“Did I hear you right?”
Yes, yes you did. I have become a fan of the Chase 5/24 Rule and it has actually improved my life and sanity. I’ll explain why below and how you can also benefit.
What is Chase 5/24? It is basically a rule that Chase implemented to mitigate business risk from potentially unprofitable customers (heavy churners, people at high risk of credit default).
The rule states that Chase will not approve you for a credit card if you have opened more than 5 credit card accounts (with any bank) in the last 24 months (rolling period). Here is a comprehensive article about it if you are interested.
Isn’t this a bad rule for churners?
Yes, but I’m not a churner and I actually advise against churning (signing up for too many credit cards at a time). I am highly strategic and focused with my credit card choices and I advise others to do the same. For example, I’ve written about the synergies you can get with certain card-pairs. In fact, I think 5/24 is a reasonable rule for both Chase and the general customers because it protects both parties. By stemming the loss from unprofitable customers, Chase can continue to provide high, uncompromised value for reciprocal customers. And we want to continue fostering the right kind of relationship with banks.
I think 5/24 is a reasonable rule for both Chase and the general customers because it protects both parties. By stemming the loss from unprofitable customers, Chase can continue to provide high, uncompromised value for reciprocal customers. And I think we should want to foster the right kind of relationship with banks.
So, how did you benefit from this rule?
As stated above, I’m already benefiting from this rule de facto because it increases the value of my relationship with Chase by pulling out the weeds. In addition, there are three distinct benefits I’ll discuss:
- Reduction of choice, especially lower value cards
- More intentional strategy
- Focus on long-term relationship
Reduction of Choice
How many of you have been in a grocery store aisle and just froze because there are too many choices? The analysis paralysis can even cause customers to leave with nothing.
If you choose to continue your credit card relationship with Chase, they have made the choice simple for you: you don’t have to think about too many other credit cards. Essentially, Chase has removed most of the products from your ‘aisle’ and you have a smaller pool of choices to pick from (since you only have 5 slots). This raises the bar on the quality and benefit of the cards you should apply for.
Several grocery store chains already employ this same tactic to help customers. Trader Joes often only offers one product per category, so instead of 10 choices and sizes for ketchup, you don’t have to waste time deciding, just pick the one bottle on the shelf.
More Intentional Strategy
The rule also helps you focus your strategy. You no longer have to evaluate too many programs. Practically speaking, I have chosen to focus on Chase Ultimate Rewards and American Express MR/SPG points. I no longer have to spend time studying the programs and terms and conditions of Citi, Bank of America, Discover, and other relatively lower value programs. Of course, this can change as programs change, but I’ll probably still focus on two or three programs max. Before Chase 5/24, I was studying six programs and getting migraines performing the cost/benefit analysis.
Again, the caveat here is that Chase credit cards work for you (if Chase doesn’t work for you, you probably don’t care about 5/24 either). But, by limiting the number of choices, you have to decide where to ‘invest’, and that helps you cut down on the number of programs you learn.
Focus on the Relationship
As with almost everything in life, it comes down to the relationship.
I think that building and maintaining long-term mutually beneficial relationships with banks is a critical part of being a responsible and sustainable travel hacker. As a long-time customer, I have more leverage when it comes to product changes, waiving of fees, and other perks. And 5/24 not only helps me further develop this relationship but also practice this kind of ethos more when it comes to all other bank relationships (and relationships period).
How can I benefit, too?
Consider the three main points that you just read and evaluate the value of Chase as a partner in your travel optimization endeavors. If sticking with Chase aligns with your strategy, then celebrate and make the most of 5/24. It is reasonable, so focus on the benefits and adjust your strategy accordingly.