It's a new year, and it's a good time to turn over a new leaf when it comes to managing your credit cards.
First, get a handle on your credit card debt. Now is the time to tally up all those credit card balances. How much additional damage did you do with all your holiday shopping? Make note of the balance, the annual percentage rate, the due date and the minimum payment for each of the cards in your wallet. Did you snap up a low-rate balance transfer offer in 2010? When does introductory interest rate expire and what will the new interest rate be? Do you have two or three or six months left of enjoying that super-low interest rate?
Now get ready for the real shocker. Make note of the monthly finance charges being charged on each credit card on which you carry a balance. Add together each of those monthly finance charges and you'll see just how much credit card debt is costing you each month. Once you organize your information, you'll be ready to take action.
Also commit to a pay down strategy. If you have lingering credit card debt, it's time to get serious about paying it down by committing to a solid strategy.
Increasing payments on the card with the highest balance will give the biggest boost to your bottom line. Once you pay down the balance with highest APR, you can focus your payments on the card with the next highest interest rate, and so on.
For a reverse strategy that also works, focus your additional payments on the credit card with lowest balance first as a great way to build up some momentum. It may not take you very long to pay off a card with a smaller balance and you'll have one less bill to pay before you know it.
Once you pay off the card with the lowest balance, you focus your payments on the card with the next highest balance and so on. Choose the pay down strategy that works best for you. And stick with it throughout 2011.
Finally, be sure to monitor your credit card accounts carefully. Don't let changes to an account catch you by surprise. According to the CARD Act, credit card issuers must provide notice of certain changes to your credit card account 45 days before they take effect.
These changes include increasing your minimum payment and rate increases on future transactions once you've had a new credit card account open for a year.
But if you're not paying attention to your card account, you may miss the advance notice. So take the time to read all letters and e-mails sent to you by from your credit card company. Otherwise, you may be in for a bit of a shock when your next bill arrives.
Some changes to your card account, such as slashing your credit line, can be done without 45 days' advance notice from your card issuer. So add monitoring your credit lines to your 2011 resolutions.