How To Manage Your Credit In The New Year
One of the keys to managing your finances effectively is keeping your debt to a minimum, or at least reducing the debt you already have. Most consumers find it challenging to live a completely debt free existence (ever tried to buy a house without a mortgage?), but carrying high interest credit card debt makes reaching financial goals impossible.
With every new year comes the chance for a new start and to regain control of your financial situation. The economy, while showing signs of recovery, is still struggling. And upcoming government changes to credit card rules may change the way you manage your credit. Many tried-and-true debt-avoidance strategies, like utilizing 0% balance transfer offers to postpone the inevitable, may not be available for long. Here’s what you can do to manage your credit in the new year with the new credit card rules.
Always Pay Your Credit Card In Full On Time
As you may have already noticed, credit card companies are increasing their fees before the new rules take place in February. This means you’re paying more for late payments or going over your credit limit and higher interest rates on existing balances. To avoid these outrageously-high fees, focus on paying at least the minimum payment before the due date. It goes without saying you should pay your balance in full every month if you can possibly afford it, but even paying the minimum should prevent your debt from growing any larger.
Stop Using Credit Cards
Credit cards are convenient and, if used responsibly, using certain cash-rewards cards can pay off handsomely. However, if you can’t control yourself your goal should be to reduce your credit card use or stop using them entirely. We’re a society that has gotten used to just swiping a credit card to pay for things when we don’t have the cash available – that has to stop. Sweeping your financial problems under the rug is a recipe for disaster.
Credit Card Rewards Programs Aren’t So Rewarding
When the new credit card rules take effect, cardholders will find their rewards programs probably won’t be quite as rewarding as they once were. With credit card rewards becoming less and less generous, a major incentive to use credit will have disappeared. There’s still the convenience factor, of course, but if more people used cash, the price of many everyday items might actually decrease (see The True Cost Of Credit).
Balance Transfer Offers A Thing Of The Past?
When a high interest credit card balance started getting out of control in the past and credit was easy to come by, you could almost always transfer the balance to a zero interest, or at least low interest, credit card. With credit tightening, these offers will likely be few and far in between and probably only available to people with immaculate credit histories and high credit scores.
about 6 months ago
I would take out no more than 2. I would start out with a secured card. Granted you would have to put a deposit upfront to secure a line of credit, but the deposit would also garner interest while you're proving your creditworthiness. You could start out small, like $200-300 or larger like $1000-2000. Either way, I strongly suggest you to continue to use your debit card and pay cash like you've been doing, and make small purchases that you can pay off in full every month (around $20-50). I would only use the credit card in dire emergencies. After the secured card becomes unsecured, then you could receive offers for other cards, but chances are just the one card could work just as well. Be sure to dispute anything that was involved in the identity theft and make sure that you have a POLICE REPORT. Your "good accounts" (rental, club, cable, cell, etc.) CAN be reported through this reporting agency called PRBC. This is for REAL. You can have your good credit reported and complied in a scored report that can be considered with your traditional credit reports. It's become increasingly popular and I'm certain that it will help you out immensely.
about 6 months ago
a time for reflection. look at the past and what you have gained. now move on. don't let emotion prevail. reason and action are the only true protection.
about 5 months ago
I have to say that the Amazon Visa does allow you to rack up points quickly (and then get $25 amazon reward certificates). Of course, it depends on how much you spend on their site and how much you charge to the card in general. The best way to rack up points on any card (whether it's American Express Membership Rewards points, Capital One rewards, Citi, etc. — there are just too many now to mention!), is to charge EVERYTHING to one card. From grocery shopping, to holiday shopping, to gas, to utility bills, to whatever the $225 charge is that you need to pay…charge everything to one card if your credit limit allows. Good luck!
about 5 months ago
*****I have one through American Airlines ~ some restaurants are up to 5 points per dollar spent.
. . . .but with airlines going in the toilet, who knows how good this program will be in the long run. . . .