A Beginner's Guide To Building a Credit Card Application Strategy

May 24 = 5/24. So naturally, we’re covering all things Chase 5/24 on AwardWallet today. Whether you’re under, over, or not sure what 5/24 even means, we’ve got guides, tips, and strategies to help you navigate this card application rule.

If you want to earn more points and miles, it’s important to understand the rules set by major credit card issuers. A long-term application strategy can help you make the most of your everyday spending and bring you closer to your travel goals.

Here's exactly what to know about building a complete credit card application strategy.

Why Create a Credit Card Strategy?

Banks make money from credit card fees, interest charged to cardholders, and transaction fees paid by merchants each time you use your card. In return, issuers offer generous welcome bonuses to attract new customers and ongoing rewards to encourage everyday use.

These rewards work like a rebate on your purchases. With the right application and spending strategy, you can earn a meaningful return in the form of points or cash back, which you can then use for travel or other expenses.

But it helps to have a framework before you start applying. A good credit card strategy can help you build a long-term card portfolio, prioritize the offers that fit your goals, and avoid getting rejected for cards you want later because you didn’t plan ahead.

Related: How To Plan a Long-Term Credit Card Strategy

What Banks Want in a Customer

Banks are always looking for long-term profitable customer relationships. When you open a new credit card account, the bank is betting it can offset the cost of your welcome bonus over time through annual fees, interest charges, and the possibility that you’ll use other products or services from the same bank.

Yearly spending matters, but lifetime spending matters more

Since banks earn a percentage of each transaction through merchant fees, your total spending is a key factor in how they assess customer value. But banks are in this for the long haul, so your potential lifetime spending is more critical than how much you put on your card in a single year.

Over time, your financial situation, spending habits, and card needs will change. Each bank wants to earn a place in your wallet and compete for a share of your future spending. That’s why the length and depth of your relationship with a bank can play an important role in how valuable you are as a customer.

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Getting started with the banks

One way to expand your future options is to start building relationships with banks that offer the rewards cards you may want later. For instance, you could open a checking or savings account with Chase if you hope to apply for the Chase Sapphire Reserve^® (Rates & Fees) one day. You don’t need to rush to build a relationship with every bank, but a slow-and-steady approach can put you in a better position to take advantage of new offers when they emerge.

Banks use your FICO Score and other credit factors to decide whether to approve you for a new credit card. But assessing risk and profitability using third-party information isn't an exact science. In some cases, it may be easier for a bank to evaluate someone who is already a customer.

If your credit history is limited, you might need to start with a card that isn't your first choice, like a student or secured credit card. Once you establish a record of timely payments and responsible use of your available credit, your reputation with the bank (and your credit score) will improve. Many people use this strategy to repair credit or build it from scratch.

Related: A Beginner's Guide To Building Healthy Credit

Building long-term ties

Since banks want long-term customers, you can increase your perceived value by maintaining your oldest accounts. The length of your credit history is a key factor in your credit score, so this strategy can improve your standing with other banks, too.

This doesn't mean you should never close a card, but keeping at least one account with each bank can be a good idea. Banks will generally do their part to avoid severing ties. If a card’s annual fee is no longer worth paying, you may be able to convert it to a no-annual-fee product instead of closing the account outright.

However, don't completely forget about your older cards. Banks may close a card after several months of no activity, so making an occasional purchase (even once a year) can prevent this from happening.

Most of the time, if a bank plans to close a card due to inactivity, you'll receive a notice. As long as you use the card by the closure date, the bank will keep the card open.

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What to avoid

A strong credit card strategy isn’t just about getting approved for the next card; it’s also about avoiding patterns that make banks question your long-term value as a customer.

A “churner” is someone who opens cards for the welcome bonuses, then stops using those cards afterward. If you open several cards in a short period, earn the bonuses, and then let the cards sit unused, banks may view that as aggressive behavior or gaming the system. Consequently, many issuers have rules designed to limit this type of activity.

Think of these rules as guardrails for your credit card application strategy. These policies clarify what the banks see as risky behavior. However, that doesn't mean you should get as close to the edge as possible.

Some banks, like American Express, have implemented pop-ups during the application process to let you know if you are ineligible for the advertised bonus.

