Credit Resolutions You Should Keep Year Round

/ BY / Credit Score

It’s more than two months into the new year. So how are you doing on all those resolutions you made on January 1st?

Even if you haven’t kept up with your resolve to exercise an hour a day or to skip between-meal snacks, make a renewed effort to get a handle on your credit card finances. If you didn’t make any resolutions about credit at the beginning of 2015, here are some you should make today--and keep.

  1. Pay off your high balances by paying more than the minimum.

    It’s very tempting to make the minimum payments on your credit card each month. It frees up more cash to buy or to do what you want.

    But take a minute to consider the long-term effect that this approach will have on your finances. Do you really want to pay that much interest to your bank?

    Suppose your credit card balance is $8,000 and your interest rate is 18%. You make the minimum payments each month (starting at $320) and don’t charge anything else on that card.

    Do you know that it’s going to take you almost 13 years--152 months--to pay off that debt?  Plus you’ll end up giving the bank more than $4,600 in interest. That’s more than half of your original balance going down the drain!

    Get rid of that debt. Figure out a way to increase your monthly payments. The sacrifice that you’ll have to make in the short term--less money to spend--will be worth it in the long run.
  2. Make credit card payments on time.

    Think it doesn’t matter if you’re a few days late with your credit card payment? Think again! A payment even one day late will cost you money. The bank can charge you $25 for the first missed payment and $35 for any late payments after that within six months.

    But the biggest hit may be to your credit score. Some creditors do report you to the credit bureau if you miss their payment deadline. You could end up paying a higher rate of interest on any credit card and/or loan that you get in the future.
  3. Use credit sparingly

    Credit cards are easy to use, so it’s not difficult to spend more than you intended, especially if you have several cards available.  But aside from putting you more deeply into debt--and requiring you to pay more in interest (see #1)--using too much of the credit available to you could lower your credit score.

    In calculating your credit score, credit reporting agencies look at your utilization rate. That’s the amount of credit that you’re using as compared to the amount of credit that you have available. Banks like that number to be under 30 percent, and the lower the better.

    You can calculate your utilization rate by dividing how much credit you have on all cards combined divided by the amount you owe on them all. Keep an eye on your spending on individual cards as well, and don’t let your utilization rate go over 30 percent on any credit card.


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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.