How To Manage Your Credit In The New Year

One of the keys to managing your finances effectively is keeping your debt to a minimum, or at least reducing the debt you already have.  Most consumers find it challenging to live a completely debt free existence (ever tried to buy a house without  a mortgage?), but carrying high interest credit card debt makes reaching financial goals impossible.

With every new year  comes the chance for a new start and to regain control of your financial situation. The economy, while showing signs of recovery, is still struggling. And upcoming government changes to credit card rules may change the way you manage your credit.  Many tried-and-true debt-avoidance strategies, like utilizing 0% balance transfer offers to postpone the inevitable, may not be available for long. Here’s what you can do to manage your credit in the new year with the new credit card rules.

Always Pay Your Credit Card In Full On Time

As you may have already noticed, credit card companies are increasing their fees before the new rules take place in February. This means you’re paying more for late payments or going over your credit limit and higher interest rates on existing balances. To avoid these outrageously-high fees, focus on paying at least the minimum payment before the due date.  It goes without saying you should pay your balance in full every month if you can possibly afford it, but even paying the minimum should prevent your debt from growing any larger.

Stop Using Credit Cards

Credit cards are convenient and, if used responsibly, using certain cash-rewards cards can pay off handsomely.  However, if you can’t control yourself your goal should be to reduce your credit card use or stop using them entirely.  We’re a society that has gotten used to just swiping a credit card to pay for things when we don’t have the cash available – that has to stop.  Sweeping your financial problems under the rug is a recipe for disaster.

Credit Card Rewards Programs Aren’t So Rewarding

When the new credit card rules take effect, cardholders will find their rewards programs probably won’t be quite as rewarding as they once were. With credit card rewards becoming less and less generous, a major incentive to use credit will have disappeared.  There’s still the convenience factor, of course, but if more people used cash, the price of many everyday items might actually decrease (see The True Cost Of Credit).

Balance Transfer Offers A Thing Of The Past?

When a high interest credit card balance started getting out of control in the past and credit was easy to come by, you could almost always transfer the balance to a zero interest, or at least low interest, credit card.  With credit tightening, these offers will likely be few and far in between and probably only available to people with immaculate credit histories and high credit scores.