Climbing the Credit Card Ladder [2023 Full Guide]

hey man when you were only making fifty thousand dollars a year how did you manage to afford a twenty thousand dollar first class flight easy credit cards right loading up on credit card debt no no no using credit card points and miles to fly for free and more specifically folks climbing the credit card ladder hey folks and welcome back to the channel for our new viewers just joining hello how's it going my name is John of John's Finance tips in today's video I am teaching you exactly how you can do climb that credit card ladder so maybe one day you could be sitting at thirty thousand feet in a twenty thousand dollar first class seat paying less than fifty Seven dollars however if that's not your cup of tea that's totally fine because this guide isn't limited to luxury travel in fact if you are just starting on your credit card Journey looking for your first card or you're looking to rebuild credit and start over again or if you might have had two or three cards you don't know where to go next this guide is the perfect guide for you as well in this video you're gonna get the ins and outs of the credit card game from somebody this guy who's been in the game for the past 10 years I've had over 50 credit cards I've accumulated well over 4 million miles in points and I'll be able to lay out the case for you on exactly how to go from your very first secured credit card to maybe potentially landing something like the American Express Centurion card so that sounds like a plan then sit back pop a squat let's go ahead and Dive Right In in a quick note this guide is going to talk about the house of climbing a credit card ladder first your second to your third card but let's quickly address why you want to climb the ladder first reason building credit if you have no credit folks that is such a detriment to you because that could end up costing you tens if not hundreds of thousands of dollars in unnecessary interest payments if you think about it from a mortgage perspective instead of pulling let's say a four or five percent rate you might be pulling seven eight nine percent that is going to cost you big time and credit cards are one of the easiest ways to build credit Point number two saving money using a credit card is kind of just like an automatic discount you can automatically get two percent discounts 3 percent discounts even four percent discounts on very common spend categories for example grocery gas dining travel if that presents itself why wouldn't you take that the third reason and the reason that I personally really wanted to climb up this ladder was for premium travel see when you get your first cards not so much bells and whistles get your beginner cards a little bit more and you as you scale up there's some incredible value packed in the top tier cards before just starting here we're not gonna go there right off the bat it's going to be a stepwise function however in this video that's exactly what we're gonna do let's go in and dive into every individual step so the credit card letter has five tiers first the base tier followed by the beginner tier followed by the mid tier followed by the premium tier and Then followed by the Ultra Premium tier so for each tier we're going to talk about the credit score required what type of cards I actually make up this year the time length you should expect to be here the ultimate objective that you need to reach in order to level up and of course I'll round it out with some example cards so the first here we gotta talk about is the base tier the credit score required here is not because quite literally anyone can get approved for one of these cards the type of cards that you're going to see at the base tier are largely going to be secured cards or student cards these type of cards are aimed specifically at people who really have no credit history so a secured card is basically a card in which you're actually going to put down some sort of think of it as a security deposit but the amount that you put in is the credit limit given to you and you're probably thinking oh how am I going to get anywhere with a 300 credit limit great question you're not the point of a secured card is to show creditors that you are responsible and you know how to manage a credit card and revolving credit the other side of it are the student cards and these are going to be targeted towards college students now unlike secured cards they don't require a security deposit but they're going to have a very low limit as well because similar to secured cards you're learning and you're building at this stage and at the base level to figure out whether or not a card is okay or acceptable make sure that you are not paying an annual fee for either the secured card or a student card so objective what do you need to do in order to go to the next level the most important thing here is learning how to use your credit we're not going to get caught up in the best ever secured card or the best ever student card because these cards aren't meant to be used for forever they're just getting you started so here learning how exactly does credit work how exactly does my statement cycle work when should I be paying my credit cards and do I understand the fact that a credit card is a short-term unsecured loan therefore I'm just borrowing money and I need to pay it back am I paying back in full all of those things these are kind of like muscle memories that at this level you really want to get into habit of because when we tear up and we get into credit cards with bells and whistles you don't want to miss out on the fundamental building blocks at this level just really focus on making sure you're paying your bills on time and in full and here's a pro tip for you making sure that if you can paying your bill off before the statement close date not the due date the state mint close date if you want a quick boost your credit score because the