Home Credit Cards What is the Chase 5/24 Rule? And How to Avoid it

What is the Chase 5/24 Rule? And How to Avoid it

What is the Chase 5/24 Rule? And How to Avoid it
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When it comes to earning rewards quickly, signing up for a new credit card with a welcome bonus can be a great option. Chase, being a prominent issuer of rewards cards, offers appealing options in this regard. However, banks have specific rules in place to prevent customers from taking advantage of these bonuses excessively. One such well-known rule is the unofficial “Chase 5/24 rule.”

Photo / iStock / CNN

Understanding the Chase 5/24 Rule:

The Chase 5/24 rule is designed to limit individuals from opening new Chase credit cards if they have already opened five or more credit cards from any issuer within the past two years. This policy aims to discourage credit card churning and maintain profitability for the bank. Being aware of this rule is crucial, as it can impact your eligibility for lucrative new cards.

Affected Cards and Checking Your Status:

If you’re considering applying for a Chase credit card, it’s essential to know which cards fall under the 5/24 rule. By understanding the cards it applies to, you can plan your application strategy accordingly. Additionally, you should regularly check your 5/24 status to see if you meet the eligibility criteria before applying for a new Chase credit card. This way, you can avoid potential rejection and optimize your chances of approval.

How does the Chase 5/24 rule work?

Chase’s 5/24 rule is a policy that restricts the number of new credit card accounts an applicant can open within a short timeframe. When applying for a new Chase credit card, the bank will examine the applicant’s credit report to determine if they have opened five or more new credit cards from any issuer in the last 24 months. The term “5/24” refers to this specific restriction.

This rule is designed to discourage individuals from engaging in credit card churning, a practice where people open multiple credit cards to earn welcome bonuses quickly and then close the accounts shortly after. By including all credit cards opened with any issuer, not just Chase, the bank aims to protect itself from potential losses associated with churners.

If an applicant is at or over the 5/24 limit, their application for a new Chase card is likely to be declined by the bank. This policy helps Chase manage risk and maintain a more stable customer base.

What cards does the 5/24 rule affect?

Chase introduced the 5/24 rule in 2016, initially excluding certain credit cards. Over time, the guidelines were updated to include all Chase credit cards. This rule applies to both personal and small business credit cards, encompassing both Chase-branded and co-branded cards.

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Not all business credit cards from other issuers are factored into the 5/24 count. For instance, if you were approved for four consumer cards from any issuer, including Chase, and one small business credit card from a different issuer within the last 24 months, Chase would consider your status as 4/24. This is because business credit cards from most issuers typically do not appear on personal credit reports.

However, it’s essential to remember that Chase counts their own small business cards towards the 5/24 count. Moreover, if you have a business card from another issuer that reflects on your personal credit reports, it will also contribute to your 5/24 status. For instance, certain Capital One business cards might show up on the cardholder’s personal credit report.

To make informed decisions when applying for a Chase-issued credit card, it’s advisable to check your 5/24 status beforehand. This helps you understand where you stand and whether you meet the eligibility criteria under the 5/24 rule.

How to check your 5/24 status

Checking your Chase 5/24 status is crucial before applying for a new Chase card, and there are several methods you can use:

  1. Review your credit report: Obtain free copies of your credit report from Experian, Equifax, and TransUnion via AnnualCreditReport.com. Take note of the new accounts opened in the last 24 months.
  2. Manually track credit applications: Some people prefer tracking their credit applications using tools like notebooks, Google Docs, or Excel files. This method gives you an idea of your Chase 5/24 status, but keep in mind that there might be delays in when the bank reports your new accounts to the credit bureaus, making your manual tracking less precise.
  3. Utilize digital tools: Apps and websites like Experian and Credit Karma offer a convenient way to review your accounts and check their opening dates. However, even with these digital tools, you’ll still need to manually add up your new accounts to determine your status.

Remember, being aware of your 5/24 status can significantly impact your eligibility for new Chase cards, so it’s essential to stay informed before applying.

What contributes to your 5/24 status?

Understanding the Chase 5/24 rule can be tricky, so let’s break down the different types of accounts that can impact your 5/24 count.

