The 5 Different Types of Credit Card Users – Ask Sebby

I’m at level 4. Booked many trips for a big family. I do touch level 5 occasionally but for me it’s too challenging to think that way all the time. Plan to stay at level 4.

The way I see it, as described, the paradigm can be simplified down to this:
Level 0 is optimizing for risk aversion.
Level 1 is optimizing for simplicity.
Level 2 is optimizing for liquidity.
Level 3/4 is optimizing for value.
Level 5 is optimizing for experience.

Personally I'd say Level 1 is the sweet spot simply because you're going to average comparable value with functionally 0 effort. It's the only level that doesn't have an obvious drawback.

Level 0 is flawed because even an ideal attempt at this path doesn't actually achieve an optimal or near optimal result. Cash and Debit are simply more risky than (responsible) Credit. Obviously there are people who might choose this path out of necessity, but it's not something to aspire to.

The problem with Level 2 is that a significant time investment is required for minimal improvement. It's likely that if you're able to navigate this level you could use your time to build a skill that would ultimately generate a higher yield.

To me Level 3 and 4 are the same thing. You're attempting to get the most value out of your points as you possibly can. Level 3 is just a failure to optimize this path and I'd consider it closer to Level 1 than Level 4 or 2. Anyway the issue with this path is that it's highly dependent on how you personally value travel. The big trap here is losing sight of expected value in the pursuit of gross value. Getting 1.5 cpp on a spur of the moment trip with your buddies is a poor redemption but will probably be remembered more fondly (and thus valued) than a well planned 5 cpp redemption to some once in a lifetime location by yourself.

Level 5 is beyond niche to the point where I don't think it's worth general consideration. To explain what I mean, Level 4 is that type of thing where I think if there was a service that did all the work for free, most people would see some degree of benefit moving up to Level 4 even if ultimately the majority of their redemptions weren't done at the standard of that tier. If a similar service existed to automate Level 5, I have serious doubts that most people would even make a Level 5 redemption.

FWIW I consider myself to be Level 2 with no particular desire to go further. While I recognize that I could probably make more lucrative investments with my time, I consider the game to be fun and enjoy trying to optimize my dollar for the sake of doing so more than the raw value. As an unintended benefit, I believe I've become slightly less prone to impulse buys than I used to be, although this might simply be a consequence of age. Despite this, I still consider Level 1 to be the most likely sweet spot for most people.

Love your channel

It could be very possible that a level zero person is someone who is not comfortable with spending somebody else's money. They may not consider the credit card money their own.

Level 3 and happy there. I did pick up a tip about having a large (>100,000) sum on deposit may warrant a larger cash back reward at some banks. I’ll look into that one.

i just wonder how much real money one has to spend to get the amount of points to redeem a air ticket.

I believe my mother is Level 2. I want to send her this video, but she will argue with me.

I suppose this video only makes sense in the US, right?

Am I correct in saying that even if a credit card gives you cash back, air miles etc it ultimately is costing you more then just using a debit card due to the nature of what it is (a micro loan with a fairly high interest rate be it immediately or several months into your credit card contract), Yea?

Level 5 sounds like an engineering problem. Very interesting. Booking a level 5 plane ticket is probably more enjoyable than the flight itself.

I love your videos thank you for sharing your tips I have a lot to learn

Level 2 but on my way to level 3 this year.

👍🏾

I’m at a place between level 2 & 3, I don’t have multiple cards from one bank to do a trifecta effect but I have a few cards from different banks & I do redeem my points to benefit me. I’ll very soon get more in tuned

Excellent video. I was someone who went from Level 0 when you made this video, blitzed through Levels 1 & 2 during the onset of the pandemic, and am currently working through Level 3 toward Level 4 via TPG, Doctor of Credit, and videos like yours. I've only traveled once domestically using AAdvantage miles I bought *GASP* years ago, and with the travel lockdown, I'll be stuck at Level 3 for sometime until I gain experience earning and burning, as all I know is what I've read. I had a rewards credit card for almost 10 years, only used it occasionally, never understood or redeemed points, and as a result, canceled the card when I opened a cash-back card from the same issuer (USAA). Knowing what I know now, even babies would be impressed by that EPIC fail.
I have a high credit score & a prestigious job, but never took the time to look into all of this until COVID-19. I was a scrappy backpacker years ago, traveling on a shoestring budget using cash or debit in far-off places. As a result, I always believed that this is just the way things were; those living the high-life made stupid amounts of money, which I was never going to pay.
With knowledge, comes power. I am working toward a portfolio consisting of the the Chase sextet, and a couple of other cards, since I'm stuck at home:
– Sapphire Preferred (got it the week of 5/24)
– Freedom Unlimited (got it the week of 5/24)
– Freedom (Q1 2021)
– Ink Cash (Q2 2021)
– United Explorer (Q3 2021)
– Amex Platinum or Gold (Q4 2021)
– Choice Privileges Visa (Q1 2022)
– Hyatt card (Q3 2022) …when I'm under 5/24 again
– Anything else that is interesting…

I went from level 1 to level 4 in about a one month period thanks to people like you Sebastian! I honestly just didn’t know about Credit Card rewards and card optimizations since nobody taught me about them. Once I learned though, man! I went all in! Immediately started running a Schwab-Amex Quadfecta and already got positive value even with those $900 annual fees. I got approved for all of them within a 2 month period, which seemed really fast though. I would be curious to learn if anyone else got approved for 4 Amex cards in such a short period of time.

I don't have the income to make travel rewards work for me. I'm on level 3.

Yes, Korean Air works! It's part of Skytean

if you are a credit card user then you need to watch this video.

Thanks to this channel I went from level 1 to ~4 in about a year in terms of knowledge and optimization

Level one thinking about going to level two really not to sure about it

I’m thinking about downgrading my AMEX Gold to green. I used to ONLY use my Gold for everything but now I’ve a card for everything. Ive AMEX cash preferred which I use for groceries and streaming service with 6% cash back. Unbeatable. Im using my Gold for restaurants and not sure if it’s worth keeping. Any tips? Thanks 😊