Flying under 5/24

In the post, “Breaking 5/24,” I described a number of ways in which it might be possible to get approved for Chase credit cards despite having signed up for 5 or more new cards in the past 24 months.  So far, reports of success have been mixed.  Another option, of course, is to stay under the limit.  Luckily, there appears to be a way to do so without giving up all of those great signup bonuses…

Flying Under 5-24

What is the 5/24 rule?

In a nutshell: if you apply for a Chase credit card, they may deny your application due to having opened 5 or more credit card accounts in the past 24 months.

In the past year or so, Chase has frequently denied applications for certain cards (Freedom, Sapphire Preferred, and Slate) due to having 5 or more new credit card accounts (with any bank) in the past 24 months.  That means that anyone who regularly signs up for credit cards in order to earn points & miles is likely to be denied when they try to sign up for these cards.  And now, according to Doctor of Credit, the rule applies to far more cards than before.

Authorized user cards count too

It’s important to note that Chase’s 5/24 rule includes accounts in which you are an authorized user.  For example, if you haven’t signed up for any cards in the past two years, but five people recently added you as an authorized user to their accounts, you might not get approved for a new Chase card due to having 5 or more new accounts in the past 24 months.

For more about authorized user cards, please see: The Chase authorized user dilemma for 2 adult households.

The Trick

A couple of days ago Million Mile Secrets revealed a simple trick that should work for those hoping to stay under the 5/24 limit while still applying for new cards.  Million Mile Secrets reminded readers that most business credit cards are not reported on personal credit reports.  In fact, according to Doctor of Credit, the following banks do not report business accounts to the personal credit bureaus:

  • American Express (except for Canadian Amex)
  • Bank of America
  • Barclaycard
  • Chase
  • Citi
  • US Bank
  • Wells Fargo

However, Doctor of Credit says that the following banks do report business cards on personal credit reports:

  • Barclaycard
  • Capital One
  • Discover

So, the trick is simply to focus applications on business credit cards from the six banks listed above that do not report them to the personal credit bureaus.

What about Chase’s own business cards?

Even though Chase business cards don’t show up on your personal credit report, Chase can obviously see that you have those cards.  And, according to this Flyertalk Wiki, Chase does include their own business cards in the 5/24 count.  If that’s correct, then to stay under the 5 card limit, it is necessary to avoid Chase business cards as well.

Flying under 5/24

Wow!  I didn’t previously think there was any reasonable way for those of us who sign up for lots of cards to stay under the 5/24 limits, but now I think it is possible.  A simple approach is to focus primarily on those cards that do not get listed on personal credit reports.  This would leave you free to sign up for one personal card every 6 months or so without ever hitting the 5/24 limit!  Of course, it is also important to avoid being added as an authorized user to any personal cards (or remember to count those towards your limit if you really need them).

Yesterday I scoured through my and my wife’s credit reports to see if our business cards really didn’t show up.  And, as expected, it was true!  I can personally verify that the following bank business cards did not show up on our credit reports:

  • American Express business charge cards
  • American Express business credit cards
  • Bank of America
  • Chase
  • Citi
  • US Bank

Other benefits

When you apply for business credit cards, banks do issue hard inquiries that appear on your credit report.  And those do have a small short term negative impact on your credit score.  That said, when business cards do not show up on your credit report they won’t hurt your average age of credit (good!), and they won’t impact your credit utilization (this can be good or bad, depending upon how much spend you put on these cards).

Regarding credit utilization: Usually, signing up for new cards helps your credit score in the long run by making more credit available.  This way, if your spend remains constant, your credit utilization ratio gets lower and you get a better score.  If you plan to spend a lot more than before, though, the spend can hurt your utilization ratio and would therefore hurt your credit score.  With business cards that don’t show up on your credit report, neither happens: your available credit does not appear to be larger and spend put on the card is not reported.  For those who manufacture spend, this is an obvious big plus, but for others it may be a small negative.

Are you eligible for business cards?

