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Why now may be the best time to get under the Chase 5/24 rule

Dec. 23, 2020
7 min read
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Editor’s note: This is a recurring post, regularly updated with new information.

There’s really no other way to sugarcoat it -- COVID-19 has caused an unprecedented calamity to the travel industry. The pandemic has ruined millions of planned vacations, while a global recession has negatively disrupted people’s financial lives and left the travel industry reeling.

As a result, consumers are spending much less on their credit cards and new card applications were down a whopping 40% from the first week of March to the last, according to the Consumer Financial Protection Bureau (CFPB). Chase, the second-largest credit issuer, has even provided select cardholders with a three-month extension (six months total) to help them meet minimum spend requirements on sign-up bonuses during these tough times. But as far as Chase’s 5/24 limitation—wherein any applicant that has opened five or more cards (from any bank) in the last 24 months will be denied, no 5/24 leniency has been demonstrated by Chase during this pandemic.

With travel mandates still in place and stay-at-home restrictions in several states, now may be the best time to save your credit hard inquiries and strategize a plan to fall under Chase’s 5/24 rule. We take a look at additional reasons why now may be the best time to work towards eligibility below Chase’s 5/24 rule.

Related: Chase’s 5/24 rule: Everything you need to know

Get back in their good graces

Chase officially created the 5/24 rule in 2016 to prevent people from opening Chase credit cards merely for the sign-up bonus. Prior to implementing the 5/24 rule, Chase had no internal hard rule limiting how many cards you could be approved for. Today, Chase has arguably the most desired credit card portfolio on the market.

This year, thanks in large part due to the economic downturn caused by the coronavirus pandemic, Chase has pulled some card product applications. If your strategy is to rack up several sign-up bonuses from credit card applications annually, now may be a smart time to take a break from card applications, given Chase’s approach to tightening approval odds.

As difficult as it may be to bypass an enticing sign-up bonus, slowly limiting the number of new accounts opened now may ease the burden of trying to get below 5/24 later on. This way, when and if a generous sign-up bonus such as the current 100,000 points offer on the Chase Ink Business Preferred Credit Card after spending $15,000 in the first three months of account opening, returns in the future, you’ll be eligible for the bonus.

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No colossal sign-up bonuses

Sure, there’s always decent credit card sign-up bonuses, such as the current Chase Sapphire Preferred Card bonus of 80,000 points offer after spending $4,000 in the first three months from account opening plus a $50 statement credit on groceries, or 50,000 miles after spending $3,000 in the first three months of account opening on the Capital One Venture Rewards Credit Card, but these aren’t the most jaw-dropping offers we’ve ever seen.

Although there’s no Magic 8 Ball predicting any upcoming sky-high credit card offers, it may be wise to sit tight and pounce on a big-time sign-up bonus later. The exception for this reason would be a targeted offer too appealing to pass up. With a significant decline in economic activity spread across the economy and people taking a hit financially, credit issuers may be wise to wait until post-pandemic to bring back big welcome offers.

Related: 9 cards currently offering sign-up bonuses of 100,000 points or more

Limitation on award redemptions due to travel restrictions

I’m itching to get back on a plane as much as anyone but for the time being, I have persevered through local road trips in my state. I may or may not have had a few dreams of a week-long uber-posh retreat at a private island while homeschooling my twins. Trust me, I get it.

Related: 5 things I noticed about how flying has changed since the pandemic

But in reality, Americans are choosing a ‘nearcation’ rather than flying during this pandemic or taking luxury trips. In fact, 97% of consumers are overwhelmingly choosing a car as the preferred mode of transportation on their next vacation according to AAA. With so many travel restrictions and imposed lock-downs still in place all over the world, there are severe limitations to when and where you can travel. Now may be the best time to save your award redemption (and credit applications) for when travel restrictions are eased at home and abroad.

Related: 5 lessons learned from taking a road trip in the age of coronavirus

Spending plan for current cards in your wallet

There may not be a better time to strategize a plan of earning cash back, miles or points—then now with your current credit cards. Because of COVID-19, you may not be redeeming your points and miles but you likely are earning them. With travel expected to resume at some point, you may want to strategize a spending plan with your existing cards to prepare for when travel universally restarts again.

One man paying at the grocery checkout
As opposed to many travel perks, most issuers are switching up how you earn and letting you do so in categories including grocery shopping. (Photo by Tempura/Getty Images)

Analyze your current stash of points and miles, and take into account bonus categories and limited-time perks from the cards you already have in your wallet. Review any cobranded airline or hotel cards to determine if they bring you enough value to justify the annual fee cost. Brand-specific cards are limited to only earning miles or points from one brand and lack the flexibility and usefulness of valuable transferable points cards such as the Chase Sapphire Preferred or American Express® Gold Card.

Rather than apply for new cards and revert on the plan to fall below Chase’s 5/24 rule, you may want to consider redistributing your spending plan on everyday purchases and use flexible points-earning cards already in your wallet.

There is no rush

A Cathay Pacific business class seat on the Airbus A350-1000. (Photo by JT Genter/The Points Guy)
A Cathay Pacific business class seat on the Airbus A350-1000. (Photo by JT Genter/The Points Guy)

If you, like me, had your big summer trip ruined due to COVID-19, you’re likely looking at 2021 or even 2022 to attempt a re-do. Since I already accrued the miles needed to fly my family and me to Southeast Asia in style, I am in no rush to accrue more of the same. With a bleak outlook on travel plans for 2021 and beyond, accumulating miles and points may not be a priority for you right now. Rather than rush to apply for a new card, utilize your current rewards stash to redeem for future travel. By contrast, you could also focus on utilizing one of the best cash back credit cards for everyday purchases given the current state of uncertainty with loyalty programs in the travel industry.

Bottom line

The coronavirus pandemic has put a halt on travel and an abrupt slowdown on credit card applications. With restricted credit card offers and limited opportunities to redeem your points and miles for travel, this downtime is the ideal opportunity for you to fall under Chase’s 5/24 rule. When global travel picks up again and credit issuers rebound with generous welcome offers again, you’ll be ready (and eligible) for that enticing Chase credit card.

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.