I’ve been getting really into the world of credit cards and travel hacking over the past few months. For people like me, opening up new cards is an easy way to optimize my spending and snag some free flights in the process.
If you’ve got a good handle on your finances, adding even just a little bit of travel hacking into the equation is a nice way to get a little bit of return on your spend. Once you get into this world, it’s easy to see why so many people write about this stuff. It’s stupidly addictive!
For years, I’ve resisted travel hacking because I was too scared to do it. At first, I just thought it was just too good to be true. I’m definitely not skeptical by nature, but the logistics of traveling around the world for free by opening up new cards didn’t make much sense to me. It seemed like there must be a catch.
Even when I figured out that travel hacking was a legit thing, I was still too scared to do it. The entire process was overwhelming and I had no idea where to start. There’s definitely a lot of information out there for anyone who wants to start travel hacking. It’s just often hard to synthesize everything you’ve read into useful and coherent information, especially when you’re a newbie.
Since I’ve been absorbing a ton of information over the past few months, I figured it’d make sense to share this information with you as I learn it. My goal is to use these travel hacking posts as a way to teach the basics that everyone should know if they want to start getting into the world of travel hacking, but don’t know where to begin.
Today, I’m here to talk to you about the Chase 5/24 Rule. For pretty much anyone starting out with travel hacking, the Chase 5/24 Rule should be the first thing you learn about. This rule will pretty much guide all of your decisions about which cards to open.
If you’re looking to get started with the world of travel hacking, you need to start with this post first.
What Is The Chase 5/24 Rule?
As a quick bit of background for anyone who’s super new to the world of travel hacking, basically, every credit card belongs to a different sponsoring bank. You’re probably familiar with most of these companies. For example, Citi has its own family of credit cards. American Express has another. In general, the best signup bonuses tend to come from the Chase family of credit cards. If we want to get the most bang for our buck, we ideally want to aim to get as many Chase cards as possible.
Unfortunately, Chase limits the number of cards you can get depending on how many cards you’ve recently opened. This limitation on our ability to get Chase cards comes from a rule known as the Chase 5/24 Rule.
In short, this rule makes it so that you cannot open up a new Chase credit card if you’ve opened up five (5) or more credit cards within the past 24 months from any company. The “any” company part is important. If you’ve opened up five (5) American Express cards in the past 24 months, for example, you won’t be able to get most Chase cards until you’re under that 5/24 threshold.
If you’re doing some soft travel hacking and don’t think you’ll open up more than 5 credit cards in a 24 month period, then you don’t have to worry about this rule. Instead, just pick any cards you want with the best signup bonuses.
One of the easiest cards to start out with – and the card I recommend 99% of people start out with – is the Chase Sapphire Preferred since the annual fee is waived in the first year and you can downgrade the card so that you never pay the annual fee. In essence, it’s basically a no-fee, no-risk card that even the most cowardly travel hacker wannabe could start out with.
For people who want to dive headfirst into travel hacking (like me), the Chase 5/24 Rule will be a major consideration that guides your card selection process. Most cards require you to meet a certain minimum spend within 3 months. If you opened up a new card every 3 months, you’d be looking at a total of five new cards sometime during your second year of travel hacking. At that point, you’d be unable to get any more Chase Cards until you’re back under 5/24.
Thus, it’s important to start off with the right cards so that you can maximize your travel hacking returns.
Which Cards Does The Chase 5/24 Rule Affect?
Of course, like with anything, the Chase 5/24 Rule has some nuances. Not every card is affected by the rule to the same degree. There are two categories of cards to think about when it comes to the Chase 5/24 Rule:
- Cards that ARE affected by the Chase 5/24 Rule; and
- Cards that DON’T COUNT towards the Chase 5/24 Rule, but that you can’t get if you’re over 5/24
The first category of cards is pretty simple. These are cards that are just straight up affected by the Chase 5/24 Rule. Nothing special here. If you’re over 5/24 (i.e. you’ve opened up more than five cards from any company in the past 24 months), you’re almost certainly not going to be able to get these cards.
The second category of cards are cards that you can get if you’re under 5/24, but that DO NOT count towards your 5/24 amount. All of these cards are business cards, which means that while they look at your credit when you apply for them, they don’t actually appear on your credit report the way a personal credit card would. The key thing to remember with these Chase business cards is that if you’re over 5/24, you won’t be able to get these cards. Thus, what you want to do is get one of these cards while you’re below 5/24. That way, you’ll be able to get the card and it won’t harm your ability to get other Chase cards.