statement close date is the day date in which your credit utilization is sent to the bureaus and then the utilization gets reported utilization is high you'll see a decrease in your score but the statement closed date is typically 20 to 28 days before the due date that's a pro tip for you next up we have time length how long should you expect to be at this level so this is going to vary greatly whether you might be an authorized user on your parents credit card so you're getting a student card you might move up a little quicker than man my credit is absolutely shot I have defaulted I have missed payments I am in collections and so there's going to be a huge range but I would say you're looking into about 12 months here which again some of you might be thinking 12 months I got a vacation next month time folks time you will get there but this is the most important level because it's fundamental it's building blocks it's really understanding and learning how to actually either re-teach yourself how to use credit responsibly or for the very first time you're getting a credit card on your own you've got a credit limit and you understand how to use it so I'd say 12 months is the target it can be shorter it can be longer it really just depends on when that you see that credit score start creeping up because at the next level there is going to be minimum credit score requirements so I've got three example cards for you to Discover It secured card so what it is is you put a 200 deposit in that deposit then becomes your credit limit the more you put in the higher credit limit eventually once you graduate from this card you'll get your deposit back what's really nice about the Discover it's secured is that you can get two percent cash back on up to one thousand dollars of spend every year with the Discover it and you'll get one percent cash back everywhere else and the next two cards are going to be student cards the first student card I look at is going to be the Chase Freedom Student this card's solid because you get twenty dollars every year for up to five years that you're a student as long as you have grades that are in good standing and the other card you want to look at is going to be the Discover It student as well and it's actually pretty similar to discover it's secured in terms of benefits where you're going to get two percent cash back on up to a thousand dollars of total spend in the first year the only difference being that because it is a student card not secured card you don't have to give any sort of deposit now moving on to the second level or what I would call the beginner level at this level the credit score are you going to need at a minimum is going to be 640. and now what type of cards should you expect at this level we're going to see cards that have no annual fee and you're going to start seeing cards that have consistently over one percent cash back so what's the objective in this category so that we can level up and go to that next tier we've got about three the first one you are still really honing in in learning responsible Credit Management because in the beginner segment you're going to get credit limits of maybe a thousand maybe 1500 but you have to understand folks that's not your money that is still a short-term unsecured loan you're borrowing it from the bank don't spend it just because it's there spend it if you have it the second thing here is focusing on hey all right we're getting some sign up bonuses now am I getting the most effective and the most efficient sign up bonus the other cash back management piece is the fact that now you're going to be getting two percent cash back cards maybe three percent cash back cards there are even cards in this category that are offering five percent cash back on certain spend categories and the third thing to really Master before you can go to that next level is are you optimizing kind of where you're deploying that spend because that five percent cashback card I'm talking about is a City Custom cash that's gonna give you a five percent cash back for your high spend category well what is that category and then you have cards like let's say Chase Freedom unlimited which is going to be 1.5 cashback everywhere so really starting to hone in and trying to optimize what type of card am I using for what spend category the time length I expect people to be in this bucket was before they go to the next is probably about six to 12 months this is going to depend on your ability to a masters of fundamentals get comfortable with this card set before you move on to the next now at the same time though some people actually could just stop here and stay here and that's perfectly fine but I would say if you want to move to the next level I would say six to 12 months you're getting comfortable here you're understanding the card management piece you understand the cashback piece you're optimizing for your spend before then you go on to the next tier means for example cards within the beginner tier I've got three so now coming in number three is going to be the Chase Freedom either the flex or the Chase Freedom unlimited both these cards are great the freedom Flex is gonna give you a 200 sign up bonus after spending 500 bucks in the first three months the freedom unlimited using my affiliate link down below you're actually going to double your cash back in the first year so instead of 1.5 you're gonna get three percent cash back on all spend for I believe up to twenty thousand dollars in total spend of course there's no annual fee love the chase family love the chase ecosystem the second card you want to take a look at is going to be the Discover it the bonus is going to double your cash back in the first year and you're gonna earn five percent cash back on rotating categories so the categories could be things like gas or grocery or online shopping and that's going to change every three months so you're kind of starting to see a little bit