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Credit Card Habits to Start in the New Year

Credit Card Habits to Start in the New Year

• Posted: December 16, 2015 • Updated: May 24, 2016
Tens of millions of Americans use their credit cards each day, but many of them aren’t using them as strategically as possible. The New Year is an optimal time to start using your credit card more effectively to save money, climb out of debt, and begin earning greater rewards. Here are 5 credit card best practices to adopt starting today: 

1. Paying your Entire Balance Each Month

Perhaps more than any other piece of credit card advice, the most important practice to adopt is paying your balance in full each month. Only about half of American consumers adhere to this goal, while the rest carry balances that average well into the thousands of dollars. The only way that you’ll be able to pay off your complete credit card balance each month is by staying within your budget. While that may sound frugal and boring, the bright side is that you’ll never have to pay a penny in interest fees!

2. Making your Minimum Monthly Payments 

Even if you can’t pay off your balance in full each month, then it’s critical to still make your minimum monthly payments. It’s definitely not the end of the world to carry a small credit card balance from month to month, but missing a payment can cause your interest rate to skyrocket and your credit score to plummet. Whatever your financial circumstances are, it’s crucial that you make all of the necessary minimum payments each month. 

Pro tip: Set up automatic payments online so that your minimum credit card payments are deducted each month from your bank account.  
Keep Reading: 6 financial moves to end the year successfully

3. Pay Attention to your Statement

Mistakes happen, even when it comes to electronic payments made with your credit card. Go over your statement each month to make sure that there are no double charges and to verify that no fraudulent purchases have been made. Moreover, this is an easy way to see if you are being charged excessive fees that you didn’t know about. 

Plus, if you carry a balance from month to month, reviewing your statement will show you how much you are being charged for interest payments. 

4. Transfer your Balance for Lower Interest

If you have a large balance attached to a high interest rate, then an important resolution for the New Year is to transfer that balance to a lower interest rate. Many credit card offers will allow you to transfer your balance for a small fee, or even for free, even if you don’t have excellent credit. These balance transfer offers can make all of the difference when trying to climb out of debt speedily in the coming year.  
Keep Reading: Top 5 personal finance new year's resolutions 

5. Monitor your Credit Score

Many consumers use their credit cards frequently without paying attention to their credit scores or monitoring their credit reports. Considering the significance of this 3-digit number on the largest financial decisions of your life—including your mortgage rate, credit card terms, and car loans—it’s a big mistake to not be proactively improving your credit score. Once you have better credit, you’ll gain access to the best perks and the most lucrative credit card rewards. 

Pro tip: Many credit card providers now provide free access to your monthly score, so be sure to use this to your advantage. 
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