The 5/24 guideline is dumb but easy to enforce

I’ve been thinking lots of thoughts about Chase’s 5/24 guideline so I figured I might as well write them down. If you are unaware, it is Chase’s arbitrary automatic declines of credit card applications for anyone who has opened more than 5 cards in the 24 months. Notable exceptions are Chase Private Clients, in-branch pre-approvals, and for some reason certain Chase cards like the Ritz Carlton card are unaffected by the guideline.

I’ve finally given up on reconsideration for the Chase Sapphire Reserve, my wife was approved and I’m tired of talking to CSRs <= get it? I did speak to a Customer Resolutions Specialist (CRS!), who does seem to have more power than the regular reconsideration people. Still, she didn’t have enough power to overturn my denial. As she and the other two reps I spoke to said, “there is no reconsideration if you are denied for the reason of too many accounts.” Okay then.

Anyway, I am a little bit salty but I was happy to risk the credit pull for the potential reward. Maybe I will take the $250,000 out from under my mattress and try again! Regardless, here are my thoughts about the 5/24 guideline in general. Or, specifically, why it makes no sense to me.

What is the purpose of this guideline?

Here is the most lucid response I received in all of my phone calls: “Since you opened up so many cards in the last two years, we can’t really evaluate what your spending is going to be like on all those cards.” That sounds to me like Chase is sort of trying to say they don’t want to increase their risk, which makes sense: I’ve applied for 15 credit cards in the last two years (the rep said 16 but I didn’t feel like arguing). Maybe I’m suddenly not going to be able to pay those cards off and Chase will be left holding the bag. That’s a pretty logical fear. Except, if that’s the case:

Why not apply the guideline to all cards?

If Chase created this guideline to mitigate risk, then why doesn’t it apply to all cards? See a list of the many cards exempt on Doctor of Credit’s post (along with some hypotheses about why those cards are exempt). Chase should apply this to all their cards if they are so concerned about their risk (I’m not requesting that they do that, I’m just following that idea’s logical conclusion). Moreover:

If it’s about risk management, at least a few people should be approved via moving around credit

I get that lots of applications looks risky, but if this move is about risk management, then they wouldn’t be saying “there is no reconsideration.” She didn’t say there was no reconsidering me, she said it as a blanket statement (and it was pretty much phrased the same way by the other two reps).

It kind of makes no logical sense that even the customer resolution specialists (one level up from the regular guys) have absolutely no wiggle room. To be fair, the rep sounded a little annoyed by the blanket edict from Chase and said they have been forwarding all the complaints along. Or maybe she was just being nice to me.

The guideline is super easy to enforce

I suspect one of the reasons Chase implemented this is because it’s ridiculously easy to enforce. It only requires the ability to count! Writing a script to count up applications is simple enough (for the automatic denial) and then telling CSRs to not reconsider under any circumstances is also very simple. I doubt that it is actually impossible to approve on the backend, I think CSRs are just being told not to do it. That’s just a guess though.

Obviously Chase is trying to cut down on churners, but the guideline is still silly

As I stated above, though I am salty, I have no problem with Chase turning me down. 15 cards in 24 months is a lot! And if they are trying to weed out people like myself because they deem me unprofitable, it makes sense.

Still, I think 5/24 is pretty harsh. 8/24 might make a little more sense to me – that’d still get rid of people like me. I think especially with the CSR Chase could probably rake in a bunch of people to pay the $450 annually, even people who play this game.

My hypothesis: the 5/24 guideline is Chase’s long con to trick everyone into becoming Chase Private Clients

I started thinking that as a joke, but actually, there could be a grain of truth to that. I mean, think about it:

1. Make up arbitrary gate
2. Let high value clients through said gate
3. Trickle out the data points that high value clients get through the gate
4. High value clients start considering taking their assets to Chase to get through the gate
5. PROFIT!

OK, so maybe there is a 5% chance that this is why the guideline came about. But you never know!

Final Thoughts

The one thing I do know is that Chase believes that the 5/24 guideline will increase their bottom line. I do not understand banks or economics enough to know if this is indeed the case, but I am sure they have smart people telling them so. “That’s why I rob banks for a living” is what Free-quent Flyer would say at this point, and I don’t have anything half as good, so I’ll end on that note!