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: