner and Im here to get mine.

The only surprising thing here is why it took so long for Chase and other banks to start cracking down on churners. With the plethora of miles/points/credit card-pushing bloggers out there, did anyone really think all these free miles could keep coming so easily? It was just a matter of time. And it’s only going to get worse for churners. But again, I’ve always been amazed that banks have continued to let this go on for as long as they have. But it looks like all the bloggers out there have finally saturated the market with the good word and made the practice nearly mainstream now, enough to finally force the banks to do something about it. Better enjoy what’s left while we can…

Couldn’t agree more. Google anything closely related to credit cards and the screen fills with MMS, FTG, etc. Geez Mommy points was on Nightline a few months back! How long will banks sit idly by watching folks abuse their system before they take steps to counteract it

They didn’t take action until now because the market wasn’t so saturated and competitive. Now that every bank is fighting tooth and nail to gain market share by offering silly huge sign up bonuses, suddenly the churners and points chasers are an issue? Yeah right. The issue is competition and the policy is simply a system that’s intolerant of it.

“How long will banks sit idly by watching folks abuse their system before they take steps to counteract it”

I agree! Commercial/Wall St. banks are there to rob the avg joe through fractional reserve banking and usury, not the other way around. The nerves of these peasants!!

I’m amazed the entire swipe fee business model is still standing. If we really want to shut this circus down we should just cap swipe fees like Europe. The reality is up until now the system has served the banks well and consumers that learned to maximize the benefits. Now consumers have figured it out and the banks take issue. Boo hoo. Oh well, I don’t see other cc issuers jumping on this because they’ll be too busy picking up consumers avoiding chase.

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