When properly educated, no fee credit card can become some of the most powerful allies in your financial journey. How did this all happen with just a Compare credit cards Tier List? Credit card companies are raking in profits from interchange fees, also known as merchant fees.
And the business, well, they’ve made a sale, so they’ve already collected their money, and you can earn rewards, cash back points, and even other benefits like extended warranty, fraud protection, and more. When I first got into the credit card game, I wondered how banks in the world could afford to pay out a couple of 100 to a couple of $1000 with those welcome bonus offers.
How does this all work, and why can we earn rewards? Banks make money in various ways, but one of their primary sources of income comes from the interchange fees they make from each swipe. And they can then pay us a fraction of the profit they also get in the form of points and cash back.
Compare Credit Cards in USA
Now that you know how credit cards work, let’s dive deep into some mistakes you must avoid. Otherwise, this will never work out.
1. Never Carry a Balance on Your Card
The best way to do this is to ensure that you always spend end within your means and stay organized with your accounts. When you happen to be two to three years into the international credit cards game and your late stage where you have 10/15/20 or even 30 cards, you need to make sure that you know your monthly income and your expenses so you never get caught on your back foot and you have to pay a balance. That’s when you can start losing, and instead of coming out on top with free money, you end up paying that money back to the banks.
If you only have $10 in your bank account, you’re probably not going out and buying Gucci flip-flops with whatever money you have left. Some people out here assume, OK, if I got approved for a $5000 credit limit, I could spend it up to that amount, and then I can worry about this way later on because that future version of me, yeah, they, you know, they’re going to be more affluent, they got more time. I’ll let the future version handle that.
2. Never Cancel a Credit Card
Many people make the mistake of closing inactive credit cards, but whenever you close your card, you should realize this. Reducing your age of accounts could further impact your score negatively. Now, look, there are certain exceptions. We will talk about this, but generally, if you apply for a credit card, try not to close it.
There are other options that you can do where if it has the best no annual fee credit card with rewards: keep the account open, turn on automatic payments, cut up the card, don’t use it, and it won’t cost you a single penny to keep that account open and to continue building your credit score. Now, if you have a credit card with a high annual fee and you don’t want to keep paying it because you don’t use that card, then you can do things like downgrading that card to a no-annual-fee card or even product-changing it to a one that has a lower annual fee.
3. Not Understanding Your Credit Card Terms
You need to understand your credit card terms to win in this game and not lose. So, you will be missing out if you have five different credit cards and need to know which credit card will give you the best reward for a specific category.
As an example, if I got the Amex Platinum card and I didn’t know that this is a sound travel credit card and I go ahead and buy groceries on it when I could have used my Amex Gold card instead, which gives me 4X back on grocery stores. It’s those little changes where, over time, it can add up to provide you with a lot more back. The choice is clear in terms of getting 1X points versus 4X points.
3. Never Try To Game The Credit Card Companies By Buying Gift Cards
The last cardinal rule I have is that you should never try to game the credit card companies. I’m talking about those strategies, like buying heaps of gift cards or engaging in manufacturing that should spend. Some folks get the idea of buying many gift joint credit cards or making large unnecessary purchases to hit that minimum spend requirement or get that welcome bonus.
Or to rack up just a general amount of points. Now, look, this stuff was trendy four or five years ago, but there’s a reason why many people don’t do this anymore. Credit card companies are no rookies. They have dedicated hires to make sure that systems are in place to detect this kind of behavior. So if you get caught, and the odds are high that you will, it will lead to severe consequences like shutting an account, forfeiting your hard-earned points, and potentially harming your relationship with the card issuer.
The Full Game Plan to Get the Best Credit Card
In the beginning, you’re at level one, new, and starting fresh. You need more credit history, and it’s like being a rookie in a game. You’ve got essential tools, but the exciting part is every move you make counts. As you use your credit cards wisely, make purchases, and pay them off on time, you’re earning experience points.
Every new level you meet could unlock a new credit card, each offering better perks and rewards. Finally, after building up your experience, grinding through, making several intelligent moves, and leveling up, you can find yourself at the top tiers of the credit card world.
It’s like reaching the elite levels in a game where you’re not just playing; now, you’re having fun, dominating, and enjoying the passive benefits from all the work you’ve done. You work your way up and eventually get better weapons, AKA better credit cards, which become more and more potent over time.
