New Year's Credit Card Resolutions

December 2, 2014, Written By billh
New Fertile Year 2015

We’re approaching another new year, which means we all have a chance to focus and fix areas of our life with some New Year’s resolutions. One resolution may be to get your credit card account in order so you can lower your balance and boost your credit score. Here are some ideas to get you started:

Make Two Credit Card Payments Each Month

Instead of paying a certain amount toward your balance every month, consider paying half that amount every two weeks. This will have a very positive effect in two ways. If you make a half payment every two weeks, you will be making 26 half payments during the course of a year, or 13 full payments. So you will make one extra full payment during the year compared to making just a payment once a month. In addition, you will be paying less interest each month. Most credit card issuers charge interest based on your average daily balance during the month. If you make payments during the month, this will cut down on your average daily balance, resulting in less interest penalties.

Make Micropayments

You can make multiple payments throughout the course of a month, cutting down on your average daily balance. Small payments, or micropayments, call add up and be quite beneficial. If you forego dinner at a restaurant and make dinner at home, take the money you save and make an online payment toward your balance. Do this whenever you save money and you’ll see a significant decline in your balance after a period of time.

Prioritize Your Credit Cards

If you have a balance on more than one credit card, choose one that you want to pay off as quickly as possible. You still need to make the minimum payment on each of them, but choose one to focus on. There are several ways to prioritize credit cards: by balance, by interest rate or by credit limit. The best way to save money is to pay off the card with the highest interest first. Then you can move on to other cards.

You could also try a process known as the “Snowball Method.” In this scenario, you pay off your smallest debts first and work your way up to the big ones. With each card you pay off, you will feel like you are making a difference in your debt. This motivates you to continue the process. Eliminating accounts like this also reduces the number of payments you make each month, which will cut down your overall bills.

Maximize Your Credit Card Rewards

If you have not taken a look at your credit card rewards programs, do so. This could be an easy way to earn cash back or points toward something special. Some credit cards have revolving rewards programs, which means each quarter brings a new opportunity to earn rewards. The first quarter may have 5% cash back on groceries, while the second offers 5% cash back on office supplies. Check your rewards programs to see how to get the most out of the money you spend.

If you have the cash for an item you want to purchase, use your card to buy it instead. Then, pay the balance off by the end of the billing period. You’ll get the rewards for the item without having to pay any interest on any balance. This strategy is only good for people that are financially disciplined and completely pay off their balance on time each month. If you carry any type of balance, don’t focus on the rewards. Pay off that balance as quickly as possible.

Only Spend What You Can Pay Back

If you have gotten into the habit of charging more than you can afford, now is the time to change. You should only use your credit card if you have a logical time frame for paying it back. If you don’t have the money now, what makes you think you’ll have it in a month or two? Unless you’re in an emergency situation, stay away from any purchase you can’t pay back by the end of the billing cycle. This will help you avoid debt and maintain a higher credit score over time.

Pick the Right Credit Card for Your Needs

If you are going to apply for a different card in the new year, make sure you choose the best credit card. Compare the interest rate, annual fee, rewards program and other features for each card, and select one which will suit your needs. There are over 1,000 credit cards offered in the United States, and it’s important to choose wisely. Make sure you read the terms and conditions of all cards you are considering in order to make the most informed decision.



The information contained within this article was accurate as of December 2, 2014. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.