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12 Tips to Get Your Credit Cards Under Control


This year, resolve to get your credit cards under control and don't give up until you do so.


Editor's Note: Minyanville is proud to introduce our new Personal Finance Editor, Dan Kadlec. Click here to read more about Dan.

January is a cruel month. The only thing colder than the Canadian winds that blow south this time of year are the credit-card statements that fly in on their own icy breeze. Post-holiday bills-in many cases, for things already consumed, broken or forgotten-can create enough stress to bust up the household. No kidding: the rate of Americans filing for divorce spikes each January and February.

At some level, consumers understand the hole they dig each December. Climbing out of it-paying down balances-annually shows up next to losing weight and getting more exercise atop the list of most-named (and soon-to-be-abandoned) New Year's resolutions. We intuitively appreciate that carrying a little more debt, in its own way, is just as unhealthy as carrying a few more pounds.

Yet half of all consumers don't even think about their credit until there's a problem, according to a recent survey. Such blissful ignorance helps explain why more people will file for bankruptcy this year than will graduate from college, and why one in four will need until the end of March to retire the debt they incurred over the holidays.

It's time to break this cycle of crime in your household. Here are some tips for getting your credit cards under control in 2007:

  • Different credit cards have vastly different fee structures. A rewards card that gives you points toward air tickets or a new car, for example, probably levies an annual interest rate of 18% or so on balances and an annual fee too. If you're in deep, dump such cards and consolidate balances on one low-rate (12% or so), no-fee card.

  • Create next year's holiday budget now, while the pain is real and your memory fresh. Inventory what you spent and who you spent it on. Cut names where possible, and reconsider the amounts.

  • Cut current expenses now to accelerate paying off your balances. Skip the daily trip to Starbucks (SBUX). Eat out less. Exercise some discipline on your cell phone. Quit smoking. You'd be surprised how much you can save this way in just a month.

  • Over the next three months, keep careful track of your spending. Then review it and look for places that you are spending more than you figured, and make some adjustments.

  • Tackle one debt at a time, starting with those that carry the highest interest rates. Those typically are retail store cards. Retire one balance at a time while keeping up with minimum monthly payments on your other cards. Where rates are the same, I like to start by retiring debts on cards that have the lowest balance. That way, you see quick results and build momentum. Besides, carrying a balance on a credit card that has a low limit can lower your credit score.

  • Automate your payment schedule through a recurring online payment system or by authorizing a creditor to debit your account each month. Once it's automatic, you never miss a payment and simply get used to living on what's left.

  • Beware simple solutions. Consolidating debt in a low-cost loan makes sense. But make certain you apply all of your interest savings along with your total former payments. Consolidating in, say, a home equity line of credit can backfire if you only pay the interest. Make sure you are paying down the loan balance as well.

  • Create a budget now. The New Year is a great time to take a fresh look at monthly income and expenses and identify where spending can be curtailed and where savings can be enhanced.

  • Start paying your bills electronically. Stop writing bills by hand, buying stamps and licking all those envelopes. Late fees and missed bills are a thing of the past with the help of your bank's own website.

  • Ask for help. Your credit card issuer may lower your rate just for the asking, or at least tell you what you must do to qualify for a lower rate. Card companies don't want to lose you to a competitor. But you have to ask.

  • If you are inclined to seek credit counseling, do it now-before you have made an expensive mistake (like cashing in a retirement account or maxing out a home equity line of credit).

  • Finally, if you are in the market for something expensive that you'll have to finance, like a car or home, check your credit report to see how much damage your holiday shopping has done. Fix it before applying, and you'll almost certainly get a lower interest rate. Order your free personal credit reports from Equifax, TransUnion and Experian at

This year, resolve to get your credit cards under control and don't give up until you do so.

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