The start of a new year means it’s time to set big goals for yourself over the next 12 months. Maybe you want to finally go back for a second degree, eliminate your debt or take on that business venture you’ve been dreaming about for years.
If you have lofty goals to achieve in 2020, maximize the credit cards you already have or responsibly apply for new cards that will help offset your costs with rewards and sign-up bonuses.
Here are a few common New Year’s resolutions and how your credit cards can help you reach them.
1. Pay off debt
A great way to pay off debt more quickly while paying less over time is to use a balance transfer card.
There are a few things to consider when you’re weighing your balance transfer options. First, check out the fees.
“Most people don’t realize that most of these balance transfer cards will hit you up front with a 3 percent or 5 percent fee,” says Ted Rossman, industry analyst at Bankrate.
Depending on your balance, this fee could add up. But even with 5 percent fee, a balance transfer card with a 0 percent intro period will still help you save – the average APR on credit cards currently sits at 16.03 percent.
If you’re looking for a balance transfer card with a longer introductory period, the Citi Simplicity Card* offers one of the longest introductory periods currently available: 0 percent for 18 months. After that, it has a regular variable APR of 14.74 percent to 24.74 percent. You’ll have a balance transfer fee of 3 percent ($5 minimum).
“It used to be more common to see 20, 21, 24 months,” Rossman says.
These offers became less and less frequent – as did balance transfer offer with no transfer fees. Following the economic fallout from the coronavirus pandemic, free offers and intro periods longer than 18 months have basically disappeared.
2. Travel more
This is one of the most popular ways to use credit card rewards, and if you’re not already doing so, travel is a great place to start maximizing your spending. There are numerous options to suit your travel plans, your schedule and your preferences, whether it’s through a co-branded airline or hotel card or more general travel options.
After a year where many people stayed at home, Rossman predicts that travel will rebound this year, and when it does, cardholders will be able to score good deals to encourage them to “liquidate rewards and sign up for travel credit cards.”
If you’re in the market for a new card to help with your travel expenses this year, the best travel credit card might depend on how you spend.
For people who prefer a flat-rate card, the Capital One Venture Rewards Credit Card is hard to beat: You get 2X miles back on all purchases. Though this card has a $95 annual fee, you can receive up to $100 in credit for your Global Entry or TSA Precheck application.
If you’re interested in getting a card with luxury perks, the Chase Sapphire Reserve is a good option. It comes with a hefty $550 annual fee, but you’ll get a $300 credit on travel and access to Priority Pass, along with other benefits. After you earn the travel credit, you’ll receive 3X points on all eligible travel and restaurant purchases. From now until Apr. 30, 2021, you’ll also earn 3X on grocery store purchases. And until Mar. 31, 2021, you’ll earn 10X on Lyft purchases. You get 1X on all other purchases.
3. Budget better
If you want to put serious effort into sticking to your budget this year, a simple cash-back credit card can help keep you on track.
The Bank of America® Cash Rewards credit card is a great option, especially for Bank of America customers who qualify for the Preferred Rewards program.
“I would view 2 percent as the baseline, whether that’s the Citi Double Cash Card* or Capital One Venture or even some of the more rotating category stuff,” Rossman says. Just make sure you’re paying any cash-back card’s monthly bill in full to eliminate interest costs.
*The Citi Double Cash Cash provides 1% when you buy and 1% as you pay for those purchases.
Daily spending on a cash-back card also allows you to analyze your monthly statements and track spending.
“I think that’s actually a hidden perk of credit cards,” Rossman says.
Any budgeting expert will tell you the first place to start is by keeping a record of every purchase you make. That way, you can see exactly where your money is going and evaluate each purchase.
“Most people are not as organized as to keep that list, but the card will do it for you,” Rossman says. “Putting spending on a credit card can help you track your spending, just in the sense that it’s all laid out for you.”
4. Start or grow a business
Great rewards from a business credit card may be the extra bit of help you need to finally get your business idea off the ground – or to mitigate any financial troubles an established business might face due to the coronavirus pandemic.
Applying for a business card may be easier than you think. If you’re a side hustler or a sole proprietor without an established LLC or corporate office, you can likely still successfully apply for a business card. Just be careful to only use the card and its rewards on purchases related to your business.
When deciding between business cards, Rossman says the most important thing is to look at your specific spending needs.
If you’re facing significant start-up costs or need help covering bills thanks to the coronavirus pandemic, the American Express Blue Buisness Cash™ Card might be a good option. While it doesn’t have an intro bonus, it comes with no annual fee and 0 percent interest on purchases for 12 months. You’ll also earn 2 percent back on all eligible purchases, up to $50,000 in spending.
5. Go back to school
Whether you’re a traditional student on your own for the first time or returning to school for a degree as a non-traditional student, a no-fee credit card can help you earn much-needed cash back on a student budget.
Either a regular cash-back card like the Citi Double Cash Card or a card that’s more student-focused in its rewards, like the Discover it Student Cash Back or the Discover it Student chrome, can help you save while earning your degree. Both Discover student cards also offer a $20 statement credit for each year that you earn a 3.0 GPA or higher (for up to five years).
If you do much of your everyday shopping on Amazon already and you have a Prime membership (students can get a 6-month trial), Rossman says this may be one instance in which a store card is a good idea. With the Amazon Prime Rewards Visa Signature Card, you can earn 5 percent cash back on all purchases at Amazon and Whole Foods, which is especially lucrative if you can purchase your pricey textbooks on the site as well.
Consider your options
No matter what your plans are going into 2021, the right credit card can be invaluable in helping you reach your financial goals. Check out Bankrate’s reviews before submitting a card application to make sure you choose the best card for you.
The information about the Citi Simplicity Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.