Chase 5/24 Rule Strategy
Looking at the above categories of cards can be intimidating, so let’s break it down a little bit more. Ideally, we want our first five cards to be Chase cards. That way, we’ll still be able to snag cards from other credit card companies later down the line.
The exception to this is if you see some really good signup bonus that doesn’t come around all that often. In that situation, you might want to consider snagging the non-Chase card if it looks like a particularly good deal.
For most people, I recommend starting out with the Chase Sapphire Preferred or the Chase Sapphire Reserve as your first card. Final Thoughts
Looking back, I wish I had known this rule from day one. I’m still happy with the cards I’ve opened up, but it would have been nice to give myself a little bit more room to snag all of the Chase cards.
I also wish I hadn’t been as intimidated by annual fees. It’s worth reminding yourself that, if you’re getting more than the fee, you’re making a net profit. Plus, most cards give you the option to downgrade the card to a no-fee card, which essentially means you can get the signup bonus and either pay the fee for only 1 year or never pay a fee at all. The Chase Sapphire Preferred is a great example of this. It’s essentially really a no-fee card when you think about it. (The Chase Sapphire Reserve, Chase Ink Preferred, and United MileagePlus Explorer also allow you to downgrade to a no-fee version).
Obviously, there’s a lot more to travel hacking, but I think this is a great starting point for anyone who’s trying to start travel hacking. Follow this order of cards and you should set yourself up for some lucrative travel hacking for years to come.
For further reading, check out the beginning of my travel hacking adventures.
If you’re the type of person who’s interested in maximizing their travel hacking, you might also be the type of person interested in maxing out the interest rate on your cash savings. Check out my posts on how you can get a 5% interest savings account:
- Netspend Account: A Step By Step Guide to 5% Interest
- Insight Card: A Step By Step Guide to 5% Interest
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the sharing economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the sharing economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- Personal Capital. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps Kevin uses to track his financial accounts.
- SoFi Money. A really good high-interest checking account with absolutely no fees. It also reimburses all ATM fees worldwide. Even better, you'll get $75 if you open an account and have two direct deposits of at least $500 each.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. It's great for a taxable account or if you are looking for a place to create a Roth IRA.
- Dobot. This is a great microsaving app that monitors the cash flow in your bank account and saves away small amounts for you each week. It's free and you'll get $5 when you use it.
- Credit Karma. A free credit monitoring app that everyone should use. It'll notify you of any changes to your credit report and is the best credit monitoring app out there.
Feel free to send Kevin a message here.
Excellent post!! I’m at 7/24 now, having started this hobby 16 months ago. Unfortunately, like most, I wasted a couple of my first 5 slots (Amex Delta Gold for a free checked bag, and Chase Freedom Unlimited for the $150 sign-up bonus <— and compounded that particular mistake by taking it as a statement credit instead of transferring to my Chase Sapphire Preferred card for higher valuation in the Ultimate Rewards portal). Luckily I started with CSP, also got a Southwest Airlines Premier card (single, so I don't need Companion Pass), and Chase Sapphire Reserve during the initial 100k UR signup. This Spring I've gotten the Starwood Preferred Guest card (upgraded 35k offer) and just received the Hilton Honors card from AmEx with the 80k bonus and no annual fee.
IHG and Chase Hyatt are worth their respective annual fees for the free room night certificates and are on my list of cards to get someday.
I'd like to get a good business card, since I actually do have a personal business (Uber driver) with 2+ years of income history to report. Not sure what to go for since I'm 7/24.
You are killing it! I just started this hobby up 5 months ago and I’m currently sitting at 4/24 now. Next card I’m going for will be the Chase Ink Preferred just to keep me at 4/24. Not sure about which card for you to go for, to be honest, but definitely will want to do some research and see if there are any good business cards out there you can snag.
You use any of the points yet or saving them for a big trip?
Just been banking points for the most part. I’ve used the CSR travel credit ($300/yr) and some of my SW Rapid Rewards points for regular travel back home to Indiana for the holidays and such. It’s comforting to have a stash of a few hundred thousand points at my disposal, but I can’t wait to use some of them sometime in the not-too-distant future.
Great post. What is often overlooked is that these benefits are tax free, so depending on your marginal tax rate, these benefits could be worth as much as 2x!
Great point about the tax-free nature of rewards points. Didn’t even think about that, but definitely true.
Great post, FP. Very good outline of Chase and 5/24.
One thing I’d slightly disagree is your statement about opening Chase Freedom and Chase Freedom Unlimited. I’d say if you have the resources to open 5 premium cards in 24 months then you might want to skip them and use them when you downgrade, however, alot of people don’t want or can’t afford that many annual fees in a 24 month period.