Tier 1 – Baby Cards
You have three different credit cards within that, the baby cards. You have secured cards, credit builder cards, and student cards.
1. Secured Credit Cards
Now, a secure credit card works by giving the bank your money, and they’ll use that as your credit limit. Secure credit cards are the first step for anyone needing help approved for a regular unsecured credit card. How it works is I’ll get if the banks say $500, they’ll use that as my credit limit.
And if, for whatever reason, I decide not to pay off the credit card on time or I run away with that money because I don’t have a good history of balance transfer offers to pay off my debts, they’ll keep that $500 as collateral. Now, think of this as your baby steps in earning the trust of some of the banks.
Luckily for most people, you don’t need to get a secure credit card. You should be able to get a regular credit card with a lower limit, but this will generally be for people with terrible credit scores over time. You pay it off, you build that trust, they’ll go ahead and release you that deposit you gave them, and they’ll turn your secure credit card into an unsecured credit card, which is now where the banks are loaning you money, and you pay off the banks on time.
2. Credit Builder Cards
The second baby card is a credit builder card, which is becoming more popular today. Similar to a secure credit card, this is still a step up: You do not give the bank a deposit on that credit card; instead, you take that $500 and put it into a checking account with that same issuer.
Suppose you get denied access to all of Chase’s products. In that case, you’d probably want to go for this one because they stayed on the website that depositing about $200 into their checking account will significantly improve your odds of getting approved for that card. This is another excellent way to build your credit score fast and become eligible for other cards within that issuer.
3. Students Credit Cards
The third baby card will be a student credit card, and it’s actually how I got started. Within the space, student credit cards don’t offer you welcome bonuses. Generally, these will be geared more towards students, who are the earliest in the journey of getting into the credit card game. They will come with lower limits, which are great for beginners, and it’s very straightforward to start with.
Tier 2: Starter Cards – No or Low Annual Fee Cards
Keep in mind that some people go into Tier 2 and don’t even need to worry about Tier 1 credit cards. These are generally the cards that will also start giving you welcome bonus offers if you want to accumulate many points.
It’s going to come from the welcome bonus offers because generally, if you do the math on how much money you get back, say, for example, the Capital One Saver One card. If you spend $500 on this card, they’re going to give you $200 back, meaning you’re getting 40% cash back, which is a considerable amount compared to the general 3 to 5% on average you’d be seeing on most cards.
Now, starter cards are great because you don’t lose anything. Just set up automatic payments. Follow rule one that I mentioned earlier, and you’ll be good. Even many of the pros I know who’ve been in the game for over ten years have many, many no-annual-fee cards, and they continue to accumulate those welcome bonus offers because those are the types of cashback and points you can stack up fast.
Tier 3: Mid Tier Cards – Target More Spending Categories
After your Tier 2 starter cards, we get into the Tier 3 mid-tier cards, where things get more fun. Within this lineup of cards, the annual fee goes up to the lower end. It’s going to be about $95 a year to hold. And on the higher end, you could see something like the Amex Gold Card, which has a $250 annual fee.
These cards are unique because sometimes they are a bit harder to get. That’s because they give you a higher credit limit, give you more benefits, and cost a bit more to hold. So even for the Amex Gold Card, by paying $250 a year, you will now be getting additional credit. You get $10 Uber Eats and Uber credits every single month. You get $10 restaurant dining credits at select locations like Shake Shack and Grubhub.
Even with some of these other cards on this list, like World of Hyatt, which I own, I can stay at a Hyatt H1 once a year entirely for free. And if that hotel room costs 150 to $200.00 and I pay a $95 annual fee, you’ll then be able to calculate, OK, I’m now getting even more positive value from holding these cards.
Now, say you don’t even utilize any of those benefits. Even if you sign up for these cards, as long as they give you a welcome new customer credit card offers bonus where sometimes you’ll get 300 to even $800 cash back, you’re still generally breaking even. If the World of Hyatt card gives me 60,000 buy points one-to-one, those are worth $600.00. If I subtract $600.00 from 95 dollars, I still earn about $400.00 in profit.
Tier 4: Business Cards – Expended Benefits in Business Categories
These here will be harder to get because, technically, you need to own a business. So, in the US, the government, the IRS, qualifies businesses as sole proprietors or freelancers, and we’re living in a country where it’s more favorable to be a business owner even if you work a nine-to-five.
