How To Climb The Credit Card Ladder 2020 UPDATE

hey credit Warriors and here it is my 2020 update to my very popular how to climb the credit card ladder video you know 2020 in general has been a crazy year and I know a lot of people watching this may have trashed their credit scores due to missed payments high utilization and may have even had credit card accounts closed on them and the credit card industry has also had new cards come out that slightly alter the ranges of some of the tiers in my original how to climb the credit card ladder video so taking all that into account we're gonna give you the definitive guide to moving up through the tiers of credit cards in 2020 no matter whether you're starting off building up your credit for the first time or you're building back up because you've trashed your credit score because of what a crazy year it's been so let's start with tier 1 so tier 1 is basically credit builder cards which would include secured credit cards and also subprime cards that target people with low credit scores and then also dedicated balance transfer cards now the one big thing that these cards all have in common is that they do not accumulate any kind of rewards okay no cash back for your spending no points nothing like that and most of the time they do not have annual fees although some subprime cards will have annual fees and we'll talk about that a bit more later so let's give you some examples for building up or rebuilding credit we have the old faithful capital 1 platinum this is my number one recommended credit builder card link below then we also have a few others for example we have secured cards like the Capital One secured MasterCard the open sky secured visa this one does have a thirty five dollar annual fee or the self credit builder secured visa then we have subprime cards so First Premier Bank has a variety of subprime cards but it seems the only difference between them is the card art look it even says choose your design at no additional charge that's because everything else there's a charge for so in Tier one subprime cards do often have annual fees and high interest rates and that's because they're targeted people with especially low credit scores so if you think about it they're basically lending you money by taking quite a big risk themselves and thus they charge higher fees and they have higher interest the Indigo platinum MasterCard is another subprime card and it may charge an annual fee depending on your credit score so if your credit score is enough to need to get this card chances are you're gonna get charged an annual fee credit one bank also has a variety of subprime cards and in general these subprime cards should be avoided unless you absolutely have no other choice in order to build up your credit score then also in Tier one we have dedicated balance transfer cards like the chase slate this card currently isn't available on their website they're actually targeting people through the mail with this one then another example is the City Diamond preferred it also offers no rewards or cashback its main selling point is its bounce transfer function it offers 0% APR for 21 months now there are other bounce transfer cards in other tiers that have other things going for them like the earn points or whatever but the ones in tier 1 basically are cards that have bounce transfer as their main selling point so who's going to be getting a tier 1 card well it's going to be people with low credit scores so as a guide I would say credit score below 680 would you know counter sort of medium low to low and if you're going for a subprime card that's going to be people with much lower credit scores so the low 600 is maybe even into the 500s so this could be someone just starting out on their journey of climbing the credit card ladder building up their credit score or it could be someone who has trashed their credit through missed payments through bankruptcy and they need to build that credit score back up in terms of credit limits if you have a low credit score if you only just qualify for one of these cards the credit limit they're going to give you is going to be just a few hundred dollars maybe even like three hundred bucks or something like that although in theory if you have a much higher credit score and for some reason you still want to apply for one of these cards they actually might give you a credit limit of several thousand dollars but for most people applying for these it's going to be a few hundred bucks alright so that's where we start on the credit card ladder let's now look at the next tier tier two now these are credit cards that actually give you some kind of rewards the most common in this tier would be cash back but there are a few others that earn points to my other requirement for these cards is that they have no annual fee some examples of tier 2 cards would be the city double cash the discover it card capital 1 Quicksilver the new Apple credit card the new US Bank altitude go or the Amex everyday card or also the chase freedom now most of those earn for example the Apple car the city double cash but actually a few of them earn points like the annex everyday card although because it's only tier 2 and it has no on your feet its points multipliers are lower than other MX cards with annual fees for example it earns two points for dollar at supermarkets whereas the annex gold that has an annual fee earned four points per dollar at supermarkets the chase freedom also earns cashback but that cashback can be transformed into Ultimate Rewards points if you get a Chase Sapphire card later on cards in this tier will often come with a small signup bonus of between 100 and 200 dollars in value and that's normally for spending between 500 and $1000 in the first three months the discover it card takes a different approach they match all the cashback you earn in the first year for some that could be more lucrative than a one to two hundred dollar sign up bonus now there could be some overlap with Tier one with some of these cards for example the discover it card even though it earns rewards could be considered a starter card for some many people do actually manage to get this as their first credit card but seeing as it earns rewards I still put it in tier 2 the chase freedom as well as a tier 2 card ok it earns rewards and has no annual fee fits the tier 2 requirements but I actually got that as my first credit card and that's because I bank with Chase so I already had a relationship with the bank and the banker in the branch actually wrote a letter to the credit card Department supporting my application but originally