You must have a business to apply for business cards.  That said, its not uncommon for people to have businesses without realizing it.  If you regularly sell items on eBay, for example, then you have a business.  Similar examples include: consulting, writing (e.g. blog authorship!), handyman services, owning rental property, etc.  In any of these cases, your business is considered a Sole Proprietorship unless you form a corporation of some sort.  If you want to keep things simple, you can use your own name as the business name and your own social security number as the business Tax ID.

Finding business card Best Offers

To help people find credit card offers, I usually point them towards my Best Offers page.  In this case, though, I created a new page that filters the Best Offers to just the business card offers:

Best Business Card Offers

Note that I did not remove Barclaycard, Capital One, or Discover (the banks that do report business cards to the personal credit bureaus) since that would be confusing for those who visit the page without intent to fly under 5/24.

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

More articles by Greg The Frequent Miler »

Pingbacks

Comments

  1. Recently applied for the Mileage Plus Business card. Got denied and letter stated “too many new accounts within past 24 months.” I called and was again denied. Sounds like the rule applies to business cards, even if those inquiries don’t show up?

    • Right, so:
      1. Chase does apply the rule to business cards (making them harder to get if you’re over 5/24)
      2. Business card inquiries do show up on your report
      3. Business card new accounts do not show up (for the banks listed)

  2. Does this apply only to open accounts? Would it work if you closed (and removed youself as AU from) enough accounts such that you you have less than 5 open accounts under two years old?

    • You can close an AU account and contact each bureau to remove it from your report. With regular accounts, though, I believe they stay on your report for 10 years after closing them so that won’t help.

  3. So here’s the important, unanswered, follow up question:

    What if someone signs up for some of these business cards, and later wants to sign up for a Chase business card? For that, will Chase review the applicant’s business credit report (and if over 5/24, decline)?

      • So let’s say I’m at 4/24 – then in theory I could apply for 3-4x Chase business cards over the next few months? And as long as I’m applying to business cards, I won’t hit the 5/24 rule?

        • Nope, wrong, Chase can, of course, see their own new business cards and count them among the 5/24. Only cards from other banks are not counted.

  4. If you’re applying for a Chase card that the 5/24 applies to, they can and will be able to see your Chase business cards in the past 24 months, and they will hold them against you.

    • That’s true that they can see the Chase business cards, but we don’t yet know if they count them towards 5/24. My guess is that a computer process simply counts the new accounts on your credit report and rejects your application if you have 5 or more in the past 24 months. If you can pass that gauntlet, then the rest is probably determined by agents who may or may not hold them against you (and might be open to recon call arguments).

  5. Wrong!!! Chase does look at your business cards with them, even if they don’t post them to your credit report.
    I asked a personal card reconsideration person a while back and they said chase based their CL for customers on total credit extended through BOTH business and personal cards. They pay attention to the income stated on applications and are only willing to extend 60% of the total, she actually said that was the max and that they like to keep it at much lower levels..this included personal AND business limits, and she had access to all of my profiles and cards on her screen….since they tend to give me way too high limits on my business cards, I found success for a new app of either kind was easier if I had the credit limit lowered on those and waited until it hit their system. They treat personal and business products separately and have 2 different divisions, so lowering a business card limit with a personal card rep is impossible, and the first time I had to cancel a personal card to make room for another….then after lowering limits on 2 business cards I was able to get instant approval on my next personal app….so they may not post on your report, but chase sees all your chase cards and limits….they used to only care about your ability to pay.

    • That’s right. I didn’t mean to imply that Chase couldn’t see your Chase business cards. Nor did I mean to suggest that it wouldn’t count against you if you have lots of recent Chase business cards. However, my best guess (and I admit it is just a guess at this point) is that the specific 5/24 rule only looks at the cards on your report.

      • Nope, in the flyer talk 5/24 thread, there are reports that Chase business cards were counted against the 5/24. Their computer pretty muchas to check you against their records to make sure they aren’t advancing you to much credit. You can get the same business card for multiple businesses, so if they did not check, you could have dozens of cards that would not be counted against their total outstanding with them.

