Now that the calendar has turned over and 2020 is finally behind us, it’s time to consider making some New Year’s resolutions. Instead of getting in shape, traveling more, or other typical January commitments, why not make 2021 the year you focus on your financial health? Here are three 2021 credit card New Year’s resolutions for you to consider:
Pay Down Your Debt
The average American household had $6,194 in credit card debt in 2019, according to Experian. Paying down debt should be at the very top of anyone’s credit card resolutions list. The main benefit of paying off your balances is that money that formerly went to creditors can now be applied to other things, such as savings, your mortgage, or even travel.
One of the easiest ways to pay off debts is through a balance transfer card. There are plenty of excellent balance transfer credit cards on the market, including the Citi Simplicity® Card or the Upgrade Card. Both cards offer a low APR, with the Upgrade Card providing rates as low as 8.99%. This makes paying down holiday debt a breeze. The Upgrade also offers cash back rewards, so you can earn while you save.
Raise Your Credit Score by Lowering Credit Utilization
If you want to get a good credit score, you need a low credit utilization ratio. Credit utilization is one of the most significant factors in your credit score. Credit use accounts for 30% of the FICO scoring model and 20% of a VantageScore.
Keeping your credit utilization under 30% is one of the best ways to maintain a healthy credit score. For those hoping to raise their score, keeping credit utilization below 10% is even better. Clearly, the lower you move your credit use, the higher your credit score goes.
Wondering how to lower your credit utilization? Here are several basic ways to get credit use below 30% of your overall available credit:
- Spend less on your credit cards
- Pay off your balances before the bank reports to Experian, Equifax, or TransUnion
- Ask for a higher credit limit
- Open a new credit card account
Opening a secured card account is the easiest way to boost your credit limits and reduce your credit utilization quickly. Cards like the OpenSky Secured Visa don’t require a credit check to apply, so opening an account and funding the card with up to $3,000 can significantly lower your credit usage immediately.
Monitor Your Credit Report
We all fear credit card fraud, but most of us do not take proactive steps to limit our risks. Why not make 2021 the year to monitor your credit report and keep your finances secured?
Preventing fraud can take several forms, including checking for skimmers, using a shredder to destroy personal documents, and using a credit card with an EMV chip. An even easier way to protect yourself from fraud is to sign up for a credit monitoring service, like Credit Karma or MyFICO.
Monitoring your credit report is essential for maintaining a healthy financial profile. Credit monitoring is critical for rebuilding credit because it helps reinforce the knowledge required to raise a poor credit score. Credit monitoring services can track your credit reports to check for data breaches, fraud, and other hazards that can cost you money – and ruin your credit score.
Related Article: Free Credit Score Monitoring from Card Issuers