Why Chase shutdowns have increased and how to avoid them

Chase Shutdown

Reports continue to trickle in from people who report that Chase closed down all of their accounts.  This often happens soon after opening a new Chase card.  Sometimes it happens after making a single very large purchase.  Sometimes it seems to be triggered by an abrupt increase in spend overall.

When people ask Chase why they were shut down, Chase often refers to the large number of accounts they opened (not just with Chase) in the past year.  Fortunately, Chase will sometimes review the decision and overturn it.

Why Chase shutdowns happen

This Reddit post offers a logical explanation for why Chase is shutting down accounts.  The theory is that Chase is actively trying to avoid Bust-out Fraud.  Bust-out fraud is where a fraudster builds up their credit with responsible credit card use and then suddenly runs up all of their balances before disappearing.  This Experian white paper describes the bust-out process as follows:

…the fraudster builds up a history of good behavior with timely payments and low utilization. Over time, he or she obtains additional lines of credit and requests higher credit limits. Eventually, the fraudster uses all available credit and stops making payments. Overpayments with bad checks are often made in the final stage of the bust-out, temporarily inflating the credit limit and causing losses greater than the account credit limit.

The problem for credit card rewards enthusiasts is that our behavior patterns often look exactly like these bust-out fraudsters, with the exception of the final fraudulent bust-out activity (which we don’t do!).

The old (but still relevant) shutdown reasons

The Experian white paper asserts that lenders typically look for suspicious activities to identify bust-out behavior:

Examples of suspicious activities are frequent convenience checks; frequent cash advances; multiple payments within one billing period from different accounts and different sources; purchases from high-risk, high-value merchants; and unusual purchase amounts (e.g., $1,000 at a dry cleaner). Some issuers use these factors in models to predict bust-outs.

Those who heavily manufacture spend often exhibit many of the above listed behaviors.  They are known to make multiple payments within one billing period, and they certainly make purchases in unusual purchase amounts.  Those who have been manufacturing spend heavily for a while are used to getting shut down for these activities.

The new shutdown reasons

The Experian white paper goes on to argue that predictive bust-out scores can be computed entirely from credit data:

…Issuers that only utilize internal transaction and payment data see only account activities in their own organization…

Credit reporting data provides a perspective on how account holders behave across the credit spectrum. Behaviors such as credit line increases, new accounts, changes in utilization and balance growth can all be captured through credit reporting data. By generating a wider perspective, the bust-out predictors can be observed months before the bust-out is executed…

I think it is safe to say that Chase has bought into this argument.  Whether or not they specifically use Experian’s bust-out scoring is irrelevant.  It’s clear from many datapoints that Chase is using credit reporting data and that shut-downs are often triggered by some of the behaviors Experian described above (credit line increases, new accounts, changes in utilization and balance growth).

Summary of Shut-Down Causes

Your accounts can be shut down due to suspicious spending activity (on your Chase cards), or suspicious patterns on your credit report which is collected across all of your accounts (not just Chase accounts).  Anecdotally it seems that applying for a new Chase credit card is one of the ways to ensure that Chase will evaluate you overall for suspicious activity.

Avoiding Chase shutdowns

The following advice is conjecture. I have no reasonable way to test this advice.

1. Keep your credit report clean

An ideal credit report shows a long credit history with no bad marks, few new inquiries, few new accounts, and a low credit utilization:

  • Long credit history: Don’t cancel your oldest credit cards since closed accounts will eventually drop off your report. If you’re not using the cards anymore, product change them to no-fee cards and keep them alive with an occasional small purchase (some banks will close credit cards that have no activity after 6 months or so).
  • Few new inquiries: When you apply for new credit cards, card issuers will submit a “hard inquiry” to one or more credit bureaus.  Unlike the other factors here, inquiries are not automatically shared across credit bureaus.  So, for example, your Experian report and Equifax reports will show different numbers of inquiries.  Therefore, one way to limit inquiry damage when applying for new cards is to spread out the inquiries.  Here are a few ways to accomplish that:
    • You can use the Credit Pulls Database to figure out which report a bank is likely to pull from before you apply, and avoid applying to those that are likely to push your inquiry count too high.
    • You can freeze the credit reports with high inquiry counts and ask the card issuer to pull from the report that wasn’t frozen (but they won’t always be willing to do so).  Doctor of Credit has a useful post about this technique here.
    • Often, applying for multiple cards from the same bank on the same day will result in only one credit inquiry on your credit report.  So, if you’re going to apply for a card anyway, you can get more bang for your buck by applying for two.  Our Best Offers page includes App Tips for each bank which indicate when the inquiries are combined.
  • Few new accounts: Unlike inquiries, new accounts are usually shown on all three credit reports.  The obvious way to limit the number of new accounts is to rarely sign up for new cards.  Another option is to sign up for business cards which do not appear on personal credit reports.  You can find our automatically calculated Top N list of business card signup offers here.  Note that Capital One is an exception in that they do report business cards to the personal credit bureaus.  Barclays does too… sometimes.  It’s unclear when Barclays reports the cards and when they do not (if anyone has insight into this, please let me know!).
  • Low credit utilization: Credit utilization is defined as the amount of credit available that you’ve used in a given month.  For example, if you have $100,000 in available credit and you charged a total of $5,000 within a month, then your utilization is only 5% (which is good).  Banks report credit used once per month to the credit bureaus, usually when your statement closes.  You can keep your utilization down by paying off some or all of the amount owed before your statement closes.  Keep in mind, though, that frequent intermittent payments can be a risk factor as well.  Also note that some banks report utilization on different schedules (see this Doctor of Credit post for more).

