21 resolutions to beat credit woes and debt regret
Minimize your debt and maximize your credit advantages in the coming year
Was 2007 a bad year for you and credit card debt? CreditCards.com recommends paying attention to the fine print on credit card contracts, comparing credit card rates and protecting your identity in the coming year. Here are some easy and not-so-easy steps to take:
1. Resolve to pay down your debt. For the fastest possible payoff, put all extra money is toward the debt with the highest interest rate. Plan B, for those who need an early sense of accomplishment: Choose the card with the lowest balance and pay it off first to gain momentum.
2. If you're in over your head, seek help from a nonprofit, accredited credit counseling agency. Check with the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling to find one.
3. Practice "need-based" shopping. Get a book such as "The Complete Idiot's Guide to Simple Living" by Georgene Lockwood.
4. Create a budget, as old-fashioned as that sounds. One of the simplest methods requires you set monthly amounts for each category of spending, label one envelope for each category, then put cash for each category into its envelope. When the envelope is empty, you're done spending on that category this month. No stealing from other envelopes, either. There are electronic versions of `the old envelope method, but they don't have the impact of watching an envelope dwindle.
5. Sell off unneeded items on Amazon.com, eBay or craigslist.
6. Check the expiration dates on all those gift cards you got over the holidays. Be sure to use them all so you don't lose money.
7. Even expired gift cards may still be worth something. Contact the store or issuer first, then your state to see if you can claim any unused funds.
The fine print
8. Grit your teeth and read the fine print on your monthly statements and credit card agreements. It's painful, yes, but it may save you some money.
9. Pay attention to the interest rate on each monthly statement. Has it edged up? If so, call the company and ask if you can opt out of the interest rate increase and pay off the balance at the previous, lower rate. Be aware that opting out means you won't be able to charge new items to the card. Compare your rates to the average credit card rates for your type of card. (Update: On Aug. 20, 2009, provisions of the Credit Card Act of 2009 went into effect that mandated consumers be given the right to opt out of increases in interest rates, fees, finance charges and certain other changes in credit card agreements. See story.)
10. Pay your bills on time. Better yet, pay the bills as soon as you get them in the mail (if you can). Credit card issuers are giving you less and less time to pay the monthly installments, and charging more and more in late fees.
11. Consider setting up online bill paying for recurring monthly charges, such as utilities. First, find out if there are any fees for paying this way. You may also be able to set up electronic fund transfers (which act like checks) from your checking account. This can help you avoid penalty fees for being late with payments, as well as a corresponding tarnished credit record, since businesses may report your mistakes to the credit bureaus (which can cause your credit card rates to rise under universal default).
12. Shred personal documents you plan to throw away that contain sensitive personal information (bank account, credit card, and social security numbers, etc.). Invest in a shredder that also allows you to shred expired or unused payments cards.
13. Placing a credit freeze (also known as a security freeze) on your accounts makes it difficult for identity thieves to open new credit lines in your name. But it also means you need to thaw your credit before borrowing money, so plan ahead.
14. Recognize that fraud alerts offered by card issuers and credit bureaus do not prevent fraud. They alert you after it may have occurred.
15. If you plan to revolve a balance, opt for a low interest credit card instead. Or even better, make purchases with a debit card.
16. Select a rewards card that matches your spending habits, providing points for expenses you would normally charge and offer rebates you can actually use (such as airline miles with a carrier that operates a hub in your city).
17. Maximize points: Pay for recurring, predictable charges with a rewards card.
18. Read the fine print to find out how points can be redeemed and when they expire.
19. Pay attention to to special promotions from the card issuer -- they'll boost your points faster.
20. Put routine business expenses on your rewards card. You may be able to get reimbursed by your employer and also keep the points.
21. Be aware of what type of behavior, such as late payments, can cost you your rewards points. Move points from an inactive account to an active one, or call your issuer to request that expired points be reinstated.
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