100 smart money tips for 2010
Leslie McFadden
credit cards
10 best credit card moves in 2010

The shuttering of an account with a zero balance will cause a drop in your available credit, which could spike your debt-to-credit limit ratio. Use a card at least once a quarter so the issuer sees some profit. Even if you pay the debt off when you receive the statement, the card issuer will benefit from interchange fee income generated from the transactions. These fees, usually 1 percent to 3 percent of the purchase price, go to banks and payment networks such as Visa and MasterCard every time you swipe your card.

Tip 6Spend rewards points.

Credit card issuers reserve the right to scale back rewards programs or make it more difficult to redeem points. In this tight lending environment, cutting rewards is one way to offset losses.

Some issuers have already tweaked their rewards programs. For example, Citi made a number of changes to its ThankYou Network program this year, including an expiration date on points. Chase Freedom cardholders previously enjoyed a 3 percent cash-back rate on their three highest spending categories for the month, and now the bonus categories rotate and aren't driven by the user.

So, watch for changes to your rewards program and check your point total regularly. When it's most advantageous to cash out, do so.

Tip 7Compare credit cards from banks and credit unions.

If you need a card with a lower interest rate and fees, compare credit union cards and bank-issued cards. Credit union cards generally offer more favorable rates and fees, but are restricted to members. Read Bankrate's story on credit union cards for more information.

Tip 8Watch out for offers to go overlimit.

Under the CARD Act, issuers can't charge overlimit fees for transactions that exceed the limit unless cardholders have opted in to go over their limit. Opting in means you would pay a fee if your balance climbs above the limit. If you don't breach the limit, you don't pay a fee. If you don't opt in you won't pay a fee either, but you might see your overlimit transactions declined. That's up to card issuers like Capital One.

"Capital One is reaching out to some customers to explain that their over-the-credit-limit coverage will be ending in February," spokeswoman Pam Girardo wrote in an e-mail.

Girardo explains Capital One customers who chose not to opt in would see their overlimit transactions declined. If they opt in and go over the credit line, they will be charged $29.

Tip 9Ask for credit limit increases if you have great credit.

One CARD Act provision requires that issuers not increase credit limits unless "the card issuer considers the ability of the consumer to make the required minimum payments" under the account terms.

That means it could be harder to qualify for credit limit increases. Consider asking for higher limits now while they're easier to get. The idea isn't to take on more debt but to increase your available credit and lower your ratio of debt-to-available credit, and boost your credit score. A higher score will help you qualify for better loan terms.

Tip 10Explore free services and alerts.

If you check account benefits online, you might discover free tools and services that could help you manage your debt or credit score. You might find access to free credit scores, spending analysis tools and custom alerts for key account changes.

For example, Discover offers a tool called Spend Analyzer, which breaks down your purchases by category and tracks spending over time. Chase has a free feature called Blueprint. It lets cardholders create a payment plan that allows them to separate purchases they'd like to pay in full from those they plan to revolve.

If any free benefit comes with fine print, read it to ensure you're not signing up for a fee-based product.

<< Read all 2010 money tips

Read tips from previous years: 2005  |  2006  |  2007  |  2008  |  2009  | 

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

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