2. Keep your Chase card activity clean

As a reminder, Experian noted these suspicious activities: “frequent convenience checks; frequent cash advances; multiple payments within one billing period from different accounts and different sources; purchases from high-risk, high-value merchants; and unusual purchase amounts.”  That leads us to these obvious recommendations:

  • Avoid convenience checks and cash advances: You should avoid these anyway. You won’t earn rewards from these cash advances, but you will have to pay fees and interest.
  • Avoid multiple payments within one billing period from different accounts and different sources: Try to pay your Chase credit card bills from a single source and make just one or two payments per month.  If you are doing heavy manufactured spend that requires cycling your credit limit daily, then I recommend doing so with a different bank besides Chase. Pick one where you don’t mind getting shut down.
  • Avoid purchases from high-risk, high-value merchants; and unusual purchase amounts: This one is a bit tougher in that we don’t know which merchants Chase considers to be high risk / high value.  But it is clear that a sudden flurry of large repeated purchases will look suspicious.  So, if you insist on using your Chase cards to buy gift cards, I recommend ramping up slowly over time.  A sudden jump in spend of this type will look suspicious.

3. Avoid signing up for new Chase cards if your credit report already looks suspicious

Chase continues to have many of the best signup offers, so I would never say to avoid Chase cards altogether.  However, if your credit report shows a large number of recent inquiries and new accounts, you may want to hold off. At least consider the risk when debating the pros and cons of getting a new Chase card.

Bottom Line

Chase has been shutting down accounts due to suspicious card activity and credit activity.  Reviews seem to be triggered, in part, by applying for new Chase cards.  Having too many new accounts on your credit report is a clear risk factor.  Unfortunately, we don’t know how many accounts is too many.  Nor do we know why some accounts are reinstated after review and others are not.  Hopefully following the recommendations given in this post will keep you safe.

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.

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50 Comments on "Why Chase shutdowns have increased and how to avoid them"

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jeph36
Guest

I hate getting those mailers from any bank with convenience checks. That seems like a huge risk for fraud if someone else gets my mail. What is the best way to avoid getting those?

jed
Guest

Have you tried calling the bank and asking them to stop sending you the convenience checks?

OP-
Guest

Try contacting Chase. I think there’s also option to disable in this on their website. I might have done it via secure message, I don’t remember since it’s been a while.

Ma Barker
Guest

I had to call Chase and Citi to stop sending me convinience checks and told them about mailbox pilferage in our area. It took at least two calls before these checks stopped coming but I’m glad I don’t get them now.

Blue
Guest

Cool to see my Reddit post is helpful! I REALLY URGE people to go read the links I provided to original sources. There’s a lot of information about more specific risk factors such as geographic location and how network analysis may also be used. I want to highlight one thing in particular:

NEVER sell access to your account to the services that add people on as AUs to raise your credit scores. It is VERY LIKELY this will link you into what are called “synthetic identities” that could be picked up in a network analysis of linked accounts. As this network analysis becomes more effective (and as the fraudulent networks of synthetic identities grow) risk of adverse action will continue long after you’ve linked and unlinked these accounts.

HoKo
Guest

Blue, a couple follow-up Q’s on your Reddit post:

Rolling six-month increase in bankcards of 2-3 and/or a ~30 percent increase.
Rolling six-month increase of 3-4 BANKCARD inquiries and/or a ~50 percent increase.

When you say 30% increase are you saying a 30% increase in number of credit lines (versus AMOUNT of the credit lines). I.E. If someone has 10 credit cards and acquires 3-4 new ones in a span of 2-3 months then that would trigger this 30% threshold?

Also I didn’t understand this comment:

“Average of 2.5 cards at or over 50 percent utilization that increases to 5.”

Can you clarify

“Much less likely to have a credit union trade account (0.3 lines for bust-outs compared to 0.9 for good credit accounts).”

