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January is a time to reflect on the year that has just passed and make resolutions to improve your life in the year ahead. When it comes to credit card, the Nerds have some tips on how you can make 2017 better than 2016.
Include credit card debt in your budget
According to the National Retail Federation, consumers planned to spend an average of $ 935.58 during the holidays. If you put more on your credit cards than you will be able to pay off in full in January, decide to wipe it out in 2017. Budget and make debt payment one of the essential categories, along with food, housing, utilities, gasoline and other living expenses. Calculate how much more than the minimum you can pay with your cards.
the debt snowball method is useful to stay motivated. Here’s how it works: Pay off the credit card with the lowest balance ASAP, while paying the minimum on your other cards. When card # 1 is redeemed, go to the next lower balance. Continue this process until your cards are refunded. By consistently addressing your debt, you can celebrate small successes as you reach your debt-free goal.
Review your 2016 credit card statements
When you have your final monthly credit card statement of the year, browse it to see how you spent your money and which items are tax deductible. Your credit card issuer can provide a downloadable annual statement, which usually breaks down expenses by category so you can analyze it.
Compare your spending against the budget you set for 2017 to see where you can adjust to stay on track. Or find out where you can cut back to spend more money on savings.
Get the right credit card
Now that you know where you spent your money last year, ask yourself if you are using the good credit card. Review the benefits and rewards of your current credit cards. Are they relevant to your lifestyle?
You may have changed jobs and are driving more each week. In this case, consider a card with gasoline premiums. Perhaps you are planning a big purchase and need a card with a long period of 0% APR. Or maybe you want match two cards for different kinds of rewards, so that you can use them to your best advantage.
For example, the Freedom Hunt® gives you 5% cash back in the bonus categories you register for each quarter. the Chase Sapphire Preferred® Card gives you bonus points on meals and travel. Book travel through Chase Ultimate Rewards and points can be worth 25% more. Consider what cards you have and how you could add one to increase your rewards.
Speaking of bonus categories, don’t forget to sign up for Q1 2017 categories to get your 5% cashback if you have this type of card. For the Freedom Hunt®, bonus for Q1 2017 are gas stations and local commuting. On Discover cards, the Q1 2017 the categories are gasoline, ground transportation, and wholesale clubs.
Negotiate better credit card terms
Often times, people’s oldest credit card is also the card with the lowest credit limit and highest APR because they probably got it when they were fairly new to credit.
The age of your credit accounts counts for 15% of your credit score, so you should keep any old cards you have. But if this really isn’t the best card for you, call your credit card issuer and see if you can. increase your credit limit, lower your APR or even convert the account to a better card. If you’re a good customer – you pay your bills on time and stay within your credit limit – your issuer will want to keep your business, which could work in your favor.
If you can negotiate better terms, that’s a double win for your credit score: you keep your credit history intact while increasing your available credit.
On the way to 2017 and to start the new year well.