When it comes to applying for new credit cards, you need to play by the rules. Each bank needs to balance its ability to extend new lines of credit against the expense of giving miles or points to every person applying for a new card (or cards). Therefore they all have their own set of rules in place to try and accomplish this goal. Whether these restrictions are successful or not, only the banks know for sure, but for the time being, as points and miles collectors, this is the environment we’re in, so we need to adapt or die.
When writing about cards issued by American Express and Chase, I thought to myself, “Which one of these rules do I hate the least?” Neither of their rules are perfect, but if you know what you’re doing, you can learn to live with both banks. I’ve come to the decision that while both banks are opaque with their restrictions, I’d rather deal with one bank more than the other.
Chase
While there have always been rules for signing up for credit cards, when it comes to the more restrictive rules by the major banks, Chase was walking the path alone, waiting for everyone else to show up.
The granddaddy of the signup rules is Chase’s 5/24. While it seems straightforward, there are still many things about it that can trip people up. The main thing I hate about 5/24 is that it’s an unpublished rule. You’ll not find it mentioned in any of Chase’s application literature. If you happen to be denied a Chase card, a representative may tell you that you were denied for “Too Many Recent Applications,” but when pressed, Chase representatives will not directly say that you’re over 5/24.
The haphazard way it’s applied can also be maddening. People who should be under 5/24 are still denied a card but then approved for another one. For others, a store or business card seems to count (this happened to me), but for others, there’s no issue. The inconsistency and lack of structure are the worst parts of 5/24. Even when you think you have it figured out, you find out that you don’t.
There is no limit to the number of Chase cards you can have. However, the bank will limit the amount of credit they are willing to allow you to have. This means when you’ve reached that limit, the only way to get a new card approved is to move the credit lines from your other cards (or Chase might take it on themselves to move your credit.)
Chase also has other rules on applications, such as allowing only two new cards in a month (2/30) and one sign-up bonus per card family every 24 or 48 months (1/24 or 1/48). Chase will also only allow you to hold one card each in the Sapphire and Southwest families of personal cards at a time.
American Express
It’s impossible to discuss American Express and signup rules without mentioning the Rewards Abuse Team, or RAT for short. This division within American Express was initially responsible for tracking down the worst offenders of reward abuse.
While first responsible for making sure people were following the rules, it’s safely implied that they were also responsible for AMEX changing the terms on almost all of its rewards credit cards.
AMEX had pretty clear rules beforehand. You could only get the signup bonus on a card once per lifetime (or as far back as AMEX could easily track, usually 7-10 years). Besides that, the only restriction was that you couldn’t have more than four (or five and maybe six) AMEX credit cards.
When signing up for cards, you can only be approved for one card per five days and for two cards in any 90-day period.
The AMEX RAT team felt these rules were too lenient. They wanted more leeway to determine what’s right and wrong when it comes to doling out reward points. Eventually, this language worked its way into the Terms and Conditions.
You also may not be eligible to receive a welcome offer based on various factors, such as your history with credit card balance transfers, your history as an American Express Card Member, the number of credit cards that you have opened and closed and other factors. If you are not eligible for a welcome offer, we will notify you prior to processing your application so you have the option to withdraw your application.
If you have a history of cancelling or downgrading American Express Card accounts within your first year and you cancel or downgrade your new Card account within your first year, we may not credit, we may freeze, or we may take away Membership Rewards points from your account. If we determine that you have engaged in abuse, misuse, or gaming in connection with this offer in any way or that you intend to do so, including if you return purchases you made to meet the Threshold Amount, we may not credit, we may freeze, or we may take away the Membership Rewards® points from your account. We may also cancel any accounts you have with us.
That may seem like some legalese just inserted into the application, but AMEX has been acting on this to claw back points and freeze/close accounts. There are many reports from people who closed accounts before 12 months or self-referred for new AMEX cards who have had their Membership Rewards points clawed back.
Also, AMEX has instituted a pop-up box that shows up when applying for a new card and tells you if AMEX is willing to offer it to you or not. There’s no apparent reason why AMEX wouldn’t offer it to you, but opening accounts to just spend the minimum for the bonus and never using it again or opening and then closing accounts seems to be a common denominator with many denials.
Just like with Chase, there’s no set rule besides AMEX’s disclaimer that they can consider your past history when deciding whether to give you a new card.
As if this wasn’t enough, AMEX has now put into place the “family” or “little brother” rule for many card families. This prevents a customer from getting a sign-up bonus if they’ve ever had a better card in the same card family. In other words, you can’t get a bonus for the Delta SkyMiles Gold card if you previously had the SkyMiles Platinum card.
Final Thoughts
So, which set of rules do I hate more? I hate to say it, but I find AMEX’s rules to be worse than Chase’s.
As inconsistent and frustrating as Chase and 5/24 can be, you can try to go above and below it and sign up for cards when possible. You can also choose to ignore it. With American Express, there’s no telling when they’ll shut you down. Filling out an application and hitting send feels like placing an order with that soup guy from Seinfeld.
You think you know the rules but make one move they don’t like and it’s NO CARD FOR YOU, COME BACK, ONE YEAR!!!
While I complain about Chase and American Express’s rules, I still apply for and use cards from both banks. While the rules are a pain, the rewards are worth it. I guess that’s the same reason George, Jerry and Elaine kept going back for the soup.
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