What do you mean here by “trade account”? Is this referring to a Credit Union LOC?

“Asking repeatedly for credit line increases.”

I’m wondering how Chase would know if someone is asking for credit line increases on their Citi, BofA, AmEx, Etc. Cards. I frequently have banks increase my credit lines with no request or input from me.

Thanks for all the info!

Casey
Guest

Does this apply to opening new Chase business credit cards?

jed
Guest

yes

Michael
Guest

Barclays pulled my TU for the AA 50k one-purchase business card. They also asked for proof of business existence. Approved about 3 weeks later. I live in Florida.

jed
Guest

Do you have a real business? What proof did you provide sir?

Michael
Guest

Yes. However it’s a sole prop, so I did not have articles of incorporation, stocks or some of the things they suggested. I just sent a copy of my tax return’s Schedule E and that was sufficient.

Aubrey
Guest

Did it hit your personal credit report?

TomT
Guest

All requests for new credit will result in an inquiry, except AMEX which seems to often not do them (personal or business) for long time customers. A business credit card not being on your credit report means that it doesn’t show in your list of open accounts. The inquiry will always appear.

This seems to be the confusion about Barclay biz CCs, as there has not been one verified instance of a Barclay biz CC appearing on anyone’s list of open accounts.

jed
Guest

One thing you didn’t mention was people getting their Chase accounts(including credit cards) shut down for activity in their Chase bank account. A lot of people on the forums recommend not to bank with Chase if you are an MSer. Or at least not to use your Chase bank account for MS(no money order deposits!)

Brett W
Guest

Ya, i was doing that and have since stopped cold. Only use it for direct deposit of my paychecks now.

MSer
Guest

Yep, I got shut down for signing up for Chase check promo and soon thereafter (10 days) had my CCs closed.

cavedweller
Guest

I never ever will get a CC from my bank BMO why would u want them to know all unless it a home loan ? Worked for 30 years.

CHEERs

jsn55
Guest

This topic is very timely. Most of our Chase accounts are in my name, but a couple in my husband’s name. Recently he applied for th new IHG card,instant approval, the card arrived at the same time a lettter from Chase Fraud. It was murky and garbled, but indicated some kind of a problem and they had closed this new account. After dorking around with them for two weeks, he got disgusted and will close the other accounts in his name. Nobody could make any coherent explanation of what the issue was. I’ve just checked the 3 major credit agencies and there’s nothing negative reported. It leaves a lingering concern about what made them do this in the first place. I guess I’ll just continue closely monitoring it all and move on with life. Most annoying.

Ben
Guest

Do we have a sense as to how widespread these shutdowns really are? I’ve found a few dozen solid stories online. Not discounting any of them, but in the context of Chase’s XYZ million customers, we might be looking at a very noisy but incredibly small minority.

Nick Reyes
Editor

The people engaging in this hobby are already an incredibly small minority of the XYZ million customers, so those shut down are definitely a small number relative to the whole of Chase’s customer base. That said, the behaviors noted in the post are more common in those who engage in this hobby — so you are increasing your likelihood of being in that small minority if you’re engaging in the behaviors the bank deems risky. Everyone has a different appetite for risk, so to each his own in how to respond to the reports — but between the uptick in public reports, reports from some people who have reached out privately, and the existence of some information that might explain the cause and behaviors to avoid, it seemed worth a warning.

Ma Barker
Guest

I concur; for those who do volume MS, it is very challenging to stay under radar. IOW, volume MS and flying under radar don’t mix, there will be a point the bank will notice activities in one’s account that’s why it’s often suggested “Do NOT call the bank” unless you want eyes on your account; we have to weigh issues first if they’ll resolve by themselves and if they don’t, we ask ourselves if we’re prepared for adverse actions should a human scrutinize our account(s).

Reports like this are useful to me, for those who think they’re not affected by any means can just ignore articles like this.

AlwaysFlying
Guest

It definitely makes things more interesting now when one must generate 20k of spend to fulfill the objectives of Iberia and Aer Lingus. So far going strong with oldest card being about 16 years and with 3 no 5 24 cards added within the past 7 month and about 18 cards opened in the past 12 months. Thats the Chase casino.

Gabe
Guest

Well..lucky for me, I have both a 6 figure investment and my home mortgage with Chase. I think this is why I’m given more reign in my applications/spending patterns. They figure that my total combined credit limit with all their cards is less than my investments, let alone my investments + home value, which they could easily seize should I try defrauding them.

robertw
Guest

I would not try to apply logic to Chase based on that or any other factor. A few years ago on a major issue where they closed accounts, they closed an account with a customer who had a Private banker at a Chase branch. And the private baker could do nothing since its another dept.