If you stop to think about the value of your relationship from the bank's perspective, it's pretty hard to get yourself in trouble without realizing it. Here are a few questions to ask yourself:

• Can I explain why this card makes sense beyond the welcome offer?
• Do the bonus categories match my spending patterns and help me earn more points than I do now?
• Are the card's ongoing benefits worth more than the annual fee?

Related: The Best Rewards Credit Cards for Each Spending Category

Credit Card Application Rules

In recent years, banks have become much more sophisticated at identifying unprofitable customers. As a result, many issuers have tightened their application rules to limit aggressive bonus-chasing. While the rules can be confusing and sometimes frustrating, they also help keep rewards programs sustainable for everyone.

Each bank has its own application rules, and sometimes a single bank will have different policies for a specific card or family of cards. We explain these policies on our individual credit card review pages, and we also maintain a resource that covers the most important application rules for each credit card issuer.

In addition to the published rules you'll find on the bank's application page, unwritten rules are enforced behind the scenes. Understanding the rules you may encounter can help you build a long-term credit card application strategy. These rules may consider:

• The total number of cards you can have with that issuer
• The number of cards of a certain type you can have with that issuer
• The total amount of credit the issuer will extend to you
• Your history of applications and approvals
• The timing of applications
• Your history of closing cards
• Your history of earning welcome offers

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Total number of cards

Some issuers limit the total number of accounts you can have with them at one time. For example, Chase and Capital One both have their own rules around how many cards they’ll approve you for.

A total-cards policy forces you to prioritize. If you've reached an issuer’s limit, you may be able to close one account before opening another. But that’s not always ideal, especially if the older card helps your credit history or gives you benefits you still use.

Total credit limit

Another rule limits your total available credit. For example, Chase doesn't necessarily care how many of its credit cards you have. However, it sets a maximum credit amount that it will extend to each customer. If Chase were to extend you $30,000 in total credit, you might be able to split that credit between two cards or six cards.

This is an unwritten rule that varies by customer and can change over time. The good news is that this type of restriction can be pretty flexible. If you established a relationship with a bank when your income was $25,000, and your income is now $80,000, a simple update of your profile might automatically increase your credit limit. Or, if you've bumped up against your total credit limit, you may be able to move your line of credit from one account to another.

Timing of applications for credit card strategy

Some banks restrict the number of applications they'll approve in a certain timeframe. For example, Citi will only approve one card in any eight-day period and only two personal credit cards in a 65-day period. Even slower: Citi approves only one small-business card per customer every 90 days.

Many credit card issuers have application-frequency restrictions. If you plan to apply for multiple cards with the same bank, it’s worth doing your homework first so you don’t waste an application.

History of applications

You might not be approved for a new card because you have too many recent applications. This may sound similar to application-timing rules, but here we're talking about your application history across all issuers.

Applying for multiple credit cards in a short period makes a borrower appear riskier to lenders. Each application results in a hard inquiry on your credit report, which can temporarily lower your score. Multiple hard inquiries in a short period can have a larger impact and may hurt your approval odds. In general, it’s best to spread out applications over time.

The key thing to understand is that this type of rule isn't entirely dependent on your credit score. Even with excellent credit, you might still be denied because you have too many recent applications.

You also may not find this kind of rule in the offer terms. Instead, we often rely on data points from people who asked why they weren’t approved and shared their experience with the community.

Number of cards

Some banks will not approve a new account if you’ve recently opened a certain number of cards. Unlike application-history rules, unsuccessful applications won’t hurt you in this case.

The most well-known example of this rule is Chase’s 5/24 policy. Chase won’t approve you for a new card if it sees five or more new credit card accounts on your credit report from the past 24 months. Business credit cards are often exempt from adding to this count because many don’t report to your personal credit report. However, other types of accounts may sometimes appear in a way that affects your count, such as financing for a medical procedure, furniture, or new appliances.

Other credit card issuers are less specific about the number, but they may still be sensitive to how many new accounts appear on your credit report.

Related: How To Check Your Credit Score for Free

History of closing cards

Sometimes closing one account can affect your eligibility for another from the same issuer — especially if both cards belong to the same rewards family. For example, once upon a time, Citi wouldn't approve you for a ThankYou^® Rewards-earning card if you’d earned the sign-up bonus or closed any card in the family in the past 24 months.

