Note: I have no direct business relationship with Chase and this post contains my educated opinion on the subject matter. I don’t have any inside knowledge or any working relationship with the bank.
Chase Made the Right Business Decision
I’m sure some of you saw that title and clicked through just to come and yell at me. If you apply for cards multiple times then Chase has sort of kicked you aside. They have told some of you that they don’t want your business. That is personal and it hurts, but it is a great business decision.
Up until recently Chase didn’t publish the official rules for getting a bonus again. Many reports confirmed that it was about 2 years, however there wasn’t anything firm in writing. Then Chase decided to publish their current rules. Those rules are:
This new cardmember bonus offer is not available to either (i) current cardmembers of this consumer credit card, or (ii) previous cardmembers of this consumer credit card who received a new cardmember bonus for this consumer credit card within the last 24 months.
And guess what. Those rules make perfect sense. Lets say a consumer got the Sapphire Preferred card, but decided to cancel after the first year. Maybe a couple of years later that person is ready to give Chase a try. Maybe it is a commercial that draws them back in or they think about how nice it felt to hold that shiny blue metal card in their hand. Either way, Chase wants that customer to come back and they are willing to pay for that.
The Credit Card Churner Is Different
Of course miles & points hobbyists see those rules differently. We immediately pick apart the words and start to formulate a strategy. If I apply for a Sapphire Preferred now, I can then downgrade it to a Freedom in a year and then get another Sapphire in month 25. Rinse, repeat. I even wrote about the best strategy to do this with Chase hotel cards.
Well guess what. Chase caught on and was forced to make a decision. Either they change the published rules and risk losing out on that customer they want to bring back or they enact other more stricter rules internally. That is exactly what happened.
For those who don’t know, Chase’s new rules are pretty simple. If you have opened 5 or more new accounts within the past two years, they will not approve you for an Ultimate Rewards earning credit card. (Freedom, Sapphire Preferred, Ink.) Some people have claimed to have been approved, but I have heard from over a dozen readers in the past month who have been denied in exactly the same way. This is real.
It’s Not You, It’s Them
So as a “churner” you might feel angry that Chase doesn’t want your business. Many of you will claim to never do business with Chase, but that simply isn’t true in most cases. Do you know why? To put it quite simply, their cards provide value.
There is a reason everyone talks about these cards on Flyertalk and in the blogs. While Sapphire Preferred may be overrated, Freedom is fantastic and we all need at least one of their premium cards to unlock transfers to their travel partners such as Hyatt and United. This is value.
A Change of Strategy
What are you going to do now that you know Chase won’t approve you for any new cards? Frequent Miler pointed out the change in his strategy yesterday. Just a few weeks ago he wrote about the optimal way to earn Ultimate Rewards through strategic applications. Now instead of cancelling and getting the bonus again, he has to keep a premium card long term.
Do you see what Chase did? By instituting these rules they forced him, me and you to keep their cards. To pay an annual fee and use the cards as intended. Since we now know they won’t approve us for more bonuses, we have to become the valuable customers that Chase wants. I’m sure as heck not giving up my Ink Plus, because if I did, then I don’t know that I would be able to get it back.
Of course we are still pretty savvy and we will ask for retention bonuses and otherwise find efficient ways to keep this relationship going. Chase is alright with that. They would rather operate within the new guidelines then give us bonus after bonus after bonus. They sort of have us where they want us and know that we would be stupid to walk away.
Update: Chase is most likely instituting the 5/24 rule for co-branded cards in April, 2016.
Chase also has one of the best assortment of co-branded travel cards and guess what, churners are somewhat welcome to apply for those. Chase has contracts with these partners to deliver a certain number of approvals and that may be why they haven’t cracked down as hard on co-branded card approvals.
That isn’t to say they haven’t cracked down at all. Some people have reported being denied lately for too many applications and too many new accounts. Overall co-branded cards are a churners best route to a good relationship with Chase, however don’t expect them to give you card after card anymore. That would be a bad business decision.
Chase is sort of at the top of the credit card food chain right now. Their business strategy coming out of the “Great Recession” was the correct one and they stole a ton of market share on both the high-end and low-end. Chase is dominate in the market and thus can get away with things like this. Of course that has not always been the case and most likely won’t always be.
We have seen aggressive moves from just about every bank over the past couple of years. American Express is desperately trying to grab business accounts with huge bonuses on their Gold & Platinum products and they have been pushing their SimplyCash Business card as a competitor to Ink. If Chase won’t approve you for an Ink, guess where you are most likely to go?
What this means is that today’s good business decision may not be the right move down the line. At some point Chase may need to start bringing up their numbers on the Ink or Sapphire and guess who they can rely on to be there waiting? By that time of course all of us will should be eligible for new bonuses on those products under the published rules.
If you look at this situation from Chase’s perspective then you will see why they made this decision. Fortunately for us the market dictates a lot of what goes on and that simple fact will most likely keep other banks from following suit. We may see an overall crackdown, but as soon as a VP needs a bonus, we will see the Citi AAdvantage Executive deal all over again.
At this point I am slowing down and enjoying my Chase cards. I’ll definitely keep an Ink Plus/Bold and downgrade my Sapphire to another Freedom. Then I’ll just sit and wait. If/when Chase needs me to boost their numbers, maybe just maybe I’ll consider applying, but only if they beg. 😉