Both cards are free and provide great value when combining with one of Chase’s premium cards. Both cards have an easy 15k point bonus after $500 spend in 3 months. 30k points for $1k spend is pretty good.
For example, Chase Freedom has 5x point rotating categories. Right now its Groceries, so every time I go to the grocery store I use that card. Chase Freedom Unlimted is 1.5x on everything so I use that card when I don’t use a premium card (CSP, CSR, CIP, etc).
All the points I gain from the free cards can be transferred to the premium cards in the Chase UR portal. By doing that I am able to get the benefits of transferring to airline/hotel partners.
For me, I get more value having a 3 card system then only using the 1 premium card.
I do agree that it’s a good idea to downgrade a premium card to one of these cards when the annual fee comes around, but I don’t think it’s a bad idea to start with one either (unless you plan to open 5 premium cards in 24 months).
For a beginner, I think combining the CSP and either the Freedom or Freedom Unlimited is a great way to get over 65k points for free. Then downgrade CSP to the other free card after 1 year.
You do make a good point and I guess I do make the assumption that folks getting into this have the liquidity to hit the minimum spends. My ultimate goal would be to have a three card system – a combo of Chase Sapphire Reserve, Freedom Unlimited, and Freedom. It’s just much more optimal get those cards through downgrading rather than taking up a 5/24 spot. But you’re right, if you’re just planning to dip your toes into travel hacking, you could play it safe and go with the no-fee cards to keep things easy and simple.
Agreed!
Just curious, what cards have you opened so far? Have you been easily able to meet the min spends? Also, any plans to do manufactured spending in the future?
When I had debt I was able to pay off my Student Loans with my credit cards so it was super simple to meet min spend requirements. Since becoming debt free I have far fewer expenses and have been routing my money to savings/investing. So now I have to really think and plan how I’m going to meet min spend requirements before applying for a new card.
I started in May 2015 so I went from 4/24 to now 1/24 so now is a good time to start back up again. I plan to open CSP (2nd time), 2 cards for SW Companion pass, Chase Ink Preferred, and prob Chase Hyatt. I’m ready to apply but still strategizing how I’m going to meet the spend requirements.
Thoughts?
So spending requirements for me in the last few months was pretty easy because I had a ton of wedding expenses that I was able to pay using a card. Admittedly, I didn’t follow the Chase 5/24 Rule strategy because I didn’t know any better (hence why I thought this post was useful for folks starting out).
I’ve opened up 4 cards so far this year: The BOA Merrill Lynch Card, the Chase Sapphire Preferred, the Chase Sapphire Reserve (missed the 100k bonus on this one though because I was stupid and fearful of travel hacking), and the AmEx SPG Card (for the 35k bonus).
As for meeting the minimum spend, the best thing to do is try to figure out your really expensive things you’ve got coming up. I also anticipate having trouble meeting certain high minimum spend since I usually spend about $1k or so per month on my credit card.
There are some manufactured spend strategies you could use. For example, BMO Harris Bank has a checking account bonus it’s doing right now – basically you get $200 if you meet certain requirements. But the best thing is that they let you fund that new bank account with $1,000 right from your credit card. That’s an easy way to snag $1,000 of spend for free.
Other option, if absolutely necessary, is to maybe use something like Venmo or Square Cash to do some manufactured spending. Pay your friend, have them pay you back. You take a hit with the fee, but if it’s for something really valuable, like the companion pass, it might be worth it.
For example, Companion Pass as of right now (June 5, 2017) has a deal for 60k points with 2k spend. If you open up two cards, you get 120k points, which is good for the companion pass right there. If you manufactured spend the entire 4k, assuming a 3% fee, you’re looking at a fee of $120. Throw in the $69 annual fee for the Southwest Plus and a $99 annual fee for the Southwest Premier, and that’s a total cost of $288. But, Southwest points are valued at 1.5 cents per point, so you’re looking at $1800 of Southwest flights for that $288. Throw in that companion pass which gives you a BOGO through the end of 2018 and that’s a total of $3600 of Southwest flights in reality. All for the worst-case scenario cost of $288. (Of course, whether the companion pass is worthwhile for you depends on whether you’re going to be using it, but just a thing to think about anyway).
Agreed- this was horrible advice to not get any Freedom card. Reading other blogs I decided to get the Freedoms to combine Reward points which has worked out
Why would you get the Freedom and waste a 5/24 slot when you could get the Chase Sapphire Preferred or Chase Sapphire Reserve, earn the bonus points, then downgrade to the Freedom a year later? The only time you’d get the Freedom over the CSP or CSR is if you’re a new credit card user and can’t get approved for either of the more advanced cards – but this isn’t a post for new credit card users now, is it?
