The "Chase" and the "5/24" rule: An open discussion of credit discrimination

[Anonymous]

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@Callandra wrote:

I also do not see how the 5/24 rule is violating the law in any way. "Too many inquiries/recent accounts" is a valid and common reason that all banks use to deny credit. Maybe Chase isn't publishing the 5/24 rule but it is aggressive credit seeking (let's face it, most Americans only have 2-4 cards so more than that, and more than that in a 2 year span is A LOT by the average standard). 

It is not going to hurt Chase, if anything it will help them because it'll weed out the bonus chasers. 

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Yeah, I was going to say if you ask 'the man on the street':

"What do you think about someone who's opened 5 credit cards within the past two years?" 

I bet you'd get a lot more of 'OMG why would anyone do that? They have some kind of problem!' than not. 

[JSS3]

You present sound arguments, but all I can think is, "Don't hate the player, hate the game."

It's their sandlot, their rules. They don't have to lend us any of THEIR money.

Convincing arguments though.

[Darinox]

Aggressive credit seeking, though how can they establish a claim whereas a large portion of the available credit is being unused? Where is the evidence?

The evidence, therefore, is the consumer report which reflects 13 per cent overall utilization and less than 30 per cent on each credit card; while one can generally be seen as 'aggressive credit seeker' as per more than 5 credit cards, which is in fact a blanket statement as evidence e.g. historic statement balance demonstrates the opposite.

[Callandra]

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@Darinox wrote:

Aggressive credit seeking, though how can they establish a claim whereas a large portion of the available credit is being unused? Where is the evidence?

The evidence, therefore, is the consumer report which reflects 13 per cent overall utilization and less than 30 per cent on each credit card; while one can generally be seen as 'aggressive credit seeker' as per more than 5 credit cards, which is in fact a blanket statement as evidence e.g. historic statement balance demonstrates the opposite.

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Banks don't need evidence. It is THEIR money and they can lend how they see fit. 

And even if a lot of credit is not being used, that doesn't mean that someone one day might just go and run it all up (especially for those that have gotten a lot of credit in a relatively short time frame). 

[Darinox]

Thank you. 

I just want to add something. It is not about 'me' or 'you'. It is not about the inquries. While this is seen as a personal preference, it is also about making the market a fair place. What is the difference between someone with less than five accounts and someone with more than five accounts assuming that both have low utilization? How does one with more than five accounts demonstrates a risky behavior with extremely low utilization or even if he repays with none?

[Anonymous]

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@Darinox wrote:

Thank you. 

I just want to add something. It is not about 'me' or 'you'. It is not about the inquries. While this is seen as a personal preference, it is also about making the market a fair place. What is the difference between someone with less than five accounts and someone with more than five accounts assuming that both have low utilization? How does one with more than five accounts demonstrates a risky behavior with extremely low utilization or even if he repays with none?

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The 5/24 rule doesn't refer to whether you have less than 5 accounts or more than 5 accounts - it refers to whether you have applied for more than 5 in the last 24 months. In other words, you can still have 14 accounts that you opened years prior and that would not be a part of the rule.

[Anonymous]

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@Darinox wrote:

Thank you. 

I just want to add something. It is not about 'me' or 'you'. It is not about the inquries. While this is seen as a personal preference, it is also about making the market a fair place. What is the difference between someone with less than five accounts and someone with more than five accounts assuming that both have low utilization? How does one with more than five accounts demonstrates a risky behavior with extremely low utilization or even if he repays with none?

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You're failing to understand why Chase would institute the rule in the first place.  It has nothing to do with risky behaviour.  It has to do with them limiting their costs by preventing those who would apply for card after card to achieve bonuses.  While some of us may not like it (I certainly don't), there is nothing illegal or discriminatory about this rule.

[Anonymous]

Darinox- try doing a google search for " credit bust out". Someone else referenced the term in another thread earlier today.

[kdm31091]

I can see this getting ugly, so I'm saying my piece and getting out:

This is not unlawful, nor is it discrimination. If you want Chase's cards, you simply can't apply for a bunch of other cards. They're tightening their underwriting. So what? That's not against the law. It's not "you qualify, but they're discriminating against you because you have 5+ in 24"...it's "you don't qualify, because you don't meet the 5/24 standard which they have decided on".

Seems simple to me. Chase is gonna do what they feel is best for their buisness. They are weeding out reward abuse. This is one way to accomplish it. If you truly want a Chase card, you simply have to be patient and wait until you satisfy 5/24. If you want it bad enough, it's worth the wait.

The discrimination logic makes no sense to me. I can't get a Palladium card. I don't meet the criteria. Does that mean it's discrimination? Because only x amount of assets will allow me to get it? No...it means I don't meet the criteria!

[Darinox]

Absolutely right - they do not need evidence luckily there is the FDIC which regulates fair market practices. How is this fair when the sole reason is for more than five accounts opened with all the variety of credit available today?

"And even if a lot of credit is not being used, that doesn't mean that someone one day might just go and run it all up" 

Certainly, though it also applies to the other party - one can diminish all the credit with less than 5 accounts, that's how a bank profits - by charging interest rates.