credit cards

12 tips to manage credit card debt in 2012

Janna HerronIt's the new year, and what better way to ring it in than to add a shiny new credit card to your wallet? Here are 12 tips for obtaining a credit card and not misusing it.

Tip 1Know where you stand

What credit card interest rate and credit limit you qualify for depends on your credit history. But many people have no idea how good or bad their credit is. To keep the surprises to a minimum, pull your credit report from the three credit reporting agencies. You can pull a free credit report from each agency every 12 months at

The report will show your account history, including factors that can hurt your credit such as habitually late payments, short credit history or high utilization, when you've used a large amount of your available credit. The more negatives you have, the more likely you won't get the best interest rate.

Tip 2Improve your chances

If you can wait to apply for a new credit card, spend at least six months getting your credit affairs in order. Use your credit report as a guide.

First, make sure there is no inaccurate information on your credit report. If there is, you will need to contact the credit reporting agency and the company that maintains the account to get the record straight.

Next, look at the key factors hurting your credit. If late payments are a problem, then commit to staying current on all bills. If your utilization rate is too high, commit money from your monthly budget to reduce outstanding debt as much as possible.

Tip 3What benefits do you want?

Your credit is in order, and you want a credit card. Now what? Figure out what type of benefits you want.

If you are a frequent traveler, consider cards that are cobranded with hotels or airlines and allow you to rack up rewards points that can be used to buy flights or hotel stays. For road warriors, there are several different gas rewards cards available. And for those interested in earning cash from their purchases, issuers have unleashed several types of cash-back rewards cards.

Other perks to consider: cards with low or no balance transfer fees, cards with low penalty or late fees and specialty cards such as secured, retail or prepaid cards.

Tip 4Compare similar cards

Consider which credit cards charge an annual fee. Will a card's rewards cover its annual fee? Would fewer perks be acceptable if the card has no fee?

Also look at the annual percentage rate, or APR. Is there a special low introductory rate that shoots up after six months? Is the rate variable or fixed?

The card with the lowest APR is not necessarily the best for you. Take into account penalty and late fees, especially if you've been known to miss payments. And look at other fees, such as balance transfer fees or foreign transaction fees, which could make the card less appealing.

Also, read the restrictions on rewards programs. For frequent-flier cards, there may be blackout dates. Cash-back cards may have a limit on how much you can earn each month.

Tip 5Other credit card perks

Credit cards come with benefits other than their rewards programs, so it pays to read the fine print. Here are a few benefits you should consider:

  • Roadside assistance: Some cards will come to your rescue if you're stranded on a snowy highway with a flat tire. But there may be geographical limitations or time-of-day limits.
  • Purchase protection: Some cards come with return protection in case a retailer won't take back a recent purchase. Others offer extended warranties on top of a manufacturer's warranty or protection against theft or accidental damage.
  • Travel assistance: Some credit cards will coordinate medical care or legal aid if you are traveling abroad. Others will cover airline fees, such as checked-bag fees, or offer access to airport lounges. Car rental, travel accident and trip-cancellation insurance are other popular perks.



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Product Rate Change Last week
Balance Transfer Cards 16.12%  0.05 16.07%
Cash Back Cards 16.45%  0.01 16.44%
Low Interest Cards 11.23%  0.02 11.21%
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