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Not knowing the ropes of the credit card rewards hobby can cost you dearly. While even seasoned veterans can make mistakes, if you're just starting out, you want to make sure you get things right early on. Key among the things you should understand is the Chase 5/24 rule.
This rule plays heavily into an overall points-earning plan. It's important that you develop a solid Chase credit card strategy from the beginning. If you don't, you could end up leaving tens — likely hundreds — of thousands of points on the table. And this is real value you'd be passing up.
In this article, we'll show why starting with Chase cards is the best approach for your credit card strategy if you're new to points and miles.
How Much Could a Bad Chase Credit Card Strategy Cost You?
In short: It could cost you a lot. As an exercise, let's suppose you've just been introduced to credit card rewards. You're excited and eager to select some cards to help cut costs on two upcoming trips.
You see an offer of 50,000 miles on the AAdvantage® Aviator® Red World Elite Mastercard®. It's an easy bonus to earn, since you get it after making your first purchase and paying the annual fee in full, both within the first 90 days. Who wouldn't jump on such an offer?
Then, you notice the Citi® / AAdvantage® Platinum Select® World Elite Mastercard®. Pairing these two offers together makes a lot of sense, at least on the surface. This card currently offers 60,000 bonus miles. Between the two, that's a lot of American Airlines miles. You'll be able to book flights to Europe and to the Pacific Northwest — the two trips you want to take this fall. Things are looking up.
Now, you realize you need some hotel points. You identify the IHG One Rewards Premier Credit Card and the Hilton Honors American Express Surpass® Card as the best options for your trips. With the IHG One Rewards Premier Card, you'll earn 140,000 bonus points after spending $3,000 on purchases in the first 3 months from account opening.. Earn 130,000 Hilton Honors bonus points on the Hilton Surpass after you spend $2,000 in purchases in the first 3 months of Card Membership.
Those two offers will take care of most of the lodging for your trips.
Lastly, you decide a cash-back card would be great to help pay for trip incidentals. The Chase Freedom Unlimited® seems like a great choice, offering 1.5% cash back on everyday purchases and no annual fee. Plus, you'll get an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back.
The downside of short-term thinking
You apply for the first four cards in May 2023, then the Freedom Unlimited a couple months later. Great news! You're approved for all of them and meet the spending requirements on all of these cards to earn the welcome offers. Here's what you took home with the current welcome offers:
- 120,000 American Airlines miles from the Aviator Red and the AA Platinum Select
- 140,000 IHG points from the IHG One Rewards Premier Card
- 130,000 Hilton Honors bonus points from the Hilton Surpass
- $200 in cash back from the Freedom Unlimited
Using a value of 1.5 cents per AAdvantage mile and the value AwardWallet members generally get for their hotel points, this is about $3,500 in total rewards. Not bad at all.
But there's a catch. Although you've cut the cost of the trips you wanted to take this year, you've blocked yourself out of any more Chase cards for the foreseeable future. And this isn't good.
Build Your Credit Card Strategy Around Chase 5/24
You see, based on the hypothetical situation you placed yourself in, you now can't get any more Chase cards until around May 2025. Ouch. This is because of the limitations of the Chase 5/24 rule. If you want a full rundown on the policy, check out our 5/24 guide. In a nutshell, Chase limits the number of cards it will approve you for based on the number of new accounts you've opened across all issuers.
Since you've picked up five new personal cards in the past few months, Chase will not approve you for any more until these new accounts age on your credit report. This process takes 24 months. Chase offers a great array of travel rewards cards. 24 months a long time to forego any new Chase cards.
What does this mean? If you're under 5/24, every personal credit card you open with another lender is a potential Chase card you just gave up. This has massive implications for your overall credit card strategy.
A better Chase credit card strategy
Rather than jumping on the first offers that catch your eye, plan for the long term. This may mean foregoing great card offers. But you're looking for more points later, rather than all of them now.