I was denied for the Chase Freedom but I think an important point would be people who get the Chase Freedom or the discover it at their first card would normally be people starting out with a clean slate ok so not really any credit score but no negative marks either I think if you're someone who is absolutely trashed their credit score through bankruptcy or negative information or whatever you're going to have to go back down to tier 1 and get either a secured card or one of those subprime cuts so what credit score would you need for tier 2 well in general it's going to be around the upper 600 so maybe 670 and above but you know your income and your relationship with that bank will also play a role so some people who have lower credit scores may still be able to get approved for tier 2 cards how much credit will they give you well for people who kind of just meet the requirements normally the minimum credit limit on these cars will be around $500 okay chase freedom minimum cred is 500 but obviously if you have a much higher credit score you could have a credit limit of thousands of dollars of one of these carts okay let's move on to the next year Tier three okay so this is where things start to get really lucrative for people who are playing the credit card and travel hacking game and Tier three has actually got broader since my last video on this topic so tier three cards have annual fees typically of around a hundred dollars the most common annual fee is ninety five dollars but it can actually go all the way up to 250 so the Amex green and the Amex gold I would say fit into Tier three the Amex Green has an annual fee of one hundred and fifty dollars the Amex gold is 250 and that's really the highest annual fee I would expect in this tier two hundred and fifty dollars now the Amex gold came out revamped in 2018 and I did consider making this kind of like a tier three point five card but I held back I just made tier three a bit broader two reasons while I didn't want to make it too complicated but also to the Amex Gold does offer two hundred and twenty dollars worth of credits for food delivery and also airline fee credit which if you use them right this card won't cost you really any more money than the average Tier three card okay even though upfront you're paying 250 you get a lot of that value back in terms of signup bonuses these cards will normally give you a signup bonus of about five hundred dollars in value and that would be for spending between 3000 and 4000 dollars in the first three months and that normally comes in the form of either transferable points airline points or hotel points so what cards would fit into this category well we have the - Amex cards we just mentioned green and gold and they earn transferable points Chase Sapphire Preferred the city premier those two auto and transferable points then we have various code branded airline cards with a hundred dollar annual fees like United Delta Airlines Amex car the mid tier airline cards they fit into this category - and then there are some hotel cards which typically will give you a free night and they have an annual fee of around $100 so they fit into this tier - including the Marriott bond buy card from Amex the Marriott Bomboy boundless from Chase the world of higher card the IHG Rewards Club premier card they all give you an anniversary free night that more than cancels out the annual fee of the card then there's also the Hilton pass Amex that gives you a free night if you spend at least $15,000 in any given year that one also gives you Hilton gold status though which kind of makes up for the fact that you have to spend fifteen grand and the annual fee is around a hundred dollars now in terms of points multipliers on your spending Tier three is where you start to get some really good multipliers so the AMEX gold earns four points per dollar on US supermarkets and restaurants worldwide the city premier earns three points per dollar on travel including gas the Chase Sapphire Preferred owns two points per dollar on travel and dining and if you want to keep track of your points multipliers how many points you're getting per dollar spend a great app to use is Max Rewards it gives you all your cards in one place showing you balanced information and crucially which cards to use where in your local area to get the max rewards ie the highest points per dollar spend another really cool feature of the app is that it automatically activates Amex and Chase offers so that you'll save money without even realizing it normally it costs 20% of the money you save but you can get $50 worth of fee free savings by signing up through our link below ok back to tier 3 cards so what are the requirements for this tier well in terms of credit score you'd need to be above 700 typically although if you have high income long credit history you may get away with being slightly below but most people would need to be above 700 and the sort of minimum credit limit on these cards it's going around $5,000 for example the Chase Sapphire Preferred the minimum credit limit they will give out is 5000 so your financial information is going to need to reflect that you can handle that amount of credit all right guys let's move on to the next tier Tier four these are known as premium credit cards ok and they have several characteristics so first of all they'll all have an annual fee of at least 450 dollars they used to all be 450 but now some go as high as 550 or even 5 95 and there's a few that go even higher though typically they'll all provide some kind of travel credits that you can call some of that annual fee back throughout the course of the year but you do have to pay around $500 or so upfront in an annual fee when you get the car also typically they will all provide some kind of airport lounge access most common it's through Priority Pass the ones with transfer more points typically have priority pass although if you get a cobra nick card like a co-branded airline card it will often be the lounge network that's part of that airline for example the American Airlines executive platinum gives you Admirals Club access the Delta Reserve will give you Delta Sky Club access etc you can expect the signup bonuses to be either the same or slightly higher than tier 3 so between $500 and $1000 in value depending on how you use it okay because these are always going to be points or transferable points or airline miles or Hotel points it's not going to be cash back so depending on how you use the bonus it could be worth probably up to $1,000 and also the minimum credit limit you could expect on these cards would be around $10,000 