The Rules From the Credit Card Companies You Have to Know

So you read the rest of our starter series, pick the ten cards you want, and then when you get to application number six, and Chase declines you. You're concerned. Your credit score has gone up. You've earned a few signup bonuses with no problem. And now you've hit this wall.

No one, not even many people who work at credit card companies (maybe even making decisions about granting or denying applications) knows all the rules for whether an applicant gets granted or denied a card or a bonus opportunity. But the travel hacking community is large and persistent. And from this, a few rules have become "open secrets." Sometimes, issuers even take to eventually putting these rules into writing, but sometimes they don't.

There are three commonly applied rules that you absolutely need to know about when you start travel hacking. You'll need to keep these in mind as you start applying for cards. These rules are not at all exhaustive, though. Moreover, they can change in an instant.

1. Chase's 5/24 Rule

Some people consider Chase's "5/24" rule to be the most draconian of the issuer rules.

The Rule

Chase 5/24 Rule is among the first rules people learn about travel hacking, and unfortunately many learn it too late. The basics of the rule are as follows. Chase will not approve you for a credit card if you have 5 new cards (any cards, not just Chase) opened in the last 24 months. The 5/24 rule does not apply to all cards. That is, Chase will give you some cards even if you have 5 new cards in the past 24 months. And not all cards count for your 5. People most commonly report American Express business cards not counting against them. The best source of information on the 5/24 rule is Doctor of Credit. 

The 5/24 rule got some attention when the Chase Sapphire Reserve was released because many travel hackers had more than five cards opened in the last 24 months. Rules like this are why using signup bonuses can work better for people who travel infrequently. If you're only funding one or two vacations a year, you don't need 5 cards in 24 months.

Chase also has a 1/24 rule, which is usually spelled out in card offers and stipulates that you won't qualify for a signup bonus if you've received a bonus for that card in the last 24 months. This means that if I apply for a Chase Sapphire Preferred in January, get approved in February, and earn a bonus in March, I can't apply for a new bonus until April two years later. As with all issuers, you also can't receive the bonus if you are a current cardholder (which means you need to product change or close your account, first).

Finally, Chase has a newer Sapphire 1/24 rule, which is that you need to have 24 months between getting the Chase Sapphire Preferred and Chase Sapphire Reserve. In the past, you could apply for both cards at the same time for the signup bonuses and then choose which you wanted to keep (if either). Now, you'll have to choose one or the other when applying.

What it means for you

Because Chase has an impressive portfolio of Chase-branded and co-branded cards, the 5/24 rule is the first one most new travel hackers need to keep in mind. Many articles on cards divide the universe into "if you're under 5/24" and "if you're over 5/24." As soon as you start travel hacking, start counting and planning your 5/24.

Moreover, track when you'll be out of 5/24. Let's say you get one new card in each of January, September, October, November, and December of 2017. Assuming you don't get any more cards, you'll be covered by 5/24 until February 2019 (the month after January 2019), at which point you'll drop to 4/24.

If, however, you apply for a new card in January 2018, you'll be stuck over 5/24 until October 2019. That eight month difference is plenty of time for a new, great card to debut with a high bonus and for that offer to disappear.

2. Citi Family 1/24 Rule

This rule is most important for trying to earn Citi ThankYou points and American AAdvantage miles with Citi cards, but it applies across other types of Citi cards as well.

The Rule

Citi's 1/24 rule is that you will only get a signup bonus for a card if you have not opened or closed a card in that same card family within 24 months. Doctor of Credit has a list of sample language for Citi's different cards. Here's some more from Lucky over at One Mile at a Time on Citi's rules.

Citi's 1/24 rule is very similar (if not identical) to Chase's 1/24 rule for Sapphire cards.

For example, we opened the Citi Prestige in the last 24 months, so we cannot get a signup bonus for the Citi ThankYou Preferred until the 24 months are up. We could (and did), however, get a signup bonus for any of the Citi AAdvantage cards, since they are in a different card family.

Also, unlike Chase 5/24, you can still open a Citi card in the same family, you just won't be able to get the signup bonus.

What it Means for You

First, you have to understand the Citi card families. The Citi credit cards page is organized by family, making it easy to tell which cards fall under the rule.

I'm interested in both of these, but I'll only get the bonus on one in the next 24 months...

I'm interested in both of these, but I'll only get the bonus on one in the next 24 months...

Second, you have to time your openings and closings carefully. For example, we want a chance at another ThankYou bonus sooner rather than later. So if we opened our Citi Prestige in January 2016, we aren't eligible for another bonus until January 2018. But if we close the card in January 2017 (to save the annual fee, for example), we won't be eligible for another ThankYou bonus until January 2019.

3. Amex Once in a Lifetime

Some people think Chase 5/24 is worse, some think Amex once-in-a-lifetime is worse. Either way, most people agree one of these is the worst for travel hackers.

The Rule

You can only get a signup bonus for each American Express card once in your lifetime. Note that like the Citi 1/24 and unlike Chase 5/24, you can still open a card covered by the rule, you just won't get the signup bonus.

The harshness of this rule is somewhat mitigated by the variety of Amex platinum cards around (for example, the Mercedes Benz Platinum Amex). Moreover, some reports indicate this rule only applies for 7 years after you close a card, but we would not count on that.

What it Means for You

If you're new to travel hacking, you'll want to weigh how much you need American Express Membership Rewards points, or other card perks, now versus later. You can get targeted American Express offers, too. We've seen 75,000 points in the mail within the past year and heard of 100,000 point offers online. We'll be waiting for 100,000 before diving into the pricey American Express Platinum, for example.

Further Reading

If you want to know about even more rules, check out this thread on Reddit. Beyond that, keep up with the sites listed on our resources page.

What's Next?

You're through the basics of travel hacking. Now it's time to talk about your first steps to becoming a travel hacker!