How I Plan to Deal with Post-5/24 Reality

The short answer is: I plan to do the exact same thing I’ve been doing for years, as in chase credit card sign-up bonuses. Cash first, miles second, hotel points third. I don’t care what bank it is. As long as the offer is substantial, I’m game.

Now, on to the long answer. In case you don’t know what Chase 5/24 rule is, I recommend this post on Doctor of Credit, probably the most comprehensive resource on the subject. I also suggest you bookmark this Flyertalk WIKI thread that contains all the latest developments.

Basically, if you are someone who constantly applies for new credit cards, it will be very difficult  for you to get approved for Chase Sapphire Preferred, Chase Ink Plus, Chase Freedom and  several co-branded products such as Chase Southwest Rapid Rewards Visa.

Many of my readers have  a dilemma  on their hands: To stop applying for new cards or stay the course? After all, Chase Ultimate Rewards and Southwest currency are probably two most valuable programs when it comes to family vacation. UR points transfer to Rapid Rewards as well as Hyatt, a hotel program many folks absolutely love. No need to deny it, I ain’t judging.

First, let me say  that there is no right or wrong way to approach this subject. If you want to stop switching cards  for this or whatever reason, go for it. It doesn’t make you an idiot if you plan to take a break from this hobby and focus on burning the points you have accumulated so far. Greed, in my opinion, is much worse than restraint.

With that, here are my two cents:

1) The ROI on continuing to switch cards is greater than  bonus’ value of Chase Sapphire Preferred or Southwest credit card.

It’s true that the offers are not what they used to be. That said, I still have no issue finding a new card to chase after.

Let me give you an example. So, you’ve just recently received a sign-up  bonus on Chase Sapphire Preferred as well as one of Southwest  offers. You’ll have to wait at least 24 months in order to be eligible for both of them again.

Let’s assume that you decide to only get three new cards (with any bank) within the next two years so you can beat Chase 5/24 rule. Now let’s assume that those three cards come with $300 sign-up bonus. You’ll get $900 total.

But suppose you apply for eight cards instead (four cards per year) and forget about this whole Chase thing. Assuming once again that each offer is worth $300, you’ll be $2,400 richer. BTW I’m not just talking about pure cash back bonuses, but any  hotel or mileage card.

If you plan on traveling and paying for expenses with dollars, then it’s reasonable to  assign concrete value to each offer. After all, you are going to use UR  and Southwest points for travel as well.

So, we have $900 vs. $2,400, $1,500 difference. I speculatively value UR point at 1.25 cents each, so assuming the offer of 55K points on CSP is still around, we are looking at $688. Rapid Rewards points to me are speculatively worth  1.2 cents each, a bit less than UR point. So, assuming there is still an offer of 50K points, it would mean foregoing $500 (after deducting the annual fee).

That’s a total of $1,188, still short of $1,500. I realize that Companion Pass will change the math, but still. Plus, I’m not even taking into an account the fact that you could sign up for another card instead of CSP or Southwest Visa. So, in short, opportunity cost of foregoing new sign-up bonuses is greater than those two offers combined.

This is a simplistic way of looking at it, I know. But basically, my point is, constantly switching cards will probably still give you the best bang for your buck. There are many Amex cards I haven’t gotten yet, and now they are starting to send me targeted offers that don’t have “once per lifetime” clause.  Obviously, churning does require work and organization and there are other factors involved. Only you can decide if the juice is worth the squeeze.

2) There is no guarantee that the sign-up bonus on Southwest card will count toward Companion Pass down the road.

Right now it does, but it could easily change two years from now or even tomorrow. I know that’s the main reason some of  my readers want to stop participating in this hobby for a year or two. Well, unless you have a crystal ball, it’s impossible to say how all of this will play out. Rapid Rewards program might also devalue or stop flying your desired route. I absolutely love Southwest,  but it’s not always the best or cheapest choice for a family vacation, even with a Companion Pass.

3) Chase may change the rules, and it probably will. 

Personally, I don’t think this rule will stick around long-term, though I could be wrong, of course. When the next (inevitable) recession hits, all banks will be once again desperate for your business. I fully expect Chase’ policy to get less draconian down the road. When? I have no idea.

4) Many have been able to get approved despite 5/24 rule.

It’s a long shot, but not impossible. Targeted offers, having a sizable deposit at Chase branch, calling reconsideration, all of those things could change  No to Yes. You won’t know unless you try. I’m actually planning on applying for Chase Sapphire Preferred in a year or so. In the meantime, I’ll be monitoring all new developments in this area.

The 5/24 rule is not written in stone, especially when it comes to co-branded products. The data is somewhat mixed and the only way to know for sure is to apply yourself.

5) You can always just pay for your Southwest flights and Hyatt stays.

I know it sounds like travesty, but hear me out. Simply take the cash back bonuses you wouldn’t otherwise have and channel them toward  your airline tickets and lodging. I know it’s harder to part with actual cash, but maybe it’s not such a bad thing, right?

Readers, what are your thoughts? Do you plan to stay the course or take a break?

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