Two things to consider. 5/24 is an individual thing. But chase considers authorized user cards. So as a household you can work it to not add your spouse as an authorized user to your cards then you can get to 10/24 per household. Second there are rumours of walking around the rule via in branch or targeted offers. Your mileage may very.
Great point. I’d always say don’t add anyone as an authorized user if you’re planning to do the travel hacking game. And yep, it’s possible to get around 5/24 via pre-approved offers, but no way to know and can’t count on it, so I don’t even think about that.
As an aside, I believe that taking advantage of credit card opportunities is a great strategy for middle to high-income earners. We’re the ones that hopefully don’t get into trouble from not being able to pay off the cards every month. Mrs. FP and you will continue to do great in this area.
That being said, I have found that I do end up spending marginally more that I probably would have otherwise because of certain spending minimums (especially those $5k ones) that we have to meet in order to get the sign-on bonuses. Have I gotten my fair share of luxury travel from it? Absolutely. I probably ended up spending a few extra thousand dollars over the years that I probably would have delayed otherwise. I’m not sure if it would have made a difference in the long run, but that is worth thinking about.
Definitely true, and I’ve been thinking about that as well. Credit cards have a tendency to get you to spend more, and even more so when you’re trying to hit a minimum spend. It’s a gamification of the world thing that they’ve done to us.
We benefited from the Southwest Companion pass this year and it’s been a fantastic way to save money on flights. But we are definitely feeling the pressure to make the most of it since it’s unlikely that we’ll get the reward again next year. (The sign up bonus made it possible). We traveled to Costa Rica earlier this year (2nd seat cost of tax only) and that alone made it worth it.
Plus, I can’t say enough good things about Southwest. We’ve had to change flights last minute and it’s always easy. We made an error on a flight (reversed the booking–oops!) and they changed it at no additional cost.
I’m looking at the Chase Sapphire for my next card.
My wife and I are debating about whether to go for the Companion Pass now. Did you snag it at the beginning of the year? They’re currently offering 60k bonus points for all of their cards, so it’d be possible for us to snag the companion pass right now just by meeting the minimum spends o the two cards. Only issue is that it’s the middle of the year, so we’d only be able to get it for part of this year. Decisions, decisions…
I would go for it now. This gives you the remainder of 2017 and all of 2018. Then you can work on getting it early in 2019 for all of 19-20. Be sure to conserve the 5/24 slots for one partner if that is your goal in 2 years.
Yeah – I’d have to have my wife go for it. I guess my only issue then is figuring out how to meet the spend quickly. If I’m going for it, I’d need to snag the companion pass pretty quickly so that I can get maximum value for it.
We got it towards the end of last year. So it was good on December holiday travel and then for all of this year. We had some unexpected travel come up and it was huge to be able to fly for the cost of one. Plus, as I mentioned, the Southwest folks could not be any nicer to us. There’s something to be said for rewarding a company with your business when you like how they treat you.
Since you didn’t start travel hacking until after you already paid your wedding expenses, did you have any trouble meeting all the required minimum spends?
I actually had only paid for a part of my wedding expenses, so I was able to hit a ton of minimum spend on my cards. Most of our vendors had a final payment due about a month before the wedding, so I was able to hit a ton of minimum spend that way. I just wish I had started earlier because I missed out on potential rewards for things I had paid for earlier – such as deposits for vendors, engagement ring, etc.
Thanks for clarifying. I seem to be stuck in “analysis paralysis”. Can’t decide which card to start with since I just don’t have any major upcoming expenses. I can’t imagine what people do to meet the minimum $4000-$5000 per card in 3 months (if, like me, you don’t have a business).
Congratulations on your marriage and your foray into travel hacking.
I’m a single guy who only spends about $27k/year, but I routinely meet minimum spends easily. Everything from utility bills, insurance bills (home and auto), phone bill, gas, groceries, online shopping, my toll bridge account, and my charitable donations will go on the card du jour.
Sometimes it makes sense to pre-pay an electric bill by a few hundred to meet a minimum spend requirement before the time runs out on the 90-day sign up bonus, or buy a gas station gift card that I know I will eventually use.
Just received my 8th card since starting this hobby 16 months ago. Went with the IHG card from Chase to earn a free night certificate for any IHG property in the world, annual fee $49, but I can get a room that would cost a few hundred dollars, and comes with Platinum Elite status.
