Chase 5/24 Rule Explained and How it Works

How Does the Chase 5/24 Rule Work?

Why did Chase start the Chase 5/24 rule? Most credit card companies offer new customers incentives to apply. These incentives often include welcome bonuses. Companies reward customers who reach a spending threshold soon after opening their accounts. There are two advantages to this strategy for the company. First, the signup bonus encourages you to apply for the card. Second, your new card becomes the go-to card in your wallet so you can meet your spending threshold. It really is a brilliant strategy.

Credit card companies compete with each other’s welcome bonus offers. Better bonuses generally mean more applications. More applications mean the company can earn more money from interest. Companies justify welcome bonuses because they trust that consumers will keep using their cards after they earn the bonus. When they do, the company makes its money back on the interest. Because of habit and ongoing rewards, customers often keep using their cards after they’ve earned their welcome bonus. However, this isn’t always the case.

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Chase 5/24 Rule Discourages Churners

Since bonuses are so lucrative, there are many people who want to earn them whenever possible. They open a new card, achieve the signing bonus, then cancel or stop using the card. These people, known as credit card churners, often actually cause the credit card company to lose money. They spend up to the bonus threshold, pay off their balances, and stop using the card. This means they cash in on the signing bonus without ever paying interest to the credit card company.

Credit card companies want to prevent this from happening. Therefore, most credit card companies set limits on how many credit card accounts you can have with their brand. They may also limit how frequently they approve your new application or how often you receive welcome bonuses. For example, American Express offers welcome bonuses only to people who have never had a particular card. Discover requires you to wait 12 billing cycles before they accept a new application. Capital One has a six month waiting period between applications. However, the most discussed application waiting policy is the Chase 5/24 Rule.

What is the Chase 5/24 Rule?

The basics of the rule are simple. Chase won’t approve your credit card application if you’ve opened five or more other accounts over the previous two years. The rule applies to all brands of credit cards, not just Chase cards. Store branded Visa or MasterCard credit cards also count. Denied applications don’t count toward the five account limit. Being an authorized user on someone else’s account usually does. Business cards only count toward your five card limit if they appear on your personal credit report.

What cards are included in the Chase 5/24 Rule?

The 5/24 Rule applies to most, but not all, Chase credit cards. The 5/24 Rule applies to Chase Freedom®, Chase Freedom Unlimited℠, Chase Sapphire Reserve and Chase Sapphire Preferred, and Chase Slate®. The Marriott Rewards, Southwest Rapid Rewards, and United MileagePlus cards are also included. If you run a small business, be aware that both the Ink Business Cash cards are also governed by the 5/24 Rule.

What cards are not included in the Chase 5/24 Rule?

Many of the most popular Chase cards are part of the 5/24 system. However, there are a few good options that aren’t included. Want a Chase cash back card? Consider the Rewards Visa card. Planning a Disney vacation? Finance it while earning rewards with the Disney Rewards or Disney Premier cards. Want travel bonuses? The British Airways, Hyatt, Ritz-Carlton, and IHG Rewards credit cards are all exempt from the 5/24 Rule.

Are there exceptions to the Chase 5/24 Rule?

As with any rule, there are exceptions. Chase may still consider customers who have not met the credit limits on other accounts. They may also make an exception for those with excellent credit. It’s also possible that they will approve your application if you apply in person at a Chase Bank branch. If Chase still denies your application, call customer service to request reconsideration.

Why should I choose Chase?

You may wonder why you’d want to choose a company that limits how many of their products you use. It’s simple. Chase offers welcome bonuses so lucrative that they have to limit who can take advantage of them.

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Chase offers some of the best credit cards on the market. Almost all have attractive sign-up rewards. The Chase Freedom and Chase Freedom Unlimited cards offer a $150 reward when you spend $500 in 90 days. Chase Slate waives balance transfer fees and offers a long 0% APR period on transferred balances. The Chase Sapphire cards offer 50,000 points bonuses, which convert to a free flight on a partner airline. In short, Chase’s credit card offers are so good, they have to use the 5/24 Rule to stay in business.

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Monica Kowollik


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