Gabe
Guest

Well, they have just as much to lose as I do. They close my credit accounts? Guess what, I move my investments elsewhere and refinance to another bank. MAD theory at work, basically.

NinjaX
Guest

u have no idea what ur talking about. are you even CPC or private bank JPM? those have been closed. ur investments and mortgage mean nothing.

trackback

[…] Avoiding Card Shutdowns:  Our card activity may seem a bit weird to mere mortals, and some banks may consider it as suspicious.  Because of this, some banks have taken drastic measures to close down accounts. Here’s a good read on why this is happening. […]

Stefan Krasiwski (Rapid Travel Chai)
Guest
Stefan Krasiwski (Rapid Travel Chai)

On “Avoid purchases from high-risk, high-value merchants; and unusual purchase amounts,” with my experience dealing with US Bank, gas stations are the biggest one that can overlap with us, large purchases at those trigger more alerts than anywhere I’ve shopped.

MSer
Guest

Screw Chase. Why anyone who plays the CC game bothers with them is a mystery.

trackback

[…] As I said, it is getting harder out there. Why Chase shutdowns have increased and how to avoid them. […]

Probably
Guest

Any reports of locking all your credit reports causing shutdowns?

Chris Holland
Guest

Unlikely, as existing issuers can still instigate soft pulls for account reviews etc even from locked CRs. If anything, an issuer seeing locked reports for a customer can be satisfied that the subject isn’t going to be looking for or signing up for new products as it would be almost impossible to obtain further credit without the new prospective lender being able to verify the applicant’s credit files.

trackback

[…] here as a new account can be the first step toward triggering a Chase shut down (See our post on why Chase shutdowns happen and how to avoid them for more on that). Still, for those who understand the triggers and/or accept the risks, this is […]

LAC LONG QUAN
Guest

If Chase closes my account, do I loose Chase’s points? Does it give me time to transfer points to its transfer partners?

Sam
Guest

I don’t think you’s have an opportunity to transfer. But you might get the cash value (1 cent per point) for them.

robertw
Guest

If you fight hard you get the points valued at one cent.

trackback

[…] In this hobby it’s incredibly important not to bite off more than you can chew, figuratively speaking. If you are someone who has a hard time juggling multiple credit cards, it’s better to pick  few good options, based on your everyday spending patterns, and call it a day. And there is certainly an upside to not applying for  a lot of cards: you don’t have to worry about Chase 5/24 rule or a potential bank shutdown. […]

robertw
Guest

I agree. Things were much different about 10-20 years ago. It was easy to get many cards (from the same provider) at once and most had small mins to get the bonus. Some were just based on a single charge and many were $1000.00 or less. I think many were just $500 bucks. You could get the same bonuses over and over with many of the companies. There has been alot of consolidation and then the banking crisis hit. Still all in all the prime customers are still valued by the card companies. I think a much more conservative approach is needed.

robertw
Guest

And for those that mention why Chase or whatever. I burn no bridges. I do no MS. But I had some issues with Chase in the past that I got resolved to my full satisfaction. They are very prickly even about what was normal patters for me. Since major changes to SPG I will use Hyatt alot more. So that is one reason for me. Amex will also scrutinize these things. If they start getting losses they will be more aggressive.

JJJ
Guest

A minor nit, TD business cards are reported to your credit report as well, it’s not just Cap One.

PoorChurner
Guest

I hate Chase for their high minimum spending for bonus and never throw a retention offer despite many years of paying AF. I’m forced with them because they have my two oldest cards.

Rob
Guest

So don’t apply for two credit cards (Ink Cash and Unlimited) same time/day?

Milezjunkie
Guest

From recent experience of a Chase Shutdown they give you 30 days to use your UR points as you wish. You can still transfer to award programs, book travel through UR or transfer to a household member. They even paid the bonus points and statement points for the statement that closed after the initial freeze.

CaliSteve
Guest

I read that a Chase CSR mentioned that 4 accounts opened within a 1 year period triggers red flags with Chase.

Rob
Guest

So it seems like if we were to be lowering our credit limits (like I often do to avoid the new card denial reason of too much credit already), we shouldn’t fit the risk profile they’re looking for.

cavedweller
Guest

I just got the Citi AA Biz card with a $20k limit I lowered it down to $5k which sets me up for the NEXT card . But not from Chase for 2 years I bet . Almost anyways away around stuff .
CHEERs

trackback

[…] Why Chase shutdowns have increased and how to avoid them. – If you thought Chase 5/24 was bad, Chase is getting even more serious about getting rid of fraud. Credit card churners and heavy MS-ers are getting caught up in the mess because their activity closely resembles fraudulent activity. Be careful out there. […]