Finance expert advice for the new year: 'If you only do one thing, do this'
These tips will help you better manage your finances and credit cards in 2019
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Saving up, paying off credit card debt, and sticking to a budget are some of the most common new year’s resolutions. But these financial goals are vague, a lack of a plan sets us up for failure.
Average credit card APRs are currently reaching all-time highs while consumers are making the most of their spending with credit card perks and rewards.
In an era of balancing maximizing rewards points with tackling credit card debt, CreditCards.com asked personal finance experts to name one thing they recommend you do this year to improve on your financial outlook.
Here’s what they had to say.
8 credit card tips to improve your finances in 2019
- Don't let your card restrain your options.
- Thoroughly understand your card's benefits.
- Calculate the costs incurred for your points.
- Use rewards points to give back.
- Review what's in your wallet.
- Find your passion – and collect points accordingly.
- Get in the habit of paying your bills – frequently.
- Start, skip and stop in order to save.
1. Don’t let your card restrain your options
If you’re looking to maximize travel rewards on your credit cards, it is better to avoid a credit card tied to a singular airline or miles program, according to Dan Arita, product manager for Credit Card and Rewards at BECU.
“There are some popular, generic travel cards available today that allow travel on virtually any airline, or even at hotels, rental car agencies and cruise lines,” Arita said.
In addition, he explained, simple cash back cards offer rewards that can be redeemed for anything, including travel. These types of cards enable the traveler to shop around for the best price with multiple airlines or travel providers, instead of being locked into one airline or its codeshare partners.
If you travel internationally, Arita suggests picking a card without foreign transaction fees. Cards that don't charge foreign transaction fees and offer points on travel include Bank of America Travel Rewards credit card and Wells Fargo Propel American Express® Card.
See related: What counts as travel on a travel rewards card?
2. Thoroughly understand your card’s benefits
You may think the heavy lifting is done once you’ve chosen the best credit card based on your needs and wants, but the homework should continue on, according to Rakesh Patel, vice president at Experian CreditMatch.
“Knowledge about credit card rewards doesn’t stop after you select your cards – you need to be proactive with understanding the rewards associated with them on an ongoing basis,” Patel said. “The key in maximizing your card benefits is knowing when the rotating rewards categories are in play.”
Rotating cash back cards may offer 5 percent cash back on gas one month, and another month it may be groceries – so pay attention and optimize the spend on the card during the correct timeframe. To stay ahead, you should be checking for the rewards changes at least once a month, he said.
3. Calculate the costs incurred for your points
It may seem like you’re a savvy consumer racking up points, but if you’re going in the red doing so, your efforts may be for naught, warns Stephen Newland, an accredited financial counselor and founder of Find Your Money Path.
“Understand exactly what you are receiving in rewards from the credit card company and what it costs to earn that reward... If [collecting points] makes us go out to dinner, for example, an extra 3-5 times a year then we’ve likely just spent any of those rewards that we collected throughout the year,” Newland said.
“On paper, it shows that we still received rewards, but if our behavior causes us to spend more, then we really haven’t received any rewards,” he added.
See related: How dining out can help you earn more rewards
4. Use rewards points to give back
Volunteering, donating, and other acts of kindness do good for others, and for our hearts. If you’d like to do something altruistic with your finances this year, consider donating or gifting your rewards points, according to Beverly Anderson, head of cards and retail services at Wells Fargo.
See related: How to donate unused rewards miles, points
5. Review what’s in your wallet
The new year offers a fresh start, even when it comes to what you’re carrying in your wallet.
“Many people get comfortable with their cards and may be missing opportunities to maximize their rewards. Take time each year for an annual review of your rewards cards and their benefits to determine if they still meet your needs,” said Carl Thibodeau, SunTrust card manager.
Benefits extend beyond points. When reviewing the cards in your wallet, check if they still offer the same benefits that made them appealing to you in the first place. These may include travel insurance, purchase protections, access to airport lounges or free checked bags.
6. Find your passion – and collect points accordingly
Spreading the wealth when it comes to collecting points could lead to a handful of small pots with few rewards accumulated. Instead, consider dedicating your spending onto one card with rewards you’ll surely make use of, according to Lauren Liss, vice president of U.S. cards at Capital One.
“Find a card that makes it easy to get rewarded for doing what you're passionate about,” Liss said.
If one of your resolutions for 2019 is to travel more, Liss recommends the Capital One Venture Rewards Credit Card, which offers 2 miles per dollar on regular purchases and 10 miles per dollar on hotel rooms booked and paid for through hotels.com/venture.
If you're hoping to explore new restaurants or attend more concerts or sporting events, Liss suggests considering the Capital One Savor Card, which offers unlimited 4 percent back on dining and entertainment.
7. Get in the habit of paying your bills – frequently
Some of us sit down once a month to pay our bills, but Holly Johnson, of ClubThrifty.com, suggests consumers tackle their outstanding debt a few times a month – even to the tune of once or twice a week.
“I do this consistently to make sure my spending aligns with my budget – and to make sure I feel the ‘pain’ of my purchases as the month progresses instead of putting them off until my credit card bill is due. Most credit card companies let you log in and make payments almost any time you want and they will even deduct the funds directly from your account,” Johnson said.
See related: 8 legitimate ways to improve your credit score now
8. Start, skip and stop
Savings are critical throughout the year, and Thasunda Brown Duckett, CEO of consumer banking at Chase, offers a trio of tips to get you in better financial shape.
- Start from zero, zeroing in on where your money is spent, saved or shared. Set a budget and make sure it zeroes out every month.
- Skip a week, in which you don’t spend for seven days in each month on non-essential items. Money saved could then be added to savings.
- Finally stop thinking about it – automate your savings so that a portion of your income is siphoned away for a rainy day.
“Saving can start small, whether it’s $5 a day to $5 a month. In the end, it’s not about what you make but what you keep,” Brown Duckett said.
Improving your finances and maximizing your card usage in the new year is as easy as taking a first step. Combining these tips – or following at least one of them – will help you save money and rack up rewards points in 2019.
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