So whether you’re a tutor, you’ve walked a dog before on Rover, you’ve done Uber Eats, you’re an Instacart delivery driver, or you have a consulting gig, someone asks you for advice. They Venmo you 50 or $100 for your time. You’ll technically be a business owner or even a sole proprietor.
I love that business credit cards allow you to earn many points. Generally, they give you way more in their welcome bonus offers. Many of these business credit cards don’t impact your credit.
So, as an example, if I got the Chase Inc. business cash card and sales starting my business for that first month, if I don’t pay off my balance in full, generally, if you did this on a personal card, you would see your score go down the very next month. But these business credit cards don’t report it to your credit reports. So, if I had a balance on one of my chasing cards, my personal credit history would still look squeaky clean.
Tier 5: Premium Cards – Luxury Benefits in Travel Categories
These are going to offer you luxury benefits and travel categories, and they’re going to be excellent for anyone who takes a lot more flights throughout the year. You’ll also notice that the annual fees are significantly higher, so you’ll earn many more benefits.
I’ve seen others make the mistake of being anxious and wanting to get these cards to fill up their wallets. It’s like having the heaviest wallet in the world with all the premium-tier cheapest credit cards, but then they don’t travel, and then holding some of these cards ends up costing them money.
So, I’m paying over $1500 in annual fees. If I weren’t traveling that much, I would cancel one of those cards, but as someone who travels at least a few times a year, I can still calculate that I’m getting positive value. Many people will also assume premium credit cards are more challenging because they have a more extensive line of credit. They give you more benefits, and they have a higher annual fee. But I’ve seen more people get approved for the platinum card than for some Tier 2 or Tier 3 cards we went over.
Tier 6: Elite Cards
These will be your elite-tier lowest credit card rates and arguably the hardest ones to get. An example is the JP Morgan Chase card. You’re going to need $10 million in assets if you even want to be qualified to get invited to apply for this card. Then, the card on the left is the Centurion card.
Rumors are that you need to spend an extraordinary amount of money for this card, whether it’s $100,000 per month, $200,000 per month, or even half $1,000,000 per month. I’ve seen data points all over the board, and all I know is this. Back then, it was easier for most people to get invited, but now they’ve tightened it up, and many people are having a more challenging time getting invited, even when they’re spending a lot of money on their cards.
By the way, the Centurion card has an annual fee of $5000, and an initiation fee of $10,000 is due the first year you get it. Many people assume that these elite-tier cards are what they need, but I want to avoid getting caught up in this whole world of, oh, if I can’t have it, it’s got to be good, and it makes you want to have it more.
Look, these cards don’t offer the best benefits in the world. Even the Centurion card, you would expect it to give you like 20% cash back on Louis Vuitton or Gucci or, you know, some rich place that rich people go to. After all these years, I’ve realized these cards are more than just flexing status cards.
It is fantastic anytime I see them, but you will need someone to move the needle if you’re even making $1,000,000 annually. The main attraction of these cards is that they offer excellent service, so you get your dashboard. You usually have a customer support Rep who can handle many excellent requests from you.
So if you’re trying to sit down at a sold-out Michelin-star restaurant, generally, if you’re a cardholder and you call the Centurion customer service line, they have a much higher chance of getting you a seat than if you didn’t have this card.
Best Credit Card Sequence
Capital One Savor
I’ve often named this card the best low rate credit card on my list. That’s because right now, they have a benefit where you can earn 10% cash back on Uber and Uber Eats, a free Uber One membership, and 8%, 5%, and 3% back on their respective categories.
So it’s a perfect card. It has no annual fee. You also have the No APR promotional offer and get an excellent welcome bonus offer. Capital One is also a superb issuer to get started with because they are more inquiry-sensitive, so they prefer customers who only have a little history and are just now getting into this game.
Chase Freedom Flex Card
This is an excellent option for you to start with Chase because it opens the door to getting other Chase cards down the list. Now, remember there’s a rule called the Chase 524 rule. That rule means if you want to get approved for a card with Chase, you’re limited to having five cards within 24 months if you want to get approved for anyone to Chase’s cards.
So Chase implemented that rule many years ago so that people are only trying to apply for some of these cards at a time, and they make you reconsider adding Chase into your lineup earlier on. What this means is if I already had four or five credit cards in my arsenal, I applied for another card within two years.
