Since beginning of 2018 Chase has been notorious in shutting down accounts without any warnings. The latest report is from this thread on Reddit where a user was shutdown without any warning and he only found out after his transactions on Chase Sapphire Reserve card were getting rejected. There have been random data points all across the board as to what triggers shutdown but still no definite answer. Some shutdowns were obvious (too many cards in last six months) but others have no backbone whatsoever.
One of the admins of Credit Card 101 had Chase shutdown all his accounts. He barely does any manufactured spending , applies for may be one or may be two cards in a year and has a stellar credit history with a credit score in 800’s. The Chase shutdown not only impacted his relationship with Chase but he was asked to submit financial documents from other bank as a result of nasty remark Chase left on his credit report after closing his accounts – ” Account closed due to unsatisfactory relationship” whch obviously was not true . He eventually went through a long tedious process with Chase to reinstate all his accounts after a secondary review.
I have three business and six personal credit cards open with Chase. These cards have allowed us to take some really fancy vacations around the world and I would be shattered if I had to ever face a Chase shutdown . Here are some steps I plan and suggest what others may consider although no guarantee this could help but are more of commonsense steps than anything else.
- If you are just starting off GO SLOW. This is a marathon not a sprint. I would limit myself to applying no more than three cards with Chase in the first year. In the past it was a different story. I personally applied for five to six Chase cards in a year but this was back in 2013 when things were “very” different.
- Try to keep total inquiries on all three credit reports below six in the last six months. Chase (and other banks) often conduct a soft pull on your credit report every few months. If they notice a large number of inquires on your report it raises red flags.
- Try consolidating your credit limits especially on Personal credit cards. Chase is extremely generous when it comes to extending credit card limit. I plan to cancel my Disney Credit card that I barely use and reduce my credit limit by almost 30% across all Chase accounts from where it is today. Make sure to never cancel your oldest credit card it has the greatest impact on your score (length of credit /average age of credit).
- Do not apply for the same card second time you’ve previously received a sign-up bonus with Chase. I have personally applied for the British Airways Card twice in the last four years each time they offered 100K sign up bonus. Chase requires you to wait two years from the time bonus was earned on similar product. My last card with Chase was the Marriott Business card. I was planning to get one of the newly launched Avios card for 100K sign up but not going to apply for any more Chase cards till the dust settles.
- Keep manufactured spending to a minimum. Lately Office Depot/Max and Staples offered extremely lucrative deals on purchase of visa giftcards. If you have a 5X Ultimate Rewards earning card like the old Ink plus Business or Ink Business cash avoid maximizing the 5X category in a short period of time (under six month). I’d spread transactions across other cards and banks to take advantage of these offers.
- Don’t call Chase to negotiate annual fees. I am quite proactive when it comes to negotiating annual credit card fees to see if banks have any retention offers especially with Citibank and American Express. I have not called Chase asking for any retention offers for the last two years. This possibly stands true today because last thing you want is a pair of eyes looking at all your accounts and spending habits triggered by your desire to waive $95 annual fees. Plus its OK for Chase to make some money from me as well especially for someone who never carries any balance. Today I pay annual fees on Chase Sapphire Reserve ($450), IHG ($89), Marriott Personal and Business ($95, $99). Each card offers some terrific benefits that easily outweighs the annual fees.
- Do not add more than one authorized user on your card at any given time and only add people who you could trust. A recent shutdown from Chase was triggered when someone added both their in-laws at the same time (go figure). If you are adding an authorized user do not provide their SSN to Chase as it is not needed.
- Keep your credit utilization on personal cards under 20% and most preferably under 10%. This is a good article to read on bust out fraud basically a white paper from Experian that draws a nice correlation between a lot of factors. Banks lost millions if not billions when people where declaring bankruptcy left right center in late 2000’s after racking up tremendous credit card debt. If they see your utilization is going up from what your normal spending pattern is they may consider you as a high risk customer and shut you down.
- Keep credit card applications with other banks to a minimum as well. For someone starting of I’d recommend to not get more than six personal credit cards in any given year.
- Develop a banking relationship with Chase and do a direct deposit with them if it makes sense. Having some money in savings with Chase could help you establish as a “good” customer.
Again these are just a few precautionary steps that may help to avoid a Chase shutdown and its better to be safe than sorry! Feel free to add anything else you know has or could triggered shutdown.