  6. How does Chase count AUs for the 5/24 rule? Is it based on the day you were added as AU or based on how old the card you’re being added to is? I was recently added as AU to a very old card.

    • It is based on how it appears in your credit report. In a few examples that I looked at, the open date was when I was added as an AU, not when the card was originally opened. I don’t know if all banks report it this way, though.

      • It was an American Express card that I was added as an AU for.

        Chase checks Experian to count how many cards you have newly opened, right? I should probably order a report then to find out.

  7. Applied for Ritz Carlton before the 5/24 rule went onto effect, but have to send veri proof (ssn). Will my app be affected by this rule?

  8. Could someone give some clarifications: I thought the 5/24 is for applications even if those applications resulted in denial for a new credit card. For example, if you applied for 15 new cards from other banks but only 1 got approved, Chase will still deny you. So, wouldn’t applying for 15 cards still result in 15 or fewer credit inquiries that the banks will see?

    • The 5/24 rule only applies to new accounts that have been established. Denied applications do not increase the number of new accounts you have. But, denied applications will increase the number of hard inquiries on your credit report, and Chase (or any bank) may deny your application for having too many recent hard inquires, but that is not related to 5/24

    • I mean if you apply for 15 business cards using your social security number and only 1 got approved, wouldn’t there still be 15 or fewer credit inquiries in your credit report?

  9. If I currently have a Chase Southwest Business card, but apply for another under a different business name, what are the chances for approval

    • It is possible to be approved for two of the same business cards for two different businesses, unlike AMEX, which restricts cards based on the principal of the business.

  10. Trying to get a little clarification: Do the AU’s count at part of the 5 cards limit if those accounts are older that two years? or do all AU’s added count regardless of the age of the account? Here’s an example of the distinction:

    Let’s say my friend add’s me to his Citi account that has been open for 5 years. This AU card would report on my account as being open for 5 years, thus circumventing the 5/24 rule (because the card is reporting 5 years of activity). I believe the only major bank that reset’s the clock with an AU added is Amex since they start the calendar over for an AU regardless of how long the primary holder has had the account. Am I wrong? Any data points?

  11. Be aware that most consumer protections, such as the CARD Act, don’t apply to business cards. Not really a big deal if you only plan to keep the card long enough to get the bonus.

  12. UPDATE
    I added a section to the post speculating that Chase business cards may in fact count against the 5 new card limit.

    As Farnorthtrader pointed out, the FlyerTalk Wiki (I linked to it in the post) states that Chase business cards count. I was hoping to find actual evidence of this in the forum, but the forum is huge and filled with mostly irrelevant data points.

    So, personally, I still consider this to be an open question, but it is safer to assume that Chase business cards affect the 5/24 count just as personal cards do.

  13. I applied and was approved for the Ink a few months ago. The card itself doesn’t show up on my personal credit report, but the hard pull when I applied does. Wouldn’t they be able to see that?

    I might not be the best example because I applied for the Sapphire Preferred on the same day and that shows up as a separate hard pull, despite everybody saying Chase combines hard pulls if you apply for more than one card on the same day.

    • Chase can see your Chase business accounts, just not your business accounts from other banks. That doesn’t necessarily mean that they count the Ink card towards the 5/24 rule, but a FlyerTalk Wiki states that they do. So, yes, Chase probably will count you as having at least two new accounts (Sapphire Pref and Ink), but not because of the hard inquiries.

  14. In the past 24 months I applied for and received the Amex Platinum, BoA Alaska Airlines, Hyatt, IHG, and United Airlines (AU) and just got the 5/24 not approved letter after applying for Sapphire. I called the reconsideration line and they specifically asked me about the UA AU credit card. “How do you use that card?” It’s my wife’s and I never use it.(Of course only an AU to get her 5K). Representative is pushing it through and I should find out my updated status in a week.

Leave a Reply

Your email address will not be published. Required fields are marked *