As many of you know, I am a big proponent of travel hacking. I started 4 years ago this week, back when I was working a job with no paid time off (no vacation, no sick, no paid holidays). My goal at that time was to just get started slowly, earn a few bonuses, and start socking away points that would go towards some unplanned future travel. Sure, I would take a few flights back “home” to Indiana for the holidays and such, but I didn’t really have a plan for opening, closing, or redeeming my points.
Fairly quickly, I learned that Chase offered some of the best cards in the travel hacking world. Between the Chase Sapphire Preferred, Chase Sapphire Reserve, Chase Freedom and Freedom Unlimited, and their co-branded cards with Southwest, United, Hyatt and IHG (Holiday Inn, Crown Plaza, Intercontinental), Chase cards were 6 of my first 8 cards I opened over 2.5 years. (Yes, I listed 8 different cards above – I never opened a United card and I also downgraded my Sapphire Preferred to Freedom when the first annual fee came due after 12 months).
Chase also has one of the more restrictive policies for opening cards. It’s called 5/24, which means 5 card openings in the past 24 months WITH ANY CARD ISSUER! Because I had opened a Delta Gold card by American Express, then later a JetBlue Plus card from Barclays, by the time I learned about my eligibility for business credit cards, I was well past 5/24 (somewhere around 13/24 at my highest point). So I slowed down considerably, and I waited 13 months until I dropped back down below 5 cards in the most recent 24 months, and I was finally able to get the Chase Ink (Business) Preferred card and then the Ink Unlimited a few months later.
I also started getting referrals from my friends in the blogosphere that know how much I am into the travel hacking world. In the last few months, I referred 4 other members of personal finance Twitter to different Chase cards, earning a referral bonus from Chase, and my friends got the top bonus offer on each of those cards from Chase.
And then, suddenly, I was trying to buy lunch on March 18th and my Sapphire Reserve card got declined. No worries, they probably suspected fraud and shut down the card. So I tried to swipe my Freedom card; also declined. I almost never carry cash on me, but I had $10 that day, and I was able to pay cash for my food.
I immediately dialed the number on the back of my Sapphire Reserve card and tried to figure out what was going on. The customer service rep was nice, but clueless as to what was going on. He asked to put me on hold for a minute, and after 10 minutes he came back to say he didn’t know the reason, but they would be sending me a letter on all 6 personal credit cards and both business credit cards. They had all been closed that day.
*insert sunken feeling*
Not only was I having my favorite credit cards closed without warning and without explanation, these were some of my oldest credit cards, most of my highest limit cards, and we were on the brink of a recession amid a global pandemic. Chase was freezing out a small business owner by eliminating all lines of credit. And to top it off, they weren’t going to tell me why.
The next day, I checked my online account to see PDF versions of the letter that would arrive over a week later. “This account and/or a related account was closed at the bank’s request. Account not used as intended.” Talk about vague! I never participated in the practice of “manufactured spending” because it feels too much like money laundering to me. Every dime spent on those 8 cards in the past 4 years was for legitimate personal or business expenses, and were paid back on time and in full each month.
Furthermore, I had hardly used any of the valuable Chase Ultimate Rewards points, because I was saving them for future travel that I didn’t even have planned yet. At the 2.0c per point valuation provided by The Points Guy, I was sitting on over $8,800 of future travel in my Ultimate Rewards balance. Now, I would have 30 days to redeem the points, or lose them forever.
After the initial shock wore off, I scrounged up some of my credit cards that are issued by other institutions. I fell back into a rhythm of using my Schwab Card from American Express for 1.5c per dollar spent and my JetBlue Plus card from Barclays for grocery purchases for 2x points.
I went to the local Chase branch to try and talk with a Banker, but they were booked solid for the entire day I had taken off from work. Instead, I walked up to the Teller and requested a Cashier’s Check for the full amount of my balance, and for her to close the account. I told her about what happened to my cards, and she was as shocked as I felt 2 days before.
Later that afternoon, I called the number on the back of 5 of the Chase cards. The 5 I called about each have annual fees, and it seemed to me that if the bank had closed the accounts I had paid for, they owed me at least a partial refund of the fee since I wasn’t getting those card benefits anymore. A couple of the cards had fees paid more than 6 months ago, and they refused to honor my request for even a partial refund. But I was fortunate to receive a full refund on my $450 Sapphire Reserve, $149 on Southwest Priority, and $95 on World of Hyatt cards, for a total of $694 back in my pocket within a couple weeks. It took 1-2 business days for the credit to show up on my account, and then I had to call back and request a check for the balance.
This all happened 4 weeks ago, so I am running out of time to redeem my Ultimate Rewards balance. I started out by redeeming 1c per point for my remaining balances, because I decided that Chase was never going to get another penny of my money ever again. That took care of about 85,000 points. Then today, I transferred 34,000 points to Southwest Airlines to top up my Rapid Rewards account along with 50,000 points to World of Hyatt for some future hotel stays. This leaves me with 301,000 points to either transfer or cash out, and because of the current economic climate, I am likely going to cash them out to pad my emergency fund.
So far, the effect to my credit score has been minimal; a drop of 17 points. I fully expected 3 times that much, since I was losing so much history and available credit limit all at once. And it’s only been a few weeks, so I know the pain could still be felt over the next month or so. I never carry a balance, I have a couple other cards in the 3-5 year old range, so I just hope everything will work out ok there. Fortunately for me, I refinance my mortgage last summer and I have no plans to buy a car anytime soon, so I should be ok even if my score dips further.
In sum, it all just sucks. I would caution anyone who is interested in travel hacking to not rely so much upon one card issuer for your future travel plans. There are so many programs available besides Chase Ultimate Rewards, including American Express Membership Rewards, Citi ThankYou Points, US Bank FlexPerks, and the various hotel and airline cards. Cashback cards can also be a valuable part of your strategy.