  1. New accounts: When you open a new credit account, it directly contributes to your total for the 5/24 rule. This includes retail and gas credit cards, but prepaid gift cards do not count.
  2. Authorized user cards: If you become an authorized user on someone else’s credit card, it will add to your 5/24 count. Some card issuers may not require your Social Security number initially, but they might need it during card activation or to link the card to your credit report.
  3. Small business credit cards: Generally, most small business credit cards do not count towards your Chase 5/24 status. However, there are exceptions like Capital One and Discover, which usually report business credit cards to personal credit reports.
  4. Closed accounts: Even if you close an account, any new credit cards that were applied for and approved within the last 24 months will still be considered for the 5/24 rule. It’s important to note that the rule counts new accounts, not just open ones.
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Moving on to the impact of various loans on your Chase 5/24 status:

  1. Loans and your 5/24 status: Getting a new mortgage, auto loan, or student loan won’t affect your 5/24 count. However, home equity lines of credit or personal lines of credit may be considered. Essentially, your 5/24 status primarily focuses on personal revolving credit accounts.
  2. Business credit cards and your credit report: Most small business credit cards do not appear on your personal credit report. Nevertheless, if you have any late payments, missed payments, or defaults on these accounts, they will be reflected in your personal credit history.

It’s essential to be mindful of these factors while managing your credit accounts to stay within the Chase 5/24 rule.

Is there any way to bypass the 5/24 rule?

Bypassing the 5/24 rule used to be possible through various methods, like applying via a Chase Private Client banker if you met the qualifying requirements. However, most of these loopholes have been closed, leaving only a few potential approaches for success.

One way to bypass the 5/24 rule is through a product change. If you already have a Chase credit card, you can request to change it to another card. For instance, you may upgrade from the Chase Sapphire Preferred® Card to a Chase Sapphire Reserve® or downgrade to a Chase Freedom Unlimited®.

Another approach involves excluding authorized user accounts. If you are over the 5/24 limit due to authorized user accounts, you can call the Chase credit department and ask them to remove those accounts. This action might allow you to be reconsidered for your application if you are otherwise under 5/24.

In-branch preapprovals can also offer a chance to bypass the 5/24 rule. Branch employees often have access to preapproved offers based on customer profiles. If you receive such an offer, you can apply through the bank employee’s link to potentially bypass the 5/24 restriction.

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For business customers, a possible way around the 5/24 rule is through paper applications with a Business Relationship Manager. By filling out a paper application for a Chase business card, you might find an opportunity to bypass the 5/24 limitation.

Other credit card issuers with similar rules

American Express “Once per Lifetime” Rule: American Express has a rule that limits customers to receiving only one welcome bonus per card type for their entire lifetime. However, there have been reports from readers that suggest qualifying for another welcome bonus may be possible after a waiting period of five to seven years. To help customers determine their eligibility, Amex provides an eligibility tool on their website that warns them if they are ineligible before they proceed with their application.

Bank of America 2/3/4 Rule: Bank of America applies the 2/3/4 rule, which means customers can open two new Bank of America cards within a 30-day period, three cards within 12 months, and four cards every two years. Importantly, this rule only pertains to cards opened with Bank of America and does not apply to cards opened at other banks.

Capital One Application Limitations: Capital One doesn’t have specific application rules like other banks, but they do impose some restrictions. Cardholders are allowed to have a maximum of two personal cards open at a time. Additionally, customers can only be approved for one new card every six months.

Citi 8/65 Rule: Citi has an 8/65 rule that applies to its customers. This rule permits customers to acquire one new credit card every eight days, and they can’t have more than two new cards within a 65-day timeframe. For business customers, there needs to be at least a 90-day gap between their credit card applications.

Wells Fargo Six-Month Rule: Wells Fargo follows a six-month rule, which means customers can only apply for new credit cards once every six months.

Family of Cards Limitation: Some card issuers have a policy of allowing welcome bonuses only once per family of cards within a specific time frame. For example, Chase offers multiple versions of their Southwest Airlines co-branded cards. If applicants already have an open Southwest personal card or have received a welcome bonus from any Southwest personal card in the last 24 months, they are ineligible to receive a new card. However, this limitation doesn’t apply to Southwest business credit cards.