Pushing reward card applications to the limits

Banks are cracking down; what you need to know

Banks cracking down on reward card applications


We don’t all have to be like Walter Cavanaugh. In fact, we probably can’t be.

Cavanaugh, from Santa Clara, California, holds the world’s record for having the most active credit cards. You think you have a lot? Cavanaugh has 1,497. Guinness World Records calls him “Mr. Plastic Fantastic.” The cards weigh almost 39 pounds and represent a combined credit line of $1.7 million 

In an 2016 interview with Money magazine, Cavanaugh said his credit score is “nearly perfect” because he uses only one card and pays it off every month. Like many crazy ideas, Cavanuagh’s quest to amass hundreds of cards started with a bet with a friend. 

Most of us have far more modest ambitions. Among Americans who have credit cards, the average number is 3.7. People always ask how many is too many, but there is no right answer. Some people have 20 or 30 cards or more and are content with that, particularly if they are not paying those pesky annual fees on too many of them. It is still possible to have a solid credit score with dozens of cards.

The pursuit of rewards – not some bet with a friend – is the most compelling reason to open new credit card accounts. The sign-up bonuses can be huge, up to 100,000 points in some cases, after spending a few thousand dollars in the first few months.

However, card issuers in the past few years have started getting wise to those of us who open accounts, milk them for sign-up bonuses, then close the cards. Most people wind up hanging onto cards for longer, but cards are far less lucrative for the banks if you quickly close the accounts. 

In response, banks have started tightening up their rules. Even if you have stellar credit, many of them now won’t approve your card application if you have recently applied for too many cards. Cavanaugh built up most of his collection more than 10 years ago, before these rules existed, and it also sounds as though many of his cards are from small retailers, not the big issuers. A related strategy that some employ is agreeing to approve customers for a card, but not awarding sign-up bonuses to repeat customers. 

Card issuers are cagey about what precisely their rules are for approvals and sign-up bonus eligibility. I have talked to many bank spokespeople over the years, and they usually say something true but unhelpful, such as “all card applications are reviewed individually.” Other times, they just decline to comment entirely, which is their right.

However, there are now so many bloggers on reward travel that we can begin to see the outlines of some of the banks’ strategies. When people share their experiences on approvals and rejections, you can glean some patterns. This is how news emerged about Chase’s so-called “5/24 rule,” which seems to be a guideline that Chase uses to reject applications from people who have applied for more than five cards (from any bank) in the last 24 months.

Here are some of the approval and sign-up bonus rules that seem to exist for the major issuers: 

American Express: Can receive only one sign-up bonus per card per lifetime. Can have a maximum of five credit cards active at one time (not counting additional charge cards).

Bank of America: There have been reports this year that Bank of America is now limiting customers to four or five active card accounts at one time. 

Barclaycard: Can receive sign-up bonus on same card multiple times. No apparent limit on open accounts.

Chase: Will generally not approve card applications if you have received five or more cards in the last 24 months (from any bank). Cannot receive sign-up bonus on the same card in the last 24 months.

Citi: Cannot receive a sign-up bonus on the same card in the last 24 months.

Some bloggers have very detailed information on each issuer. Doctor of Credit, for instance, offers several points of information on each one.

Also, be aware that just because a bank might allow, say, an unlimited number of accounts at a time, that does not mean that it will approve you for every single one. In some cases, you might need to request that the bank lower credit limits on existing cards. Banks don’t want one person to have too much credit. Maybe they’ve learned their lesson from Walter Cavanaugh.

See related: Scoring a great rewards card from your existing bank, Is it worth keeping the Chase Sapphire Reserve for a 2nd year? 

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Updated: 03-25-2019