Boost Your Buying Power and Your Credit in the New Year
Besides losing weight, increasing financial stability is one of the more common New Year’s resolutions. For anyone whose intention is to improve their financial situation in the New Year, a part of the process often includes applying for a new credit card.
Here are eight must-know credit card tips that you can use to help make 2013 the year you finally get on right track with your finances by choosing and using the right credit card the right way.
#1 – Know Where Your Credit Stands Right Now
The first thing you should do entering into the new year is to get a copy of your credit report so you can see where you stand right now. Look over the report with a fine-toothed comb, and dispute any errors if you find them. This will help you clean up your report, and possibly improve your credit rating.
Understanding your current credit score will help you identify which credit cards you will most likely qualify for, and this will help you avoid any credit-harming denials.
#2 – Watch Out for Marketing Misdirection
When you get a credit card offer in the mail, odds are it contains a lot of language that tries to give the impression that you have been “pre-selected,” or that you have been pre-determined to meet their “special qualifications.” Try not to fall for such marketing misdirection. Credit card companies do not pre-select or pre-qualify their customers. The letter is just a ruse to get you to apply by making you feel special. You still have to be approved for the card, so unless you know you can qualify, avoid these offers.
#3 – Always Read the Fine Print
The fine print on a credit card offer may not be exciting, but that is where the “meat and potatoes” of the credit card’s rates, terms, and conditions are listed. This is where you will find the truth behind the offer; always read it so you can have the most important information at your disposal before making a decision.
#4 – Beware of Small-Business Credit Card Offers Sent in the Mail
Just because a credit card offer states that it is for a small-business credit card, do not automatically think that it will benefit your small business. If the application requires you to provide your Social Security number (or your business is a sole proprietorship), then that card’s activity will be reported on your personal credit report, and not your business’s credit report.
#5 – Watch Out for Sign-Up Bonuses
Some credit card issuers offer tempting sign-up bonuses, but be wary of such promises. In most situations, the bonuses require the card holder to spend a certain amount in order to qualify, and this can lead to overspending. Plus, if you are unable to pay off the card every month, then you may be hit with a heavy interest rate charge that could counterbalance any benefit you get from the bonus program.
#6 – Be Careful Applying for Store Credit Cards
Virtually every retail store has its own credit card these days, and they will often tempt shoppers to apply for them by offering them a certain percentage off their purchase. If you are serious about improving your credit, then you need to be wary of these types of cards. Not only will the added debt decrease your credit score, but the hard credit inquiry that the store makes during the approval process will also cause your score to drop.
Plus, if you are unable to pay off the card’s balance every month, then the card’s high interest rate will quickly overrule any savings you enjoyed when applying for the card in the first place.
#7 – Take Advantage of Reward-Maximizing Incentives
There are several ways you can make your credit card work for you, but one of the most effective is through its rewards program. Find out which retailers (online and off) the credit card rewards program has special deals with, so you can maximize your points per purchase. You can also register your credit card with select dining programs so you can get more points when you eat out at certain restaurants.
#8 – Monitor Your Credit Card’s Activity Every Month
Credit card fraud is a real threat, so make it a habit to check your credit card’s activity if not every month, then at least every six months. This will allow you catch any fraudulent charges early on so you can quickly resolve them.