I’d probably get automatically declined now in between applications. The earliest I would go is one month between applications. That’s pushing it a bit, but I’ve had no issues every time I’ve done it. Some people wait at least three months, which is too long. So, the average wait is two months between applications.
One month. If you are paying a lot of rent, I recommend waiting about two to four months before getting the bill card. I recommend getting the built MasterCard first, the Capital One Saver One card, the Virtual Credit Card, and then the Chase Freedom Flex card because these three cards will help you build your credit history and get approved for your first mid-tier card.
Chase Sapphire Proffered
That here is going to be the Chase Sapphire Preferred. This is a tremendous mid-tier starter card for anyone looking to get their first annual fee card. It has a decent number of benefits that you don’t have to stress out about. Spending money on the Chase Sapphire Preferred will also open the doors with Chase for you.
If they see that you have the Freedom Flex and an annual fee card with them, it will make getting the Chase Inc. business cards a lot easier. Now, this here is like an upgraded version of what I did back then, but as soon as I got my if I preferred, I was looking right at the Chase Inc. business preferred cards because of the 524 rule.
Once again, at this point, you will still be under 524. And what’s cool is that there is an exception to that rule: if you get a business credit card, it will not add to the 524 rule either. How did you get so many cards with Chase quickly? Well, it’s because these three cards did not add to the 524 rule, and at this point, I was still at 4:24.
So I got the Chase Sapphire Preferred and the business cash in the Ink Business Unlimited. They’ll bump up the offer where you’re earning 80,000 or 90,000 points, which is the equivalent of 800 and $900 cash back on the minimum side.
Gold Credit Cards
This was a fascinating point because the American Express Gold Card feels so different from any of the previous best interest rate credit card credits. After the Gold Card, you’ll have a choice of getting your first premium-tier credit card. If you don’t travel that much, go for the Capital One Venture X card because it pairs well with the Capital One Saver One card. With this card, you can change and transfer the cash back into points and then use the capital and travel portal for your bookings.
By the way, the Capital and Travel portal is excellent. They offer price match guarantees, alerts, and cancellations. It is very flexible compared to other portals I know of. Now, if you travel a decent amount but not a crazy amount, get the Chase Sapphire Reserve. Okay, the credits are on.
This is super easy to use, and you’re already part of Chase’s ecosystem. And if you want to ball out and maximize all their benefits, you can get the Platinum card or even get all three if you travel that much. For me personally, what I did was I got the Platinum card, and that’s actually because I was mindful of the Chase Sapphire rule, where since I got the welcome bonus offer on this, I would have to wait four years before being eligible for my next welcome bonus offer.
How To Get Approved for Any Credit Card?
It does make a difference. Now that we know the road map and how you can get started, here are two secret tips for getting approved for a new credit card. Back in the day, when I first started, people were charging a lot of money just for this little bit of information here. So I’m going to give you, I don’t know if it’s worth $1000 in info, but it’s at least $100. If you apply for any cards and are declined, here’s what will happen.
And all the credit card companies, by nature, will go through a process of telling you why you got declined. So sometimes it’ll be your credit history was not long enough, or sometimes it’s just your credit score sucks, or you have too many open accounts in a short period that’s going to help you get a better understanding of why they declined you.
The next thing you’ll do is call a reconsideration line, where you talk to a live agent and rep who has the power and authority to reverse that decision when you get declined. By the way, it’s different from all these people clicking a button and going through it daily. It’s an algorithm flagging your account, and you shouldn’t get approved based on the metrics they set. Now, I know the reconsideration line has helped many people because you can plead your case, talk to an actual human, and let them know.
Now, the following quick tip is piggybacking. So, obviously, my fiancé and I were picking some apples here, piggybacking me. The way piggybacking works within the credit card world is that if my fiancé does not have the best rewards credit card score in the world, I can add her as an authorized user onto my account and transfer my credit history, power, and reports that I’ve had to hers.
If they add you as an authorized user to one of their cards, they never have to give you the card. You don’t have ever to use their card. If they add you to it, they can transfer the power to you. And they’re piggybacking on the effort and the positive things you’ve done with your credit score.
Those are the two main strategies for getting approved for a card if you happen to get declined, as well as how to improve your credit score extremely fast. When you improve your credit score and apply for a card, your chances of getting approved increase significantly. Now that you probably have your first credit card, we need to talk about unlocking your card’s full potential.
