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Last-minute credit resolutions

By Janna Herron · Bankrate.com
Tuesday, December 31, 2013
Posted: 12 pm ET

It's not too late to add one more New Year's resolution to your list after losing weight and volunteering more often. Here are three credit goals to consider, each one tailored for people at different financial points in their lives.

Get out of credit card debt

Make 2014 the year you get debt-free if you've been carrying high credit card balances. Start by figuring out how much extra money you can dedicate to your credit card debts. Attack the balance with the highest interest rate first to reduce the amount of interest charges you pay. On the other balances, make sure to pay more than the minimum payment to slash the balance faster.

Once the balance with the highest interest rate is paid off, put extra cash toward the balance with the next highest rate. Continue this way until the debt is gone.

Cautiously consider balance transfer options. Look for ones with long periods of zero interest, so you can be sure to wipe out the debt before the interest rate increases. Also, don't use the balance transfer card to buy more because purchases are charged a higher rate and that will hurt your chances of paying off your debt in time.

Boost your credit score

Maybe you're not knee-high in debt, but your credit could use a facelift. Why not spend the first three to six months of 2014 improving your credit? Better credit means you will qualify for a lower interest rate on loans, saving you possibly tens of thousands of dollars in interest over the life of the loan.

First, pull your credit report from AnnualCreditReport.com. Every American is entitled to a free credit report from each of the credit bureaus -- Equifax, Experian and TransUnion -- every 12 months under federal law. Make sure that all your accounts are yours and the history of each account is accurate. If not, file an online dispute with supporting documents with the credit bureau to get the information corrected.

Next, make the most of the credit you have to boost your credit profile. Always pay your monthly bills on time and in full. Keep balances on credit cards below 20 percent of the credit line. For example, if the limit on your credit card is $2,000, don't charge more than $600 in any month.

Last, avoid the temptation to open new credit -- such as store cards or new credit cards -- if you don't need it. Every time a lender pulls your credit report for a credit application, it dings your credit score.

Make the most of rewards

So, your credit history is pristine and your credit card debt is non-existent, what now? How about making sure you're getting the most from your financially savvy lifestyle?

It's always a good idea to make sure the credit cards in your wallet fit your financial spending now, versus when you first opened the credit card. For example, if you carry a cash-back rewards card, check to see if the purchases you make earn the highest possible amount of rewards.

Pull up the charges you made in the last one to three months and figure out where you spent the most money. Was it at restaurants or at supermarkets? Once you know, you can match your spending to the reward credit card that offers accelerated earnings for those categories. Bankrate's cash-back rewards cards survey can help.

Keep old credit cards for small, quarterly purchases so they stay active. But move the new card to the top of your wallet to get the most back from your purchases.

Happy New Year! What are you financial resolutions this year?

Follow me on Twitter: @JannaHerron.

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