I recently explained how signing up for certain business credit cards instead of personal cards could be a path to flying under Chase’s 5/24 rule*. For those who regularly seek credit card signup bonuses, this approach can potentially have many benefits far beyond 5/24. The idea is to focus most credit card signups on business cards that do not appear on your personal credit report, and signup for personal cards only occasionally.
* Chase’s 5/24 Rule: 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
The more I thought about this approach, the more appealing it became. Not only would this approach make it possible to stay within Chase’s 5/24 limits, but it may help in other ways as well. I’ll explain…
Business card disadvantages
Before talking about the benefits of signing up for business cards instead of personal cards, let me point out a couple of negatives (or, at least, factors that are not positive):
- Credit Inquiries: This approach does not decrease credit inquiries on your credit report. Each inquiry for new credit, including small business card credit, can have a small negative impact on both your credit score and your ability to get approved for new cards.
- Credit Card Utilization: As counterintuitive as it may sound, new credit accounts that appear on your credit report can help your credit score by lowering your credit utilization (assuming your spend patterns before and after getting the new account stay roughly the same). Business cards that don’t show up on your credit report do not have this advantage.
Business card advantages
- Credit Card Utilization: This factor is listed in both disadvantages and advantages. While these business cards don’t help your credit utilization ratio by increasing the ratio’s denominator, they can help by reducing the numerator: the amount of credit used. If you’re a heavy spender and you put most spend on business credit cards which don’t show on your credit report, your overall credit utilization will remain low.
- Age of Credit History: One of the downsides of signing up for new credit cards is that each new card usually lowers your average age of credit. This is true even if you soon cancel those new accounts (since even closed accounts stay on your report for 10 years). Business cards that don’t appear on your credit report will not have this negative impact. As long as you have some personal cards sitting around from long ago, your average age of credit will increase over time as long as you do not sign up for new cards that appear on your report.
- Total Accounts: The number of accounts on your credit report hasn’t traditionally been a negative factor when signing up for new credit cards (card issuers previously seemed more worried about the number of recent inquiries for new credit), but Chase changed that with the introduction of their 5/24 rules. Plus, some other businesses may have already been sensitive to your number of accounts. For example, I’ve heard a few stories from readers where they were unable to get approved for the lowest automobile insurance rates due to the large number of accounts on their reports. So, again, since certain business cards do not appear on your credit report, focusing on these cards for new applications should help.
Business cards that are not reported to personal credit bureaus:
This information is from a Doctor of Credit’s post:
- American Express (except for Canadian Amex)
- Bank of America
- US Bank
- Wells Fargo
Business cards that are reported:
- Capital One
It’s too bad about Capital One – they have several great business card offers.
OK, so the big question is whether there are enough good offers out there to make this business card approach feasible? Let’s take a look at what is available at the time of writing (limited to the card issuers that do not report business cards to personal credit bureaus)…
Amex Credit Cards
Update: Some of these offers are not currently available.
Delta Gold: 50K Delta SkyMiles + $50 statement credit Delta Platinum: 60K Delta SkyMiles + 10K Delta MQMs + $100 statement credit
- Delta Reserve: 10K Delta SkyMiles + 10K Delta MQMs
- Starwood Preferred Guest (SPG): 25K Starpoints
- SimplyCash Plus: $250
Blue for Business: 20K Membership Rewards
- Lowe’s: No current signup bonus (that I’m aware of)
Amex Charge Cards
- Business Gold: 25K Membership Rewards*
- Business Platinum: 40K Membership Rewards*
- Business Green: 5K Membership Rewards
- Plum: $600 (with $30K spend)
* Better targeted offers are frequently available for these cards.
