Do cards opened under my LLC’s name count against my 5/24 status?

Dec 10, 2019

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Reader Questions are answered twice a week by TPG Senior Points & Miles Contributor Ethan Steinberg.

While Chase’s 5/24 rule — automatically rejecting applications of customers who’ve opened five or more credit cards in the last 24 months — is incredibly frustrating to award travelers, it’s had the unintended benefit (for Chase at least) of making Sapphire and Ink credit cards the first on many people’s wish list. TPG reader April wants to know if business cards opened under her LLC’s name will count against her 5/24 status with Chase …

Will cards opened for my LLC count against my personal 5/24 status if the cards are opened in my LLC’s name?

TPG READER APRIL

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Good question April. People spend so much time trying to carefully calculate their 5/24 status so they don’t waste an application and risk rejection. One important thing to keep in mind is the difference between cards that are restricted by the 5/24 rule (only Chase cards) and cards that count against your 5/24 status (all personal cards and some business cards).

Related: Your guide to applying for small-business credit cards

Now back to April’s question. When we talk about business cards and 5/24, it doesn’t matter whether it’s a card for your LLC that uses a business name or a card for a sole proprietorship where the business name is the same as your name. They work the exact same way here, as all small-business credit cards require your personal social security number on the application.

We’ll talk about the exceptions to this rule in a moment, but the same reason most business cards don’t count towards one of your 5/24 slots is the same reason they’re great for businesses with high expenses. Simply put, most business credit cards don’t show up on your personal credit report. When you open the account a credit inquiry will show up on your report, but the account itself (and importantly, the utilization ratio) does not. This means that your business can spend tens or even hundreds of thousands of dollars a month without it affecting your personal credit.

Because most business credit cards don’t appear on your personal credit report, they don’t show up as a new account in Chase’s system and they don’t count against your 5/24 status. Interestingly enough, this means that opening a Chase business card like the Ink Business Preferred Credit Card does not add to your 5/24 score.

However, if you open a business credit card issued by Capital OneDiscover or TD Bank, these do report to your personal credit report and count as one of your 5/24 slots. This is true whether you open it as a sole proprietorship with the business name matching your name, or as an LLC with a different business name.

Related: The best business credit cards

Bottom line

While April is right to be cautious about calculating her 5/24 standing with Chase, it doesn’t matter if she opens business cards under her LLC name or as a sole proprietor using her name for the business name. All that matters is whether she’s applying for a business card from one of the issuers (Capital One, Discover or TD Bank) who are known to report business cards to your personal credit report. If so, the card will take up one of her 5/24 slots but if it’s from any other issuer she’ll be fine.

Thanks for the question, April, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

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