The surprising reason I was rejected for a Chase Ink card

Jun 5, 2020

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While it’s not always fun to talk about, getting rejected from a credit card application is an unavoidable part of earning travel rewards. I consider myself to be a pretty savvy credit card user, and I carefully study issuer-specific application restrictions before clicking submit. But I’ve still been rejected 13 times over the last couple of years.

Oftentimes, I’ve been able to get a rejection overturned by calling the reconsideration line, but it doesn’t always work. At the very least, each rejection teaches me something new about the specific card/issuer, or the state of travel rewards as a whole. And that’s why I’d like to share with you the story of my most recent rejection for the Chase Ink Business Preferred® Credit Card, as it might help you avoid the same fate.

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A long wait to apply

 

The Chase Ink Business Preferred Credit Card has been at the top of my wish list for a while, but I’d always been ineligible to apply because of Chase’s 5/24 rule. I firmly agree with TPG Loyalty and Engagement Editor Richard Kerr that if you’re over 5/24, you shouldn’t actively wait to get back under before applying for other cards because the opportunity cost is too high. Plus, there are plenty of other good cards worth applying for now.

Related reading: The best ways to use your Chase 5/24 slots

However, living abroad limited my ability to spend in U.S. dollars on new cards, and after applying primarily for business cards over the last 2 years (which generally don’t count against your 5/24 status), I fell back under the threshold this spring.

Once I realized how close I was, I circled the date on my calendar and waited a few months until I dropped under 5/24 at the beginning of May 2020. My excitement grew even higher when Chase increased the welcome bonus on the Ink Preferred.

Now, the card offers new applicants 100,000 Ultimate Rewards points after spending $15,000 in the first three months of account opening, making it the most valuable Chase welcome bonus on the market. While $15,000 is a lot to spend in three months, I strategically planned a few tax payments so I’d be able to hit the minimum spending requirement and earn my bonus. I even waited a few weeks after I dropped under 5/24, just to give Chase’s systems some time to update.

Related reading: How to Calculate Your 5/24 Standing

May 24, an auspicious day

Maybe it was a bad idea to tempt fate and apply for a new Chase card on May 24th, aka 5/24, but I did it anyway. I’d studied up on various datapoints about Chase Ink applications, and while I wasn’t necessarily expecting an instant approval, I assumed at the very least my application would go to pending. I was shocked and disappointed when after a few seconds of processing, the system said my application had been rejected.

It took a few days for Chase to mail me a letter explaining why I’d been denied (which they’re legally required to do), and I was a bit taken aback when I saw the reason. After more than a dozen credit card rejections, you think you’ve seen everything, but never before had I seen this given as the reason for a denial:

I was dismayed, but I wasn’t ready to give up without a fight. Over the next few days, I moved about $20,000 into a Chase business checking account that I already had open. I called the Chase reconsideration line and explained that this transfer was a goodwill gesture, and that I’d consider moving more money or even some investment accounts over to Chase if my application was approved. The agent spent a few minutes reviewing my information and came back to tell me that my application still could not be approved.

Related reading: How bad is it to get denied for a credit card?

Interestingly, TPG Editor at Large Zach Honig also applied for a Chase Ink Business Preferred this month and was rejected as well. He too was under 5/24, and when he called the reconsideration line he was told that his rejection was because of his business structure, i.e. the fact that he applied as a sole proprietor which often means the business is smaller and less established than an LLC.

What happened?

Ultimately, I was a victim of bad timing, not because I applied on “5/24 day,” but because I applied in the midst of a recession. When the economy is doing well, banks are actively looking to add new customers and make more money. But when the economy slips into a downturn, banks make adjustments to mitigate risk. The last thing they want is to issue more credit to people who may have just lost their jobs and might now be a higher risk than their credit scores would suggest.

Many issuers are making adjustments to limit their downside exposure from credit cards, either by cutting credit limits on existing accounts or by tightening up the approval process for new lines of credit. Bloomberg reported earlier that American Express has pulled back on adding new credit card accounts because it’s struggling to assess creditworthiness in this turbulent economy, and we’ve seen recent changes to Chase’s lineup to help them mitigate risk.

Related reading: 5 ways the global recession is affecting credit cards and banks — and the upside for some cardholders

This means that many customers who do everything right, have high credit scores and follow all of the issuer-specific rules (like 5/24) may still get rejected for a credit card. The 5/24 rule is easy to follow because anyone can check their credit report and see where they stand, but these new restrictions are much tougher to navigate. I don’t know how much money I would’ve had to transfer to Chase to overturn my rejection ($50,000? $100,000?) or if no amount of money would’ve been enough because the bank was only looking to approve existing customers.

Should you still apply for a credit card now?

It’s going to be harder to get approved for most credit cards now, especially business cards and premium cards that generally come with higher credit limits. Still, that doesn’t mean you shouldn’t apply. While I’d never encourage you to risk an application if you have a very low chance of getting approved, at the end of the day, getting rejected isn’t the end of the world.

You’ll potentially take a roughly 5-point hit on your credit score, and you’ll have a new inquiry that will stay on your report for about 2 years. But there’s no additional penalty for getting rejected. If you decide to apply for cards now, I’d encourage you to focus on issuers where you have a pre-existing financial relationship (i.e. checking, savings or investment accounts).

Bottom line

I’ve waited years to get a Chase Ink card and it looks like I’ll have to keep waiting. Ultimately, I probably won’t reapply until the economy starts to recover. If I decide to apply for any other credit cards in the interim, I’ll be focussing on the issuers I bank with already to improve my chances of getting approved.

Featured image by Wyatt Smith/The Points Guy

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