that's sort of the starting point although it can go much higher the minimum credit score for applying I would recommend around 720 although obviously with you know depending on your income and depending on your credit history length you could go slightly lower than that now these Tier four credit cards are normally the highest level most people will reach they include the Amex platinum the Chase Sapphire Reserve the city prestige then there are also co-branded Tier four cards like the two airline cards we already mentioned also the hilton aspire which gives you Hilton Diamond status that's the top status available plus the usual Priority Pass airport lounge access etc then there are even some other tier 4 cards that have higher annual fees like the luxury card Gold Card which is nine hundred and ninety five dollars a year but really you're just paying for a gold-plated card okay the actual benefits of that card are not much different to other tier four cards so I would still put it in Tier four then there's also rumored to be a new AMEX card coming out that would be above platinum and below Centurion with an annual fee of around $1,500 now would this be a Tier four point five card well I don't know yet probably I'm just going to list it as a particularly exclusive tier four card especially if it's publicly available because there's one thing that the next tier of god tier 5 all have in common let's talk about that now tier five tier five cards are invitation-only that is the number one criteria for a tier five card in my five tier credit card system obviously they are very exclusive as well they're expensive but yeah you cannot apply for these cards you have to be invited they have to look at your financial information I have to think this is the kind of guy we'd like to be a card member so the most common tier 5 card we think of would be the annex Centurion also known as the black card then we also have the JPMorgan Reserve which is only four members of JPMorgan private bank then overseas there is the coots silk card in the UK the Dubai 1st royale card in Dubai and all these cards have different selling points so the Amex entering card it is expensive it costs $5,000 per year in annual fees and you know you have to spend about three hundred and fifty thousand dollars a year on other Amex cards to be considered for the card there is a website Centurion comm where you can register your interest but I did it a few months ago and they never got back to me foolish they don't know what they're missing out on anyway there's insuring card caters to a kind of celebrity style lifestyle in its benefits so it gives you equinoxes in membership for example and access to a private terminal no not a lounge an actual private terminal at LAX Airport in LA so they're aiming it at Hollywood celebrities basically then in contrast the JP Morgan Reserve card actually only costs five hundred and ninety five dollars a year not that much more than the Sapphire Reserve and the benefits are very similar to the Sapphire Reserve just a few things a slightly better so really it's just a flex card that shows that you're loaded and that's because it's only available to members of JP Morgan private bank so not chase private client JP Morgan private bank and supposedly you need to have ten million dollars in assets under management but in reality it seems they let a few cheapskates in to then the coots silk card has no annual fee at all but it's only available to members of coops private bank which is a very prestigious bank in the UK where the Queen keeps her money and to be a member you have to have at least 1 million pounds that's 1.3 million dollars or so under management with coots then the Dubai first royale card which actually has like 24 karat gold and also a diamond inlaid into the card its requirements are even higher basically it's only available to like the royal family and ultra high-net-worth individuals in Dubai people with you know who are billionaires or have at least hundreds of millions of dollars so that's tier five guys an interesting place but not a place that most people end up hanging out in in reality most people's cards will come from either tier 2 or tier 3 so for myself I have I think one tier one card a couple of tier two cards several tier three cards and then just one Tier four card there's not really much point to getting more than one tier four card for most people and that's because you're going to be doubling up on benefits like they all give priority Pass lounge access there's no point in having two priority pass cards you can't use both of them at the same time all right you can only use one and most of them are unlimited anyway so you're just wasting one of them and obviously the annual fees are huge so that's gonna add up really quickly if you're not using the benefits it might be worth it for some people who are like power travelers and you know always traveling and really can make use of all of the benefits on several tier four cards but for most people I would say one is enough really you're getting that card for the benefits and then tier three cards are gonna be four earning points and perhaps tier two cards if you want to earn cash back you probably have in tier two so that is the tier system guys and I hope it helps you out on your road to improving your credit and climbing back up the credit card ladder whether you're doing it for the first time whether you're rebuilding credit after you know financial hardship or perhaps your credit score's okay but you just want to earn more credit card points and rewards that's what we're about on this channel so guys before we go do check out max rewards it's a very helpful app in keeping track of your credit card spending and how much of your credit limits you're using and then also obviously your credit card rewards knowing which cards to use where and we do have that deal for $50 worth of savings for free so please check that out below link is in the description of this video thanks so much for watching guys please subscribe if you're new and we will see you next time bye bye

Channel: The Credit Shifu

Views: 435,094

Rating: 4.8995581 out of 5

Keywords: the credit shifu, credit card, how to climb the credit card ladder, secured credit card, american express, capital one platinum, tier system, amex centurion, black cards, jp morgan reserve, tier system explained, rewards credit cards, exclusive credit cards, apple credit card, amex platinum, citi prestige, credit cards explained, credit cards, capital one, best credit card

Id: pBtSNH8lU6A

Length: 17min 6sec (1026 seconds)

Published: Sun Jun 14 2020