in this category you have to keep up to date right like hey I've got this card but the benefits change a little bit you want to be able to keep up to date to what that is quarter over quarter sometimes it could even be month over month and the number one card in the beginner category that I would recommend is going to be the Capital One Quicksilver this card is going to be 1.5 cashback everywhere in the signup bonus for the Capital One Quicksilver is 200 after you spend 500 within the first three months of course no annual fee no foreign transaction fee and as a pro tip if you are evaluating beginner tier cards and obviously they're not one of the three I mentioned three things you want to keep in mind one no annual fee two sign a bonus three some sort of cashback earning that's over one percent that's it all right we're leveling up to the third level this is what I would call the mid tier the minimum credit score around here you're gonna need at least a 670. and what should you expect in this tier for one this is where you're actually going to see annual fees starting to come in 50 100 250 or so but don't worry because a lot of these annual fees in my opinion are Justified given the benefits that the card provides and on the benefits front at this category is what we're going to see cards transition from giving just pure a percent of cash back to earning points and then these points think of it as kind of currency from all the major Banks Chase American Express Capital One City can then be used to redeem for various benefits namely travel and so in this category is where we see travel cards starting to come up a bit now I do want to note even though there are cards called travel cards you don't have to be a traveler to actually pull value from the card if you are a travel you'll get that much more value but you don't have to be a traveler per se okay because these cards I think are just a earning better but also their points have more flexibility on how you redeem them and as for objective at this level is learning how to optimize your credit card points and Miles that's it because once you optimize it then you can go and advance to level four so when it comes to points and Miles not all of them are made equal and they're going to vary based on how you travel how frequently you travel who you travel with and so you could spend a lot of time at this level because at this level just to give you an example let's take a Chase Sapphire preferred that's a great kind of mid-tier card instead of just earning pure cashback from Chase you'll earn Chase Ultimate Reward Points the ultimate reward points can be transferred then to one of their Partners let's say a hotel partner like Hyatt or a flight partner such as United and then you can use that Award chart to book stays or flights now if that all went that's okay because this is where I want you to spend your time to really start mastering how am I deploying my points am I getting the best value for my particular travel situation or for my situation overall and there is no rush to get out of here I think this is a really good middle ground for a lot of people because at that next level the annual fee is going to get heftier and you're going to really want a good understanding of how you're going to deploy these points the second objective here actually is start to think about what is your ultimate card strategy are you going to go after Chase cards Amex cards City or Capital One cards are you going to go more Hotel specific more Airline specific at this level we're going to really start filling that out because the sign of bonuses are also going to get higher at the beginner tier the sign of bonuses were 100 200 bonus at the mid-tier you're getting the 60 000 points seventy ninety thousand points on a bonus which easily is five six seven nine hundred dollars worth of value just up front now as for time length at this level I'd say three to six months at this point you're really good you've got your solid foundation of credit management you've optimized your spend and now you're really optimizing how you want to deploy points if you're at this level you're getting comfortable and you could be out of here in two three months you can go on to a top tier but if you're like Hey listen I really want to get things settled I really want to figure it out I don't know if I want that many cards yeah spend more time spend six 12 months before you get that next year but I'd say three to six months is a solid sweet spot for people who are really in it and they're really looking to climb now for examples of mid-tier cards at level three I've got two one is the American Express gold right now the American Express gold comes with a sign of bonus anywhere from 60 to 70 000 points after spending 4K in six months the gold also will give you four points for every dollar that you spend at the grocery store as well as eating out you'll get 3.5 spent when you book flights directly with Airlines or through AMX travel one point per dollar spent everywhere else the car does come with a hefty 250 annual fee yikes but the card also comes with 240 of aggregate dining credits 120 is a dining credit 120 comes from ubereats added together that's 240 so that 2 50 annual fee take up to 240 of credits effectively you're paying 10 the other car that I want you to take a look at is going to be the Chase Sapphire preferred Chase love Chase great ecosystem love my ultimate reward points from Chase Sapphire preferred comes right now with the assignment bonus of 60 000 points after spending 4K in three months now as far as earnings there's a whole laundry list of them couple months to call out I like that there's a three points per dollar spent for like streaming services three points per hour spend for online grocery and 2.5 spent for all travel the Chase Sapphire preferred honestly is a great entry mid-tier travel card because you're in that chase ecosystem and it when you