As an alternative scenario, you could have opened:
- Chase Sapphire Preferred® Card: 60,000 bonus Ultimate Rewards points after you spend $4,000 on purchases in the first 3 months from account opening.
- IHG One Rewards Premier Credit Card: 140,000 bonus points after spending $3,000 on purchases in the first 3 months from account opening..
- United℠ Explorer Card: 60,000 bonus miles after you spend $3,000 on purchases in the first 3 months your account is open.
- Marriott Bonvoy Boundless® Credit Card: Earn three bonus Free Night Awards after you use your new Card to make $3,000 in purchases within the first 6 months of Card Membership. Redemption level up to 50,000 Marriott Bonvoy® points for each bonus Free Night Award, at hotels participating in Marriott Bonvoy®. Certain hotels have resort fees.
- Chase Freedom Unlimited®: Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back.
Based on AwardWallet users' average redemption values (and using a conservative value of $200 per free hotel night), the overall value you'd get from these cards is actually greater — somewhere around $4,200. But two things would have happened:
- You would need to space out applications more, as you can't get approved for all five cards around the same time. This means you may not have been able to book the airfare and lodging for your upcoming trips using only points and miles. This depends on how far in advance you're planning and how quickly you earn the welcome bonuses.
- You wouldn't be able to jump on any other great card offers that come up.
These are both negatives, for sure. However, after being approved for these five cards, you could then apply for the non-Chase cards you originally wanted. This gives you more points and miles over the long term.
Here's the key takeaway: If you're under 5/24, prioritize Chase credit cards.
Related: How Does a Credit Card Signup Bonus Work?
What about business credit cards?
There is a bright side to how Chase determines your 5/24 count: Many business credit cards with other issuers don't count against your Chase 5/24 total. However, you need to be under 5/24 to apply for Chase business cards — though they won't add to your 5/24 count.
Our Chase 5/24 guide covers which business credit cards do and don't count toward this number, so make sure you check it out before applying. The main thing you need to know is this: If you have a small business, you may be able to pick up business credit cards without affecting your Chase 5/24 status.
Related: Am I Eligible for a Small Business Card?
This means you could pick up cards like the Delta SkyMiles® Gold Business American Express Card or the AAdvantage® Aviator® World Elite Business Mastercard® without reducing the number of Chase cards you can get. These cards don't add to your 5/24 status, which means you could still get five Chase cards. Plus, you can select from Chase's great portfolio of business credit cards.
So, let's update our takeaway: If you're under 5/24, prioritize Chase credit cards and only consider business cards with other issuers.
What if I'm already over 5/24?
A lot of us are in this boat. If you're well over 5/24, you'll need to decide whether it's worth foregoing other offers or not. Often, it depends on the time you need to wait until you drop back under 5/24.
The long-term thinking here is to go in phases. If you're under 5/24, pick up the Chase cards you can. If you're over 5/24 and won't drop back under 5/24 for a while, pick up some cards from other issuers. After all, the opportunity cost of holding off on card applications to get back under 5/24 can be huge.
If you're close to dropping back under 5/24, focusing on business credit cards and/or upgrade offers on your current cards can help you continue to earn points until you're back under 5/24. You can time this around the various application rules and restrictions for card issuers.
Final Thoughts
I've made poor decisions at times with my card application strategy, blocking myself out of the opportunity to get Chase cards in the process. It took some discipline for me to lay off new personal applications a few years ago, but I finally managed to drop back under 5/24. And it paid off. I was able to get three new Chase credit cards I had wanted for years. Since then, I've been free to apply for others. However, I'm back to considering dropping under 5/24 once more.
We cannot emphasize it enough: If you're under 5/24, prioritize Chase credit cards. Ignoring Chase can be costly, as we've shown. Crafting a long-term credit card strategy is important. It might feel nice to earn a bunch of miles in short order, but you'll pay for it in the long run.
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