Is Chase Going to Shut You Down?

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Is Chase Going to Shut You Down?

Million Mile SecretsIs Chase Going to Shut You Down?Million Mile Secrets Team

Signing-up for credit cards through partner links earns us a commission. Here’s our full Advertising Policy.

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.

How To Keep Your Chase Credit Cards From Being Shut Down
You Might Lose Your Points and Have Your Account Shut Down If You’re Not Careful!

What’s Changed?

Link:   Chase Ink Terms and Conditions (New)

Link:   Chase Sapphire Preferred Terms and Conditions (New)

Link:   Chase Freedom Terms and Conditions (New)

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

How To Keep Your Chase Credit Cards From Being Shut Down
Repeatedly Applying for Credit Cards Just to Earn Points Could Get You Shut Down!

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?

Link:   FlyerTalk Chase Shut Down Thread

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.

How To Keep Your Chase Credit Cards From Being Shut Down
Don’t Make the Banks Angry by Abusing the System!

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.

How To Keep Your Chase Credit Cards From Being Shut Down
Everyone Uses Their Chase Cards to Get Points for Meals! It’s Folks Who Spend Thousands Each Month Who Might Need to Scale Back

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.

How To Keep Your Chase Credit Cards From Being Shut Down
Paying Your Bill Each Month Over the Years Establishes a Strong Relationship With Chase, as Does Opening a Checking Account

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.

Bottom Line

Chase has updated the terms and conditions on the Chase Ink, Chase Sapphire Preferred, and Chase Freedom cards.

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?

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Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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Apparently Chase is not only shutting off accounts it considers used by “abusers.” I have had a Slate Card that has been an account that originated with a bank that was bought out several times, ending up with Chase. I kept the card purely as a back-up emergency card and never used it. They cancelled it saying that the reason was due to lack of activity.

Just received a letter that CHASE will be closing my only CC with them in 2 months when the card is set to expire. It explained that the reason is b/c the account “hasn’t had any recent activity”.

I used to have 2 cards with them for yrs & then they closed 1 out 4-6 yrs back (cannot recall exactly anymore)… damn them for closing this last 1 as well (it has one of the highest CL among all of my cards, too):

BTW, they’ve been sending me solicitations to open a Checking & Savings acct. with them for 8-9 yrs & I was never interested at all.

IF I could complain to have this stay open, I would give that a try… if not, then I will never have anything to do with that company ever again… there’re enough banks out there to do business with than with this giant P!o!S!

JD… oh, hi to you too, Mr. J D

Chase shut me and my wife out no reason. Honestly I do chrun but not abusive.

For the people that were shut down, how much spending were you doing that led to you getting shut down? What exactly were you purchasing and in what amounts?

Chase shut me down on 2 cards they claim i used and paid too many times in a month. They also reversed my husbands payments over 30 days after posting several times. I dont recommend chase for credit husband and i pledged 50k to foster children in itunes, to help build my credit we used my cards chase didnt like that. My husband is very well to do we dont need you chase.

I got “The Letter” yesterday. I’ve been making a purchase of $21.xx once a month and other purchases as well. Three months ago I bought something that cost $900-plus. I’m asking myself, “What inactivity?!”

Can it be because I pay off my bill in full every month, so they don’t reap interest & fees from me? Doesn’t seem fair…

Chase shutdown my sapphire and southwest last Oct 2014 due to MS. When can I apply again to have chase credit card? Or Im not allowed anymore to get any of their credit card?

I’m a noob. Steep learning curve and a lot to learn with MS… I made a few mistakes ramping up too fast and it remains to be seen if I will pay a price. My biggest one was applying for too many cards too fast. I had also been doing a series of applications to get 0% interest cards to best park a small debt for a year. All the applications were done in 48 hours and probably hard dinged my credit a few times (something I am just learning about now too). Knocked my scores way down (but assuming I do everything right with credit rebuild, I should be ok in not too long). I digress.

So I had gotten approved on Chase Sapphire Preferred and Chase British Air… as well as Cap 1 Venture. Each one… I got one for me and one for my wife. Did a little MS with GC and Bluebird. About $1k on the Chase Cards (several purchases, unrelated amounts).

I had applied for INK thinking it would be a good everyday card and got turned down. This was before I knew it would be smart to slow down (typical of me… anybody else?) I called Chase to see they would reconsider (oops!). I got a kid on the phone who started beating me up. “Sir I see you applied for 1-2-3-4-5-6 cards this year (3 of them at Chase) and there were other cards applied for at your address (huh… he knows that?). And I see you have made several purchases of cash equivalent gift cards at a grocery chain. I think you should know that Chase offers bonuses to their customers because they contract deals with other corporations at great expense. If you are taking advantage…. At this point I started to blank out.

He said he would review this all again and send a letter. I think I remember him saying something about thirty days….

I figured this is a good forum for advice on strategy going forward with the Chase. I figured some regular everyday spending on the Chase cards might dilute things and make me appear like a regular customer.

Any ideas good people?

BTW Flaming my mistakes is unnecessary. I already know I am a doofus.

-I know its only rock n roll but I like it.

Screw Chase. Everyone that reads this blog should stop using them. If they don”t want you to use the cards and get the bonuses why put them out there?

Hit them where it hurts. Stop using them and switch to Citi cards.

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