How To Unlock The Full Credit Cards Potential
One of my favorite strategies for unlocking your card’s potential is maximizing the welcome bonus offers you get. Remember we talked about those business credit cards? Well, it gets pretty high if you look at the fine print on how much you have to spend on some of them. Even back then, when I got my first business credit card, I thought more creatively. I will be paying less than 10,000 or $15,000 on my Amex Business Platinum card to get this number. I am still determining how I will do it, but there are ways.
Now, to do this, you will be charged a small fee. It’s about 1.85% with pay USA tax right now. By the way, not affiliated. This is literally off from the IRS website. They have three different credit card processors.
So get a new credit card, pay off a part of your tax with that credit card, maybe then get another credit card, and hit that welcome bonus offer. And this is how you can quickly get a lot of points. The second strategy is to pay your bills, vendors, and contractors with a different service provider.
Now, the following advanced strategy in accumulating a ton of points with your credit cards is not just the spend; it’s not the welcome bonus offers but the referral aspect you get when opening a new card. So, take as an example: you can earn up to 200,000 points per year if you Max out the referrals on your chasing cards. You can also get up to $500.00 cashback per year with the Chase Freedom cards.
So this is precisely what I did, going from a million points to a couple of million points. By the way, my 3,000,000 points one-to-one cash back is $30,000. I can cash out anytime. If I could do it in the last five years, you guys can, too, and $30,000 cashback can be life-changing for most of you.
It would be even still for me now, utilizing the family and close friends, saying it’s straightforward to bring up in a conversation what credit cards you have. How’s your credit score? Do you want to make money and optimize your benefits? If you know you have your friend Jim Bob, who has a 520 credit score and could be better with paying off his finances on time, please do not refer him to it.
compare the market balance transfer, you could be ruining lives out here, too, but if you know someone who’s very disciplined with their finances and the only thing they lack is an understanding of credit cards.
Get them to hit their welcome bonus offer score, which is two $300.00 free money in their pocket. That is usually the hook that causes people to realize that this stuff works. The second method is social media.
This is powerful, and something I did recently was utilize my Instagram. So even if you have an Instagram account with 100 to 200 followers, if you get just one for two people who watched your story, use your link to sign up for a card. After you explain the benefits, that can add up to a reasonable amount.
Compare the market credit cards
This is because if you have a whole bunch of credit cards, you get a whole bunch of points but don’t use them for high redemption awards. So this is the difference between just getting one-to-one cash back with my 3,000,000 points, which is $30,000. Instead, I could turn that into 100 or $150,000 in free travel.
I booked a trip and may get a hotel at a discounted rate using my points there. OK, I doubled the value of my points, but the second thing you do is transfer your points to a dedicated one—transfer partner. So here’s what the Chase Ultimate Rewards portal looks like. You can go through it, and you can see that even my points right now are worth up to $17,704.00.
If I book through the Chase travel portal, these redemptions generally range from 1 cent to three cents per point. Through transfer partners, these can range from 1 cent up to 10, and I’ve seen even instances of $0.20 per point. An example of this is trying to get a first-class flight. So here is a new Japan Airlines suite.
For example, if I went from San Francisco to Tokyo, the trip cost would be $20,606.00 in cash. So, for that same flight, I found the point equivalent through American Airlines First Class; it would cost you 80,000 points plus $5.60.
Eighty thousand points are equivalent to $800, and you’re paying $800.00 for a $ 20,000-dollar flight ticket. If you guys like that, drop a like below, please. So, how do you even do that? It could sound more straightforward, but it’s not. I broke it down into even three basic steps you would do here.
So you go on the American Airlines website. You would then select redeem miles and determine which transfer partner to move your points to. When transferring, they accept built rewards one-to-one or Marriott Bon Voy points from 3:00 to 1:00. This is how it would look. Transfer your points to frequent travel programs 123 and then book your reward travel. Now. By the way, finding a flight like this takes work.
OK, it takes a little work, but I wanted to talk about some resources I also use. So, award hacker. They’ve been around for a while. It gets you started. It gives you ideas on which transfer partners could work out for you. For this, I would put it in my home airport and say I want to go to South Korea because I miss the food there. That food was so good. Put that in there. OK, we’re going first class here; put in the details, and basically, it will load up my different options in transferring my points to get to that destination.