Josh – I’ve read a bit about “manufactured” spending, so I know I can always buy gift cards for places I shop/spend (grocery store, gas station, etc.). I already put the cable & phone bills on my credit card, plus auto/condo insurance. I don’t know if this is an option for the gas bill, but the electric bill charges a fee to do it, so I have them set up for autopay directly from checking. I can also charge real estate & pers. prop. taxes… again with the fees. My charitable deductions are set up as a payroll allotment (can’t change this).
So, 1st question: do you pay fees to pay by CC because it’s worth it for the benefits or do your utility companies not charge them?
2nd question: for cards with a high annual fee that give benefits like travel credits or hotel cards that give you a free night per year, are these benefits cumulative or do you lose them if you don’t use them each year?
Hey Donna, here’s my thoughts to your questions:
(1) If there are fees to pay by CC, you’ll just want to think whether your return in travel is worth it. So for example, if you need to hit an extra 1k of spend, let’s say, then what are you getting back in return. So lets say you got the Chase Sapphire Preferred. You get $50,000 points, which at minimum, is worth $625. To get the bonus, you have to spend 4k. So if you had to pay the entire 4k and pay a 3% fee, you’d pay $120 in processing fees. If you’re getting $625 in travel, minus the $120 in processing fees, you’re still coming out ahead. Obviously, it’s more ideal to hit the spend without having to pay any fees, but this is one way to look at it. If I told you to pay me $120 and I’d give you $625 in travel vouchers, many people would think that’s a no brainer, right?
(2) For your second question, the benefits are typically 1 per year and you can’t keep them into the next year.
Thanks, Donna! I’d personally start with the Chase Sapphire Preferred if you’re just trying to get your feet wet. It has no annual fee in the first year and then you can just downgrade it to the Chase Freedom in year 2. In terms of meeting the spend, one potential way to do it is through opening up bank accounts. Happy to share more with you, but I play around with bank account bonuses and BMO Harris bank let me fund my bank account with $1,000 from my credit card. Easy way to turn 4k of spend into 3k of spend.
The Southwest card has been great for me, and was chosen because it is a hub between my city and my girlfriend’s new city. Gotten two free flights so far.
That’s awesome! I’m planning to go for the Companion Pass early next year.
QUESTION: Can anyone tell me if a store CC such as Lowe’s or Macy’s counts against the 5/24 rule?
I’ve been at this for many years now and up until the 5/24 rule always got all the cards I went after, even though I tried to be selective [except for two of them a few years ago… British Airways….award seat fees are outrageous and rarely have seats available where I want to go using American metal……and the Hawaiian Airlines card… useless coming out of the Midwest, and crazy expensive using Jet Blue metal, will dump them into my Hilton account soon].
Also, be careful going after the Southwest free companion ticket route. Two years ago, i got both cards personal and business spent the $10K on the card, [that was not that hard as i thought], then believe it or not never used it once in the 14 months i had it….no one my family could go and friends could never go when i could, so it never got used … ): Make sure you PLAN ahead that you can actually use it…. The miles are still in my account, so i didn’t lose them, just never got to use the free companion pass. ):
Finally, watch out for the authorized user card…… Two months ago I signed my recent college grad up for the Chase US Mileage Plus explorer card…. He got a special offer for 60K miles with 3K in spend and an additional 5K for an authorized user…. I was able to help him meet the spend as he would never have been able to accomplish it. But, little did I know that I would get dinged on my 5/24 report as if I was opening a new card… ):
…. Live and learn… Great column BTW!
Yes, a store card would count towards 5/24 – hence why they’re generally not recommended.
Great point about actually using your perks. At least you still have the points, but that’s a bummer that you never used the Companion Pass while you had it!
Yeah it was a bummer that I never got to use it so I would recommend all the readers of your blog to be sure that they have the billet he to use the companion pass so it doesn’t go wasted.
FP: in the case of the timing of when to downgrade an airline card (in my case the Chase United Explorer) what is the exact time you lose your benefits? Say my annual fee is coming up in May, I booked and paid for a trip this week getting the free baggage, but the trip is in June. Can I downgrade before the annual fee and still utilize the benefits of when I booked the trip?
So, Chase’s unofficial rule is that you can downgrade your card 60 days after your annual fee posts and they’ll refund you in full. My friend just did this with no problem and others online do the exact same thing. So, if you’ve got an annual fee coming up in May, you should still be able to downgrade it after you take your trip and get a full refund on your annual fee in June or July. Don’t downgrade it before your trip because then you won’t get your free bag.
I’ll be doing the same thing with my Chase Sapphire Reserve – my annual fee posts in May, and I’ll be taking a trip in June and want to go use the lounge, so I’ll be downgrading my card in July and am expecting the full annual fee back.
Thanks for confirming! Really enjoying your informative and well written posts.