Bank of America
- Alaska Airlines Visa Business: 25K miles
- Asiana Visa Business: 10K miles
- Spirit Airlines World MasterCard for Business: 15K miles
- WorldPoints Travel Rewards for Business: $100
- WorldPoints Rewards for Business: $100
- Cash Rewards for Business: $100
- Platinum Visa Business: $100
- Platinum Plus for Business: $100
- Business Preferred World MasterCard charge card: 10K points (worth $100)
- FlexPerks BusinessEdge Travel Rewards: 20K bank points
- Club Carlson Business Rewards: 85K hotel points
- Korean Air: 10K miles
- BusinessEdge Select Rewards: 10K points (worth $100)
- BusinessEdge Cash Rewards: No current signup bonus
- Business Edge Platinum: No current signup bonus
Note that while Chase business cards have most of the advantages of other business cards, they may not help with Chase’s own 5/24 rule since Chase can see these accounts even if they’re not on your credit report.
- Ink Plus: 60K Ultimate Rewards points
- Ink Cash: 20K Ultimate Rewards points
- Southwest Premier Business: 50K Southwest points
- United MileagePlus Explorer Business: 30K miles
- Marriott Rewards Premier Business: 100K Marriott points
A sample 2 year plan
One approach to consider is to sign up for two business cards from a single card issuer once every two months (one exception: with Citibank you can only sign up for one card in a day). The advantage of signing up for multiple cards from the same issuer on a single day is that the hard inquiries would likely be combined and would result in only one hard inquiry every two months, for a total of 6 per year. That’s not too bad! And, if you’re lucky (or plan well), the inquiries may be spread across different credit bureaus such that the number of inquiries per credit bureau would be much less.
Credit card offers come and go regularly, so this is not a realistic plan, but I thought it would be a good exercise to see what’s possible…
All of the following cards are assumed to be business cards except where specified.
- June 2016:
Amex Delta Platinum (60K + $100)+ Amex Blue for Business 20K
- August 2016: Bank of America Alaska 25K + WorldPoints Travel Rewards $100
- October 2016: US Bank FlexPerks 20K + Club Carlson 85K
- December 2016: Amex Business Platinum 40K + Business Gold 25K
- February 2017: Citi AA 50K
- April 2017: Chase Ink Plus 60K + United 30K (often available for 50K, but since I’m reporting currently available offers I’ll leave it at 30K)
- June 2017: Amex SPG 25K + SimplyCash Plus $250
- August 2017: Bank of America WordPoints Rewards $100 + Cash Rewards $100
- October 2017: US Bank Korean Air 10K + BusinessEdge Select Rewards $100
- December 2017: Southwest Business 50K + Southwest personal 50K
- February 2018: Amex Delta Gold (50K + $50) + Business Green 5K
- April 2018: Chase Marriott 100K + Ink Cash 20K
I added just a single personal card to the above list: either of the two personal Southwest cards (Premier or Plus). The reason is that if you’re going to sign up for a Southwest 50K offer anyway, you might as well get two cards in order to qualify for the Southwest Companion Pass (which requires earning 110,000 points in one calendar year). The reason for signing up for these cards in December is that it is then possible to complete all spend in January in order to secure the Companion Pass as early in 2018 as possible so that you’ll get almost two full years of free companion flights: all of the rest of that calendar year, and all of the next.
In total, not counting points earned from credit card spend, the above bonuses add up to the following:
- 215,000 transferable points (I lumped in 20K FlexPerks points for lack of a better place. I also put the SPG points here)
- 325,000 airline miles
- 185,000 hotel points
- $800 cash
That’s not a bad two year haul for a casual signer-upper, but it’s also not exactly amazing. That said, the above results ignore a few significant things that could increase the totals significantly:
- Increased bonuses: banks often offer short term increased bonuses. Instead of following a plan like the one shown above, one could do much better by focusing on the business cards that offer enhanced offers at any given time.
- Better targeted offers: Especially with Amex, it is very common to get much better offers than those shown above.
- More than two at a time: With some banks it may be possible to get more than two cards at a time, but still combine all inquiries into one.
- Repeat signups: In some cases it is possible to sign up for the same card multiple times. Sometimes, but not always, it would be necessary to sign up with different businesses.
I’m not yet ready to declare myself “all in” to this approach. There are too many personal card offers that I wouldn’t want to miss. However, I do think that I’ll try to do more of these business card offers (especially when the bonus is high) and fewer personal card offers.
Sidebar: 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.