That Citi policy is no longer in effect, but the takeaway still applies: Closing an account can have long-lasting effects at some banks. In some cases, you might remove a whole family of cards from your options for years. The good news is that if you know about the rule ahead of time, you may be able to adjust your sequencing and apply for the new card before closing the one that could trigger a waiting period.

Generally, converting a card to a different product won't count as closing an account. If you're stuck with a card that isn't a good fit anymore, call the bank to see if you can switch to a different one. Because banks value long-term relationships, many will let you downgrade to a card with no annual fee.

You also may be denied if the bank believes you regularly close its cards and aren't a valuable, long-term customer.

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History of earning a welcome bonus

Lastly, you might be denied a lucrative welcome offer if you don't meet certain eligibility criteria. That can be the case even if the bank still allows you to open a new account.

A strict example is Amex's “once-per-lifetime” policy. If you've earned a welcome offer on a particular card in the past, you won't be eligible for another welcome offer on that same card. During the application process, you may see a pop-up message stating that you can apply for the credit card, but you won't receive the welcome bonus.

Other issuers require a specific waiting period, which should be clearly stated in the offer's terms and conditions. For example, you might see language like this:

“This new cardmember bonus is not available to either (i) current cardmembers of this credit card, or (ii) previous cardmembers who received a new cardmember bonus for this credit card within the last 24 months.”

Some banks that offer multiple cards under one co-branded family, like Amex's Marriott credit cards, have rules limiting the number of bonuses you may earn within that brand.

Importantly, these restrictions usually apply to when the bonus was received, rather than when you opened the account. The spending period for a welcome offer can range from three months to one year, so make sure you keep track of the dates when you received a bonus. If you're not sure, you can ask the bank.

Finally, double-check the terms and conditions on the cards for which you earned a bonus in the past. If “lifetime” language isn't present, you're more likely to receive the bonus.

Building a Credit Card Application Strategy Step-By-Step

Now that you know what the banks are looking for in a customer, and which application pitfalls to avoid, here's how to build your own credit card application strategy:

• Determine where you stand. Start by evaluating your current position. Check your credit score, determine how many credit accounts you've applied for in the past 24 months (if any), and list out your current credit cards (and which welcome bonuses you've earned) to identify cards you might be ineligible for.
• Define your goals. Do you want to earn cash back or transferable rewards? Are you hoping to book a first-class long-haul flight and stay at a five-star resort, or do you want to backpack and stay in hostels? Or do you simply want to maximize the return on your everyday spending?
• Start building relationships. It's never too early (or too late) to start building relationships. If you don't have an existing relationship with a bank and your credit score isn't the best, consider opening a checking or savings account to establish one.
• Map out rules for your target cards. Once you know your goals, you can determine which credit cards help you reach them. Then identify which rules and restrictions apply to these cards, from welcome bonus eligibility to application-timing restrictions.
• Set your application strategy. With this information, you can determine how and when to apply for future cards. You might prioritize a card with a limited-time welcome bonus or one that offers a better return on everyday spending. Or, if you’re close to Chase’s 5/24 threshold, you might apply for a Chase-issued card first. As a general guideline, try to space out applications by six months to give your credit score some breathing room and ensure you have enough time to earn each welcome bonus.

Once you build a robust portfolio, remember to manage your accounts effectively. Keep your accounts open and lightly active, pay your balance in full by the due date each month, and track your benefits so you use all your perks before they expire. Luckily, you don't have to do that for yourself. Signing up for an AwardWallet account helps you keep all your accounts and benefits in one place.

Don't have an AwardWallet account yet? Sign up for free and track unlimited rewards programs and travel plans.

Final Thoughts

Earning points is a marathon, not a sprint. A thoughtful, steady approach can help you build healthy relationships with banks, avoid unnecessary denials, and stay ready for great offers when they come along.

Over time, you'll build a portfolio of credit cards that offer a great return on your regular spending and benefits that far exceed the cost of their annual fees.

For rates and fees of the cards mentioned in this post, please visit the following links: Chase Sapphire Reserve^® (Rates & Fees)