Inking 5X: What’s safe?

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In April, I posted “Why Chase cancels accounts (and how to protect yourself).”  In that post I warned people about dangers in maximizing credit card perks (like the Ink Bold’s 5X office supply category).  Specifically, I wrote:

Use tricks that maximize credit card perks in moderation.  For example, buying Visa gift cards at Staples to help meet the Ink Bold’s $5K spend requirement (for the signup bonus) should be fine if you spread out the purchases over several months.  If you suddenly start spending $10K per month at Staples, though, I expect you’ll get noticed (in a bad way).

Since writing that post, the Ink Bold’s minimum spend requirements have doubled to $10K in three months, and I posted a better way to leverage the Ink cards to earn 5X everywhere by buying Vanilla Reload cards at Office Depot (see “One card to rule them all”).  Later, Chase unveiled a new Ink card (the Ink Plus) with the same earning structure and signup bonus as the Ink Bold.  All of those happenings have combined to lead many people to spend lots of money at Office Depot stores.  There’s little doubt that Chase is well aware of this phenomenon, and they’re probably not happy since a 5X payout is far more than they earn from merchant transaction fees.

Account closures

In my post about why Chase cancels accounts, I wrote about people who took extreme advantage of Chase’s AARP 5% cash back, and others who took advantage of Chase Freedom’s 10 points per transaction (when combined with a checking account).  Chase shut down those accounts without warning and with no explanation.  At that time, I had not yet heard of anyone getting shut down for overuse of the Chase Ink 5X categories.

After I wrote “One card to rule them all,” some people asserted that they or a friend had been shut down.  Often, though, comments like these come from people who intentionally want to scare others away.  They want the deal to last longer for themselves and hope that scaring people away will help.  I didn’t give much credence to those comments at the time, but I saw them as a fair warning nevertheless.

More recently, though, I’ve received a couple of emails about account closures that seem legitimate.  One person admits that he not only bought lots of Vanilla Reload cards at Office Depot, but also did many other things to “manufacture spend”.  In his case, Chase called to question him about his account activity, but when he failed to adequately explain his purchases, they shut down his accounts.  If history is a guide, he should eventually get paid 1 cent per point for his point balance, but it may take a while.  I have much less information about the second person who was shut down.  Apparently he tried to log in one day, but couldn’t.  When he called Chase, one of the managers asked him a number of questions about his Office Depot purchases, so he assumes that those purchases are to blame for his shutdown.

Both of these recent stories are scary for those of us who buy gift cards and reload cards at office supply stores.  Were these guys really shut down because of their Office Depot transactions?  There are other possibilities.  Auditors may have identified them as bad credit risks.  Or, their overall spending behavior may have triggered alarms.  Maybe they regularly spent more than expected.  For example, they may have been spending more on their Ink cards than what they reported their business income to be on their credit application.  There are many possibilities, but unfortunately we’re unlikely to ever know the truth for certain. 

So, what’s safe?

People ask me this all the time.  Can they safely buy $1000 worth of Vanilla Reload cards per month?  $2,000?  $3,000?  $4,000?

Sadly, I simply don’t know.  I expect that the answer varies depending on your circumstances.  If you are a big spender with a thriving business and a long history of excellent credit scores, then I’m sure you can get away with much more than someone with otherwise low spending patterns, small reported business revenue, and a short credit history.

My advice is to examine your own situation as if you were a Chase auditor.  Do your spending patterns look suspicious?  Are you a bad credit risk?  Are you an unprofitable Chase customer?  If you answer yes to these questions, then reduce your office supply purchases accordingly.  Also consider your own risk tolerance.  If you find yourself stressed out over whether or not Chase will shut you down, it’s probably not worth playing this game.

Protecting yourself

Some people proactively cash out their points or transfer them to their favorite loyalty program (United, for example).  The hope is that if Chase cancels their accounts they will at least still have profited from the points earned.  It seems unlikely that Chase will try to claw back points already redeemed. 

Personally, I highly value the ability to move Ultimate Rewards points to various loyalty programs as needed.  I don’t know right now whether I’ll want to move my points to United or Hyatt, for example.  I also don’t know who’s account I’ll want to move the points to.  It’s great that Chase allows you to move points to other people’s accounts, and I highly value that option.

Another possible way to protect yourself is to move keep points as Ultimate Rewards points, but transfer them to a friend or relative (assuming the friend or relative is less likely to get shut down).  The risk with this approach is the possibility that this action will cause your friend or relative to get shut down as well.  I’m not saying that’s a likely outcome, just that it’s possible.

For ongoing discussions about this topic as a whole, see this FlyerTalk thread

My plan

For now, I’ll scale back my Office Depot purchases a little bit, and increase my use of Chase cards for non bonus spend.  No, the sky isn’t falling:  I’m still not convinced that Chase is gunning for people who buy gift cards and reloadables at Office Depot, but it makes sense to be cautious.

Reader experiences

Has Chase called you to ask you to explain your office supply purchases?  Have you or someone you know had your accounts shut down?  Please comment below.

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