redeem your points through the Chase Ultimate reward portal as a result of having the sapphire preferred you'll get a 25 bonus so earlier you know I talked about the Chase Freedom as good beginner cards will you take a Chase Freedom you stack it with the Chase Sapphire preferred you can actually take your cash back transfer them as points into the sapphire preferred and redeem for 25 more value so again right at this level we're thinking strategy we're thinking synergies how do we build an ecosystem of cards and that's really what's the most important focused here in addition the Chase app I prefer does come with the 95 annual fee but you'll get a 50 Hotel credit every single year so you go and you book hotels use the card 50 credit instead of paying 95 effectively you only pay 45 interested in other card guys feel free to check out in the links below alright now that we've finished three levels we are on to level four and this is what I would categorize as the premium tier of cards I do want to pause here though just because these cards are quote unquote premium by way of having it doesn't really confer status to somebody all right because I know people look at these cards I'll give an example one of them is an American Express Platinum they're like oh my gosh this card's so luxurious so premium ah look at me I'm special no you're not I'm not credit cards don't confer that well at least credit cards in this segment don't they're just a tool like anything else they're premium because there's a little bit more bells and whistles Associated the credit score you're gonna need is excellent credit so that's typically around a 740. and what you should expect for cards at this level one a hefty annual fee three four five seven hundred dollars is not unheard of in fact that's pretty standard at this level two you're gonna get more premium perks so things like lounge access at an airport where you get free food free booze kick up your feet you're gonna get those benefits from these cards these cards certainly are going to have a lot more bells and whistles so you're really gonna have to be comfortable with the first three levels once you are here because there's a ton going on there's gonna be dining credits there's going to be travel credits there's going to be incidental credits which you can pull value out of but you're gonna have to jump through a couple of Hoops there there's just gonna be credits that you get whether it's monthly whether it's quarterly whether it's bi-annually there's a lot thrown at you here we are at the premium level so what is the objective at this level that's an interesting question as I was sitting down and making a video because I have a lot of cards at this level this is in fact the level that I'm at currently which is level four and I would say the objective is twofold one you want to really obviously have a good understanding of cards you're really at this level just you're really playing the credit card game right your opening cards you're getting kind of bonuses you're transferring to Partners here you're transferring the partners there you're doing basically that twenty thousand dollar first class flight that I was talking about at this level you should have mastered that you should have might already be comfortable pulling down one of those redemptions that's the first level right is really getting in tune with using those credit card points in Miles the second and third objective at this level are one earning a lot of money into spending a ton of money on these cards that's it if you want to get to that next level I'll give you a hint it's invite only and you're gonna have to show you actually have a lot of money whether it's invested or whether you're just gonna spend it that's objectives two and three so objective one at this level is continue doing what you're doing from level three there's just no shortcut about it so as far as time length at this level it's indefinite I mean I've been here for I don't even know six years or so I'm just chilling now not that I have a huge desire to get to that next level but you could be here for the rest of your credit card career period that's it if you don't meet some of those earn and spend thresholds to level up to level five example cards in this category you have the American Express Platinum the next card I want you to take a look at is the Chase Sapphire reserve and the number one card in this segment is going to be the Capital One Venture X folks 75 000 points on bonus for case mine in three months okay two points while I spent pretty much everywhere we love that but this car comes with a 395 annual fee but you get 400 worth of aggregate travel credits in the first year 200 travel credit for Redemption through the Capital One travel portal in a 100 anniversary credit 400 worth of credits 3.95 annual fee you get paid five bucks for this car and it is a premium card because it gets the lounge access it gets the global entry it's on the same level as an AMX Platinum a Chase Sapphire Reserve but it pays you five bucks this card I would jump on it any given day if you're at this level and looking at a card all right folks we are at the top after four levels we have cracked it into level five in the Ultra Premium category at this level what kind of cards should you expect one invite only sorry you can't apply they have to invite you for the privilege of applying the second thing is you're going to be hit with a hefty annual fee like I'm talking not hundreds but thousands of dollars a year the objective at this level well since there's no other level the objective at this level is purely to flex like it's like pulling up and pulling out a card and just showing people that either you make a lot of money you have a lot of money invested or you spend a ton of money that's it you don't flex at level four at level five is when you are flexing you post this on IG you post this on Tick Tock you want to tell your mom