What Does the 5/24 Rule Mean for Credit Cards?
Demystify the 5/24 rule for credit cards. Understand its impact on new applications and how to accurately determine your eligibility.
The “5/24 rule” is a guideline in personal finance that influences eligibility for new credit card accounts. This unofficial policy considers recent credit history and can impact the approval process for certain card issuers.
Understanding the 5/24 Rule
The 5/24 rule refers to a credit card issuer’s internal policy that denies applications if an individual has opened five or more new credit card accounts within the past 24 months. This rule considers credit cards opened with any issuer.
This count includes all new credit card accounts that appear on an applicant’s personal credit report. Even closed accounts opened within that 24-month window still count; closing an account does not reset the clock.
Credit Accounts Included in the 5/24 Count
All personal credit cards, regardless of the issuing bank, count towards this limit. This includes charge cards, retail store cards, and even closed personal credit cards.
Authorized user accounts can also count, as they often appear on your personal credit report. While these typically factor into the count, reconsideration may be possible if an authorized user account is the sole reason for a denial.
Most business credit cards generally do not count towards the 5/24 rule because they usually do not appear on an individual’s personal credit report. However, business cards from specific issuers like Capital One, Discover, and TD Bank are exceptions, as they typically do report to personal credit bureaus and thus contribute to the count. Conversely, other types of credit such as mortgages, auto loans, student loans, and personal loans are typically excluded from the 5/24 count. Credit card applications that were denied and did not result in an opened account also do not count.
Credit Cards Subject to 5/24
The 5/24 rule is associated with Chase Bank, which uses this policy for approvals on many of its credit card products. While the rule is not officially published by Chase, its existence is widely recognized through consumer experiences and crowdsourced data. This policy is primarily designed to manage the volume of new account openings, particularly for individuals who frequently apply for cards to earn sign-up bonuses.
Most personal credit cards offered by Chase are subject to the 5/24 rule. This includes popular rewards cards and many co-branded cards, such as those associated with airlines and hotels. Even many Chase business credit cards typically require an applicant to be under the 5/24 limit for approval, though the approved business card itself might not add to the personal 5/24 count.
Determining Your 5/24 Count
Reviewing your personal credit reports is the first step to assess your 5/24 status. Individuals are entitled to a free copy of their credit report from each of the three major credit bureaus—Experian, Equifax, and TransUnion—once every 12 months through AnnualCreditReport.com. These reports detail all open and closed credit accounts and their opening dates.
Once you have your credit reports, you can manually count the number of credit card accounts that show an opening date within the last 24 months. Many credit monitoring services, including apps provided by the credit bureaus themselves, offer tools to view and sort your accounts by opening date, which can simplify this process. This diligent review helps determine if a new credit card application would likely be impacted by the 5/24 rule.