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May 4th is Star Wars Day (“May the Fourth Be With You”). It’s easy to forget in the middle of a global pandemic that today – May 24th – is Chase Day because of the importance of 5/24 in whether you’ll be approved for a rewards credit card. In most cases you can only get approved if you’ve had fewer than 5 new credit card accounts in the last 24 months.
I’ve talked about this guideline in the past. If you’re already an expert on this, stop here, but 5/24 is important enough in signing up for credit cards and there are enough new readers that it is worth going over.
Chase counts all of your recent card applications that they can see — not just applications for Chase cards. Cards you aren’t approved for don’t count — it’s new accounts, not applications, that they’re looking at. Authorized user cards that report on your credit do count as well, although some readers have told me they’ve been able to appeal this with a representative if they’ve been denied for a card.
Since many issuers do not report small business cards to your personal credit those will not add to your 5/24 total. (Capital One is a major exception to this, their small business cards do report and therefore count in your total.)
Why Chase Excludes Customers With 5 or More New Recent Card Signups From Some Cards
Chase is spending a lot to acquire customers. They only make money on customers who use their products over time. In some cases they’re said to need to hold onto a customer more than 6 years before they turn profitable. So they want to avoid people who switch cards, and one way to distinguish profitable from unprofitable customers is to exclude people signing up for several cards in a short period of time. They believe they’re losing only a small percentage of potential customers, while avoiding the bulk of costly customers who never become profitable for the bank.
Other issuers take different approaches, Citi won’t give bonuses to people who have opened or closed the same card within 24 months and now apply the ‘same card’ rule to mean ‘same family of cards’ (if you get the American AAdvantage standard personal card they aren’t going to give you a bonus on a premium $450 ‘Executive’ card, but they will give you the business card’s initial bonus.
American Express will only give you the signup bonus on any given card one time — although if they no longer ‘remember’ you’ve had a product they’ll repeat a bonus. Some people seem to find that a card drops off after around seven years, in either case you can ask American Express what cards they show you as having previously signed up for.
I Believe 5/24 is Bad for Chase’s Travel Partners
The idea here is Chase does not want to invest a costly signup bonus on someone who is moving from card to card. They only make their money back acquiring a customer if that customer keeps the card and uses it over time.
However this is a fairly blunt instrument.
- It means there are Marriott ‘Ambassador’ members who spend over 100 nights and $20,000 with the chain, with perfectly good credit, who want to carry the brand in their wallet. They apply for the Marriott Bonvoy BoundlessTM Credit Card and get rejected.
- It means there are United Global Services members spending over $50,000 a year with the airline who want a UnitedSM Explorer Card — which is a pre-requisite for getting upgraded on domestic award tickets — and who get declined.
Meanwhile I think that The World Of Hyatt Credit Card is a fantastic card. But the market for the Hyatt card is relatively narrow. Hyatt has a limited footprint. They have the best elite program if their hotel locations works for you. Most people with a Hyatt card aren’t going to just have a Hyatt card. As a result 5/24 seems disproportionately likely to keep the bank from building its Hyatt portfolio.
American Express has a better approach. They only allow one initial bonus per card in a lifetime (lifetime being as long as their records reflect you’ve had the card before). More recently they’ve added additional unpublished hurdles where they decide you may or may not be eligible for a bonus. But they tell you in advance during the application process whether or not they’ll give you that bonus. They let you apply, and will approve you for the card, either way.
In contrast Chase won’t give you the card at all if you’re at 5/24. Chase ought to follow the American Express lead here and at least be willing to approve customers for their cards, albeit without a bonus. That has largely upside — a customer getting a card without bonus is likely to keep the card and likely to use it, and it’s less expensive to acquire that customer.
Of course that would take a focus and investment at Chase in creating the separate approval path, and they haven’t shown any inclination to do that. Co-brand partners like United and Marriott should be pushing them to do so.
What Cards Does 5/24 Apply To?
Chase’s 5/24 started out with their own Ultimate Rewards cards and expanded to some of their travel partner cards – personal cards from their largest portfolios saw the restrictions first. I broke the news two years ago that Chase planned to expand 5/24 to encompass effectively all of their rewards cards. Since fall 2018 all Chase rewards cards you can currently apply for have become subject to 5/24.
Are There Exceptions to 5/24?
When you log into your account and see ‘your offers’ on the left hand menu bar, if you are shown “Selected For You” offers with a green check mark then Chase is specifically targeting you for a card and reports are that 5/24 will not apply.
If you apply in-branch for a business card with a business relationship manager using a paper application, reports are that 5/24 will not apply.
And sometimes — rarely, admittedly, but sometimes — there are reports of customers who are at or above 5/24 being approved for cards anyway.
The Order to Apply for Cards In Because of 5/24
Now that 5/24 appears to have expanded to more cards the strategy over ‘which cards to get first’ is, I think, as follows:
- If you’re under 5/24, start with Chase business cards. While they are subject to 5/24 (you need to have fewer than 5 new card approvals in the last 24 months to be approved) they do not seem to increase your total (if you’re at 3/24 and get a new Chase business card you stay at 3/24).
- Get other issuer business cards first. The CitiBusiness® / AAdvantage® Platinum Select® World Mastercard® won’t increase your total. It is offering 70,000 American Airlines AAdvantage® miles after spending $4,000 in purchases within the first 4 months of account opening. This card has a $0 annual fee the first year (then $99). (Bear in mind that some issuers like Capital One do report business cards to your personal credit so increase your 5/24 total.)
American Airlines Boeing 787-9 Business Class
If you’re under 5/24 and want a Chase personal card my recommendation is the Chase Sapphire Preferred card. It has a great initial bonus at 60,000 points after $4000 spend within 3 months. It’s easier to get approved for than Chase Sapphire Reserve®.