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The Critical Points: Stop Waiting to Be Under 5/24

Aug. 03, 2018
8 min read
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Each month in his column "The Critical Points," TPG Senior Points and Miles Contributor Richard Kerr presents his opinion on a loyalty program, card product or recent news that he believes is overlooked, unsung or the result of groupthink taking mass opinion in a direction with which he doesn't agree. His goal is not necessarily to convince you to agree with his position, but rather to induce critical thought for each of the topics and positions he covers.

In 2015, Chase began to lose millions of dollars in customer acquisition costs. People were collecting sign-up bonuses on new credit cards — and redeeming for more value via partner transfers — only to quickly cancel the card, leaving little profit in the equation for Chase. To try and stem this behavior, Chase — at first quietly — instituted its now infamous 5/24 rule.

Time and time again I hear from readers, points enthusiasts and friends about how many months they have left to once again be under 5/24. I don't believe this countdown makes sense. The opportunity cost of waiting up to two years to apply for another credit card(s) in order to pick up a single Chase card — one that's subject to 5/24 — is far too high. Instead, you should look to other issuers and products to continue your points and miles hobby while solidifying your relationship with Chase, thus ensuring a long-term relationship with the very valuable Ultimate Rewards program.

Do Your Homework, Then Don't Wait

There's a list of core Chase credit cards that I believe every award traveler should acquire. Once you have these cards — all of which are subject to 5/24 — there shouldn't be a reason you need to drop below 5/24. These cards include...

  • Chase Sapphire Preferred Card or Chase Sapphire Reserve
  • Chase Freedom (No longer open to new applicants)
  • Chase Freedom Unlimited
  • Ink Business Preferred Credit Card or Ink Business Unlimited Credit Card
  • United Explorer Card or United Club Card (and/or business versions)
  • Substitute any two of the above cards with the Chase Southwest Rapid Rewards Premier/Plus/Priority and business card if you're in pursuit of a Companion Pass
  • Substitute for any of the co-branded cards that seemingly became subject to 5/24 in November 2018, such as The World of Hyatt Credit Card or the IHG Rewards Premier Credit Card

Of course, this means you have to start your credit card applications with these Chase products. This initial acquisition phase is where the majority of beginners fail, generally only course-correcting in time to utilize between one and four of their 5/24 slots. But even with only three or four out of the above five suggestions in hand, you shouldn't wait to be below 5/24 to continue on in your award travel pursuits.

Why? Because if you wait 12 to 24 months without acquiring a new credit card in order to pick up one or two Chase cards, the value of the sign-up bonuses and ancillary benefits you've passed up far exceeds the value of those one (or two) Chase sign-up bonuses.

Case Study

If you already hold either variety of the Sapphire cards plus the Freedom cards, in my opinion the most valuable sign-up bonus you're going to forego by being over 5/24 is the United Explorer Card bonus. The bonus is between 40,000 and 70,000 miles depending on the time of year, plus the card comes with benefits like expanded award availability. I'd value the card and bonus between $1,000 and $1,400 in the hands of an experienced award traveler.

That would mean a person over 5/24 would, at most, be putting further sign-up bonuses and ancillary benefits on hold for $1,400. But with one to three card applications from banks other than Chase, you could easily exceed the value of the United Explorer. So why wait two years for $1,400 when you can have equal or more value today?

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What if you don't have a Freedom, Ink or Sapphire card and you're above 5/24? In that case, you're in such a vast minority that it could make sense to hold off and wait to be below 5/24 in order to gain access to transferable Ultimate Rewards. However, I would love to speak with you to understand how you applied for that many cards without reading about Chase cards and Ultimate Rewards.

Chase Will Drop Unprofitable Customers

It's largely known that in 2018, if you try and game Chase, the issuer has the ability to identify your accounts, flag them for review and possibly close some or all of your cards. Most of the time these account reviews and closures happen because of cycling credit limits, putting very large initial spend on new cards that doesn't match your information from the card application or applying for too many Chase cards in a short time frame. Even long established accounts can be flagged when applying for Chase cards that are not subject to 5/24.

These recent reports about Chase shutting down accounts have given me further incentive to value the current cards and accounts I have with Chase and not further test the waters with a bank which, by all reports, is not currently gun-shy to terminate relationships. I want to utilize Chase Ultimate Rewards 15 years in the future. To me, that means while the current climate could lead to scrutiny and reviews, it's best not to consider new Chase cards in my credit acquisition plan and ignore 5/24 altogether.

As long as you ensure you own a Chase transferable points card (Preferred, Reserve, or Ink) and one flavor of Freedom (preferably the Freedom Unlimited for all non-bonus category spend) you'll have the tools you need for long-term, sustained Chase Ultimate Rewards-funded award travel.

Look to These Banks Instead

Followers and readers routinely tell me they've run out of credit cards to sign up for and should just wait to be below 5/24 to sign up for another Chase card. After six years of applying for cards on an as-needed (and sometimes speculative) basis, I assure you I've yet to see a light at the end of the tunnel when it comes to valuable cards to hold.

When readers first tell me they're out of cards to apply for, I'll ask if they've acquired any of the following products which hold significant value and don't require you to be below 5/24 (issuing banks in paranthesis):

  • Cathay Pacific Asia Miles Visa Signature (Synchrony Bank)
  • U.S. Bank Altitude Reserve Visa Infinite Card (US Bank)
  • Alliant Credit Union Visa Signature (Alliant Credit Union)
  • Crystal Visa Infinite Credit Card (Crystal National Bank)
  • Bank of America® Premium Rewards® credit card (Bank of America)
  • Wells Fargo Propel American Express® card (card no longer available)
  • Wells Fargo Visa Signature® Card (Wells Fargo)

Usually the response is they don't hold any of the above cards and have done little to no business with the issuing banks. Yet those seven credit cards only scratch the surface of the incredible value possible outside of the banks and products that are popular among the public.

Bottom Line

First, make sure you understand all the intricacies of 5/24 before proceeding in your award travel goals and card applications. Then, apply for the core Chase products which will help you reach your next goals. Once you have those core cards — or if you're already above 5/24 — stop foregoing the value month after month from other cards and banks — many who have less strict approval rules — just for the chance to acquire a Chase card subject to 5/24.

Of course, if you're less than three months away from being under 5/24, then sure, let common sense apply and continue the wait. But if you have the core Chase cards and are waiting six months or more, stop. I like to think of the Chase cards I currently hold in the famous words of infomercial star Ron Propeil — "Set it, and forget it!"

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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