your grandma your friends about it it is just it's vain it's at the surface level of just flexing for your buddies which Hey listen I'm not knocking it if I get some of these cards I probably do the same the credit score required here is 740 and how long should you expect to stay at this level I would say until your money runs out that's how long until you can't afford to stay at this level anymore so we've got two cards at this level the first card we have at this level is the JP Morgan Reserve this card is invite only into qualify you have to have about 10 million dollars invested with a JPMorgan wealth management team and the reason I do want this card is even though it is a carbon copy of the Chase Sapphire Reserve you do get United Club membership benefit so United Club basically when you fly United they have these lounges for business class travels but the messed up thing about United is if you earn status with United which is their top tier status with United you cannot access United's lounges when you fly domestically so this card actually gives you access to the United business class lounges all around the country so that's the only reason I was eyeing the card because again from a features and benefits perspective it's a carbon copy of the Chase Sapphire Reserve which also means that it's actually not that expensive but getting in is a whole other Story the closest that I got was someone saying potentially if I move moved a quarter million over to chase have them manage it they could consider it but even then that moving the 250 000 over I mean their management fees I think it was like two or three percent it was something where I was like doesn't make sense because of the fact that I know I'm just paying way too much for this money to be managed and when I got on the phone and they talked about how they would manage money like oh yeah we you know we're taking active approach you know we could beat the stock market and for me I'm like that's kind of red flag like anyone's saying they're gonna beat the stock market that's not it so I'm gonna keep trying though but for now I do not have 10 million with Chase and I don't see that card in my wallet anytime soon the next card we have is the American Express black card or the Centurion card this one is a card of lore this card is not a half 10 million invested with us this card is actually on spend and most people think the spend is around 250 000 on an American Express card every year I am never going to hit that period now if I had a business I could see how people could hit that but even my business because it's largely social media but I don't really have a lot of expenses can't do it I don't think I'll hit it and they don't just look for a spend of 250 they look for spend in premium categories is kind of what people say so you have to be spending money with Amex you have to show them you're a high potential client and then they say okay you can apply and we'll let you in and hang on to your horses because the black card oh my gosh the fees so one you have to pay a ten thousand dollar Initiation fee just like welcome to the club pay us 10K and then the annual fee is five thousand dollars something yeah five thousand dollars like this is gonna deliver it's gonna deliver so many benefits so many credits not at all it's the exact same thing as American Express Platinum the difference is yes you probably have better Services yes their concierge is better yes they can take care of whatever for you but it's not that you're paying for so many extra Services it's truly a status Flex like in terms of benefits like yeah like I've perused the forums on Reddit and most people like yeah you know people have flat car like it's just kind of like a platinum truthfully yeah like you might get a couple invitations to invent here you might get backstage there but it's nothing to write home about right and people like oh but there's no spending limit well technically for most of amex's charge card so the platinum and the gold there is no spending limit it's based on your spending history and your spending habit so if you just spend a ton of money like your limit's gonna go up because again their charge cards not credit cards this card the black card it is like it's the flexiest of flex cards because it's not as if it's giving you five thousand dollars of value it's just pay us five grand and you can say you have a black card so that you can show everyone how much money that you've spent every year with Amex I mean it is again a flexi Flex card can't hate it don't hate the player hit the game right it's certainly not a card I see on my Horizon anytime soon on these two I would say the JPMorgan Reserve is probably more realistic for me for the united front but then also a quick note on that I was able to get Star Alliance Gold by flying on United crediting my miles to Asiana guy United gold now I can access the United Club so actually now that I think about it I actually don't really have a reason for the JP Morgan Reserve maybe it's one of those I just wanted to get it to say that I was able to get it but anyway folks Hey listen I appreciate it that is a wrap on climbing the credit card ladder as you can see here at every level we have certain objectives before we can go on to the next tier but largely it's self-serving right you want to master the base level before you get to beginner beginner we want to optimize our spend before we get to the mid-tier the mid-tier we want to optimize our redemptions before getting to the premium tier and at the premium tier you're just spending and earning a lot of money if you want to get to the Ultra Premium tier folks again great video comments questions concerns drop them down in the section below and I will catch you all next time peace

Channel: John Liang

Views: 445,185

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Id: u1R_XSThw2g

Length: 24min 28sec (1468 seconds)

Published: Fri Jan 27 2023