Watch out if you aren’t using your Chase credit cards for regular spending and only going after bonus points offers! Chase has updated the terms of their Chase Ultimate Rewards points earning credit cards.
Thanks to Million Mile Secrets reader Jon for pointing out that you could lose all of your points and have your account shut down if Chase thinks you’re abusing their system. Here’s what you need to know.
There’s new language in the terms and conditions for the Chase Ink, Chase Sapphire Preferred, and Chase Freedom cards that clearly states you could lose your points or be shut down for abusing the system.
The section “How You Could Be Prohibited From Earning or Using Points” states:
We may temporarily prohibit you from earning points or using points you’ve already earned:
If we suspect that you’ve misused the program in any way, for example…by repeatedly opening or otherwise maintaining credit card accounts for the sole purpose of generating rewards
And the section “How You Could Lose Your Points” contains similar language:
Your points don’t expire as long as your account is open, however, you’ll lose all your points if:
We believe that you’ve misused the program in any way, for example…by repeatedly opening or otherwise maintaining credit card accounts for the sole purpose of generating rewards
The terms and conditions on these cards didn’t have such clear language in the past (you can read older versions of terms and conditions for the Chase Ink, Chase Sapphire Preferred, and Chase Freedom cards to compare).
In the older versions, Chase states that they “reserve the right to prohibit you from earning or redeeming points” if:
…there is any fraud or abuse related to the accrual of points
But now their terms are much more specific!
What Does This Mean?
In the past, folks have reported having their accounts shut down by Chase for various reasons. Some of the more common ones include:
- Spending thousands per month on bonus categories (like 5X points at office supply stores or gas stations)
- Transferring points to other people’s accounts (not your spouse or partner)
- Opening up many credit card accounts in a short period of time (not just Chase accounts)
- Overpaying credit card accounts, or running up a big balance early in the billing cycle then paying it off before the statement closes
- Paying credit cards from many different accounts (like Serve, Bluebird, etc)
But now Chase has made it very clear that you could lose your points or be shut down for:
- Signing-up for cards just to earn the bonus, then cancelling
- Using cards solely to buy gift cards or other methods of “manufactured spending”
- Repeatedly signing-up for cards just to earn the bonus or points
Most folks don’t abuse the system like this, and shouldn’t have to worry.
But if you’re regularly opening new Chase credit cards, earning the sign-up bonus, and then closing the card without doing much further spending, only to re-apply later, you might want to slow down.
For instance, some Chase cards such as the Chase Freedom allow you to close the card and then sign-up for it again 24 months later.
Cancelling a card immediately after the sign-up bonus posts to your account is a huge red flag. It’s much better to keep the card for 9 or 10 months, then decide if the card is worth keeping.
And you may want to be careful if you’re spending thousands of dollars per month at office supply stores to earn 5X Chase Ultimate Rewards points and then paying your bill with your Bluebird or Serve account.
How to Avoid Getting Shut Down
I’ve always said that it’s important to maintain a good relationship with the banks (pay bills on time, use credit responsibly, and don’t carry huge balances).
Chase is 1 of the biggest miles-and-points credit card issuers, so you do NOT want to get on their bad side. And the Chase Ultimate Rewards program is 1 of my favorite ways to get Big Travel with Small Money, because their points transfer to so many great airline and hotel partners.
The banks know there are folks who abuse the system. And now Chase is making it clear they will shut you down if they catch you.
And because gift card fraud is such a huge concern, even services like Evolve Money are changing their rules to make it more difficult to use gift cards for paying bills.
Here are 4 tips to maintaining a good relationship with the bank.
1. Don’t Cancel a Card Right After the Sign-Up Bonus Posts
Don’t apply for a card, cancel after getting the sign-up bonus, then apply for it again in the future. This would definitely fall under the category of “repeatedly opening credit card accounts for the sole purpose of generating rewards.”
Use your card now and then for regular expenses, and keep it at least until it’s time to decide whether the annual fee makes it worth keeping.
And cards like the Chase Freedom don’t have an annual fee, so it’s a good card to keep long-term to build your credit history. And you can earn a lot of points (even with regular spending) on their rotating bonus categories.
2. Don’t Over-Do Bonus Spending
If you’ve been spending thousands of dollars per month at office supply stores to earn 5X points on the Chase Ink cards, you may want to slow down.
Spending thousands and thousands of dollars, especially using 1 credit card, is a sure way to get noticed. That said, there don’t seem to be any hard and fast rules about how much is too much.
Keep in mind Chase recently changed its terms and conditions, so what’s worked in the past might not work in the future. Moderation is important!
But don’t be afraid to use you card for bonus category spending, like meals or travel. We all do that – that’s why we got the cards in the 1st place!
3. Take It Slow
It can be tempting, especially for folks just starting out, to apply for lots of credit cards in a short period of time. This could send the signal that you’re desperate for new credit and that might make banks nervous.
A better strategy is to start out slow with just a few cards. Use them regularly and make your payments on time.
4. Be a Good Customer
Use your credit cards occasionally for regular spending like meals, groceries, and gas. Don’t just put them in your sock drawer after you’ve met minimum spending requirements.
Paying your bills on time and keeping cards open establishes a history with the bank over the years. You might even consider opening a bank account with Chase if they have a branch near you.
As with everything in our miles-and-points hobby, moderation is important! Don’t get greedy and you should be fine.
They now clearly state that you’ll lose your points or have your account shut down if you use your credit card accounts only to earn points, or apply for cards over and over just to earn points.
This should NOT affect folks who use their credit cards responsibly and exercise moderation in their spending. But if you’ve been spending thousands of dollars on gift cards each month,
you may want to be careful.
Will this affect how you spend on your credit cards, or which cards you spend on?