7 credit card moves to make by year’s end

Paying off your debts and using your card's built-in credits are two key things you can do before we ring in 2021


Between the pandemic, the election and everything else, your credit cards may not have been top of mind in 2020. If so, it’s time for a check-in. Here are seven ways to whip your plastic into shape by the time we ring in 2021.

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There are just six weeks left in this crazy year. Between the pandemic, the election and everything else, your credit cards may not have been top of mind.

If so, it’s time for a check-in. Here are seven ways to whip your plastic into shape by the time we ring in 2021.

1. Make a plan to pay off your debt

If you’re carrying credit card debt, check your interest rate(s) and make a plan to pay it off.

The average credit card charges about 16%, which makes it very expensive debt. These rates are way higher than your typical mortgage, car loan or student loan. Make your credit card debt a priority. Only 39% of credit card debtors knew their interest rates when we asked them in 2018.

Start by determining how much you owe and at what rate. Some people like to prioritize these from the highest interest rates to the lowest. That makes the most sense mathematically and will save you the most money on interest.

Others prefer to pay off the smallest balances first to build momentum. You know yourself, so either approach can work, but you need to get started.

If you have a good credit score (more on that in No. 2 below), a 0% balance transfer card could help you save even more. These have gotten harder to obtain over the past year due to worries about the economy.

If your credit is less than pristine, consider alternatives such as nonprofit credit counseling and card issuers’ flexible payment plans (e.g., American Express Pay It Plan It and My Chase Plan).

Read more from our credit card experts.

Ask Ted a question.

2. Review your credit

You need to know where you stand here, too. Your Experian, Equifax and TransUnion credit reports are available for free at AnnualCreditReport.com. You can download them every week through April 2021 (normally, each is only available for free once a year). You don’t need to check every week, but if it has been a while, it’s important to make sure everything is accurate.

You should also check your credit score, which is a numerical grade derived from the information in your credit reports. You can get this for free from most lenders.

Your credit score is one of the most important numbers in your financial life. It determines whether or not you get approved for loans and lines of credit and the interest rates you’ll be charged.

See related: Which credit score matters most?

3. Use applicable credits before they expire

Many credit cards extend annual or monthly credits. For example, the Chase Sapphire Reserve has a $300 annual travel credit, which goes a long way towards offsetting its $550 annual fee.

Due to the pandemic, gas and groceries are also eligible in 2020. You’ve already spent this money via your annual fee; make sure you take full advantage. Various cards offer credits for Uber and Uber Eats, DoorDash, Saks Fifth Avenue, cell phone plans, streaming services and more. This is free money. Use it before the clock expires.

4. Maximize rewards while holiday shopping

Online shopping portals and card-linked offers are easy ways to save, as I outlined in this column. Make sure you pay with the right rewards card, too. Some cards have rotating rewards categories that can help you optimize your holiday savings. While filling out your gift list, make a list of which card to use for which types of purchases.

5. Redeem rewards

If you’re saving up for the trip of a lifetime, then you might want to hold onto those rewards. But there’s really no incentive to hang onto your cash back; it’s not likely to gain value over time, so use it now.

Exchanging rewards points or miles for gift cards can also be a valuable holiday shopping strategy. You might leave some value on the table compared with other redemption methods, so consider all of your options, but sometimes the biggest mistake is hoarding rewards. These points and miles have real value – use them.

See related: Not traveling? Here’s what to do with your unused points and miles

6. Ask for a higher credit limit

Some 85% of cardholders who asked for a higher credit limit got one, according to a 2018 CreditCards.com survey. Your odds probably aren’t quite that good right now, because lenders are more risk-averse, but this is usually a low-risk gamble.

Just make sure the lender will only perform a soft inquiry (most do, including the three I asked last year). Unlike a hard inquiry, a soft pull won’t affect your credit score. A higher limit will help your score by lowering your credit utilization ratio as long as you don’t use too much of your new-found credit.

7. Sign up for a new card

Maybe you’ve got cabin fever and want to turn your holiday shopping into a fabulous trip once the pandemic (hopefully) subsides in 2021. Or maybe you want to score some quick cash back from a sign-up bonus.

Your spending habits have probably changed, so ensure your current card portfolio matches your lifestyle. Speaking of which, if you’re paying an annual fee for a card you’re not using much, ask the issuer for a product change. This is a good way to switch to a different card that fits you better and preserves your credit rating.

See related: When is a credit card annual fee worth it?

Bottom line

There you have it. Seven simple but impactful tasks to complete before the ball drops on New Year’s Eve. You can do it. I’m rooting for you.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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