Whether you’re a seasoned points veteran, or just starting in this hobby, you have most likely heard of the Chase 5/24 rule. Understanding this rule is an essential part of maximizing points and miles for travekl! In this article, I’ll break down everything you need to know about the Chase 5/24 rule, and how you should use it in your decision-making process!
What is the 5/24 rule?
The 5/24 rule is an unwritten rule from Chase Bank that basically says: Chase will not approve you for any of their credit cards (business or personal) if you have opened 5 or more credit cards in the last 24 months from chase, or any bank, anywhere.
So why does this matter? And why should you care?
Currently, Chase Ultimate Rewards are one of the most valuable points currencies out there. This is largely due to the number of quality transfer partners that Chase has. Naturally, just like any currency, the more widely accepted it is, and the more things you are able to purchase using that currency, the more valuable it is. With a whopping 11 airline partners, and 3 hotel chain partners, you can easily use Chase Ultimate Rewards to travel just about anywhere in the world.
Because Chase points are among the most valuable transferable points currencies, naturally your points and miles strategy should include as many Chase URs as you can earn. And in order to earn and redeem them, you are going to need some chase credit cards which means you will need to be UNDER 5/24. Again, that means that you will need to have opened less than 5 credit cards from any bank (or store…but you shouldn’t be opening those retail cards anyways!) within the previous 24 months in order to be approved.
Let’s build a scenario here.
Let’s say that you are just getting started in this hobby, and you want to apply for the Chase Sapphire Preferred card (a fantastic card to start with btw). The only credit card you currently have in your wallet is a capital one student credit card that you opened way back in college, definitely more than 2 years ago. Your 5/24 status would then currently be 0/24, meaning that you have opened 0 credit cards in the last 24 months.
So you apply for the Chase Saphire Preferred card and get approved! Congrats! You are now 1/24. Meaning, you have opened 1 credit card in the last 24 months.
Now let’s say you’re out running some errands one day and like any good errand day, it includes a stop at TJ Maxx. While checking out they ask you “Hey Maxinista, would like to save 10% today by signing up for a TJ max rewards credit card?”
For clarity sake, the answer is always NO for cards like this.
You should never ever, under any circumstances, open a retail credit card like this! Think of it this way: would you rather get 10% off of $100 at TJ maxx (or Marshalls, or Victoria’s Secret, or Rooms to Go, or Macy’s, or Amazon etc.) or would you rather get $750 worth of free travel like you did with your Chase Sapphire card?? It’s kind-of a no brainer right? Especially when you know about the 5/24 rule, because you know that you would be wasting one of your precious 5/24 slots on a card that is only going to earn you a $10 reward! I digress. Back to our story.
Let’s assume you hadn’t read this article and you were a poor, uneducated victim of retail credit card sales and you sadly said, “YES I’d love to save 10% today, I mean afterall I shop here all the time! Sign me up!”.
What would your 5/24 status be after that? You would now be 2/24! and only have 3 remaining slots in the next 24 months before you would no longer qualify for chase credit cards.
A Few notes about the 5/24 rule
Not all cards count against your 5/24 status
Just about any personal credit card you open will count toward your 5/24 status. Business credit cards on the other hand, while you do need to be under 5/24 to get approved for them, typically they do not add to your 5/24 count! There are a few banks whose business credit cards will show up on your personal credit report and count against your 5/24 status. However, the vast majority of them do not count against your 5/24!
Being an Authorized user on someone else’s card will affect your 5/24 status
You might think that being added as an authorized user on someone’s card wouldn't affect you because its not your card, however in most cases being an AU will add to your 5/24 count. However, the good news is, you can call and have yourself removed as an AU and it should fall off your credit report within 30 days.
What do I do if I’m over 5/24?
If you’re over 5/24 you have a few options. If you’ve already opened and earned the sign-up bonuses for the majority of high-value Chase cards, you can either hold off on opening any new cards until your status drops back below 5/24. Or if you are satisfied with the amount of Chase UR points you’ve earned, its probably best to move on to other bank’s points like American Express Membership Rewards, Capital one miles , and Citi thank you points!
I’m not sure what my 5/24 status is, how can I find out?
A great way to check your 5/24 status is by signing up for credit karma. While the actual credit score it may show you can vary wildly from your actual score…one thing it does very well is show you all of the accounts on your credit report. So you can see exactly what accounts are being reported, and the date they were opened which will allow you to very quickly calculate your 5/24 status!
TO RECAP
The Chase 5/24 rule means that you cannot open any new chase cards if you have opened 5 or more credit cards, from any bank, within the last 24 months. Being an authorized user on someone else’s card will count against you. Business credit cards will not add to your 5/24 count unless it is from Discover, Capital One, or TD Bank.
Why does it matter? Because you can only get the top Chase cards while you are under 5/24, it is wise to begin with these before moving on to other cards such as Amex, Capital one, and Citi.
Thanks for reading! Please don’t hesitate to reach out if you have any questions at all!