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The Chase 5/24 Rule: What You Should Know

Some savvy credit card holders have made a killing out of opening new credit cards just long enough to score a big sign-up bonus -- and then closing or downgrading them shortly after. It can mean big bucks for the cardholder. After all, some sign-up bonuses are worth $1,000 or more.

But issuers have caught on.

Now, many issuers have policies in place to limit so-called credit card churning. Chase has a policy referred to by many as the "5/24 rule."

[Read: Best Rewards Credit Cards.]

What Is the Chase 5/24 Rule?

The Chase 5/24 rule is a guideline for Chase card approval. According to the rule, you must have opened fewer than five personal credit cards within the last 24 months to be considered for a Chase card.

"Rumors of the rule started surfacing on Reddit, FlyerTalk and various blogs," says Jarrod West, a content contributor for rewards travel website UpgradedPoints.com.

Chase has confirmed the rumors. "If you've opened more than five credit cards -- regardless of issuer -- in the last two years you will likely not be approved for a new account," according to a statement from Chase.

Lee Huffman, credit card expert at BaldThoughts, a travel rewards resource, says he's experienced this firsthand. When the Chase Sapphire Reserve card first came out with its 100,000 bonus point promotion, Huffman says he was unable to jump on the offer because, he suspects, he had opened too many cards around that time.

"It took me almost two years of not applying for personal credit cards before I was able to apply and get approved" for the Chase Sapphire Reserve card, says Huffman.

The five-card limit applies to Chase cards as well as cards from other issuers. For example, if you opened a Discover credit card within the last 24 months, that card would count toward your five-card quota.

Additionally, retail credit cards, cards that designate you as an authorized user and some business cards may count toward your 5/24 limit.

Chase Cards Affected by the 5/24 Rule

There's no official list of what Chase cards might deny your application if you reach the five-card threshold. However, you should expect it to apply to most personal credit cards, co-branded cards and some business cards.

Knowing most Chase cards are off-limits to applicants who reach the five-card threshold might be discouraging, but there's good reason behind the policy, says Huffman. "These rules are intended to minimize the abuse of sign-up bonuses by people who don't plan on being long-term customers."

But keep in mind, Chase still considers factors beyond the 5/24 rule when you apply for a card, like your creditworthiness, your history with the issuer and your income.

[Read: Best Travel Rewards Credit Cards.]

What Other Issuers Restrict Card Accounts?

Chase isn't the only issuer enforcing restrictions. American Express now has a "once per lifetime" rule to keep applicants from receiving a bonus on the same credit card twice, says Huffman. For added transparency and to deter credit card churners, American Express launched a new welcome bonus feature that appears during the initial application steps. It tells you whether you're eligible for a card's welcome bonus before you submit a formal application.

"Most credit issuers have some sort of published or unpublished rule as to how often they will approve you for a new card or how many cards in total you can hold," says West, including:

-- American Express. The issuer limits you to holding five of its credit cards at any given point. Additionally, you may not be approved for more than two AmEx credit cards in a rolling 90-day period. These rules don't include AmEx charge cards, like The Platinum Card from American Express.

-- Bank of America. You may only be approved for two Bank of America cards in a rolling two-month period, three cards in a rolling 12-month period and four cards in a rolling 24-month period.

-- Citi. Citi may approve you for, at most, one personal card every eight days and, at most, two cards every 65 days.

-- Capital One. Capital One may approve you for, at most, one card every six months. This applies to both personal and business cards.

How Can You Figure Out if You're Above 5/24?

If you're not sure whether you've already applied for five cards in 24 months, check your credit report, which includes the dates you opened each account. You can get one free copy of your report from each of the three credit bureaus every year through AnnualCreditReport.com.

"Once you can see each of your account dates, simply count up each new account you've opened in the last 24 months to determine your X/24 figure," says West. "Do keep in mind that this only applies to new credit card accounts, so things like auto loans do not add to your 5/24 count."

Some business cards aren't reported on your personal credit unless there's a problem. Business cards that aren't on your credit report likely will not count toward the 5/24 rule.

[Read: Best Dining Credit Cards. ]

Chase 5/24 Rule: What to Do if You're Denied

Looking for loopholes in Chase's 5/24 rule isn't likely to get you far. Instead, West suggests you:

-- Check that your credit report is accurate. Double-check your credit report to make sure all new accounts are, in fact, yours. If you spot an error, contact all three credit bureaus to correct the mistake immediately. Also, you can use your credit report to identify cards you hold as an authorized user and would be willing to drop.

-- Mark your calendar. The rule applies on a rolling monthly basis, says West. So you might qualify for a new Chase card as soon as next month. Add a reminder on your calendar so you can better time your application.

-- Look for targeted offers. When you're logged into your Chase.com account, you may see personal credit card offers that say, "Just for you." This is not a guarantee that you'll be approved despite your 5/24 status, but it could work.

-- Consider a different issuer. If you need a credit card, you might have better approval odds with a different issuer. But keep in mind that a new application will count toward your 5/24 status, which could make it more difficult to qualify for a Chase card in the future.

-- Wait. If the 5/24 limit is keeping you from a Chase card you really want, your best bet may just be to ride it out until the date you've calculated you'll become eligible. Avoid new credit card applications until you fall below this limit, then reapply for your desired Chase credit card.



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