March 17, 2016 by Jake M.
The seasons are changing, birds are beginning to sing, the days extend, and your trees begin to grow leaves. Americans are preparing their homes, storages, garages, in the well-known practice called spring cleaning. It’s obviously a good ritual to clear your home of dust bunnies and hoarded items, it also can benefit other personal items and property, and in the case we’re about to mention, particularly your wallet/purse.
You know those dads that have a wallet so thick they get a ‘dead’ leg when they sit down with the wallet in their back pocket, or the mom who can’t find the card she needs because her purse is a mess. Here are some tips on how to best clear your wallets and purses of debt, cards, etc. It’ll give you a clean, fresh, and relieving new start.
1. Pay Down on Your Debts
It is estimated about half of American credit card users actually carry debt on at least one of their credit cards. Credit card debt can be burdening and costly. As spring rolls around, take a good look into your statements and balances. See how much debt you have and the interest rates applied to each credit card or loan. This last winter the prime rate increased by a quarter point, causing some issuers to also raise their credit card interest rates with variable rates. If you are in over your head, you might want to look into credit cards offering 0% interest for balance transfers.
2. Check Your Credit Limits
However many credit cards you may have, you’ll want to make sure and examine the amounts you have used and how much you have available. If your credit card utilization (amount used vs amount available) is above 30%, then you need to take action to get it below that. Since utilization is a key factor in determining your credit score, you want to put due diligence in keeping it under the 30% mark.
3. Optimize Your Rewards
If you are wisely paying off your credit balances in full each month, then you have the opportunity to earn rewards for your spending at no additional cost or interest rate. Now that you are focusing on clearing out your wallet, this spring might be a good time to re-familiarize yourself with the rewards programs associated with your open credit cards and how you can best utilize them for your benefit. Take an in depth look into what purchases you will need to make in order to qualify for the desired rewards.
4. Cleaning Out The Closet
Credit cards are always improving and companies are trying to keep up with their competition. As you go through your credit cards, you might want to check out what other new credit cards are available. Check out their rates, rewards, fees, and other benefits that might beat out that of the cards you already have. If you find a superior card, then you can sign up for it, and who knows, the issuer might offer a sign-up bonus.
Remember, if you do decide to follow through with something like applying for a new card — this will impact your credit inquiries and report as hard inquiries on your credit reports, so be aware of that and plan accordingly with that in mind. If you are curious what your credit score looks like currently, visit creditperfection.org for copies of your reports.
5. Re-Evaluate Your Benefits
Along with credit card rewards, also comes benefits. A majority of credit cards include a number of benefits in which a consumer should be aware of. Let’s say for example, the purchases you make might be covered by an extended warranty policy, have theft and damage coverage, and might enable your eligibility for price and returning protection. As you travel, you might have benefits available to you in the event of a trip delay, lost luggage, or auto rental insurance. Your card might also offer partnership with an airline or hotel chain, in which you can expect some super benefits while making reservations and using their services.
As the grass changes color and your prepare to get out and plant some flowers, plant some goals and financial changes in the ground and grow them as the season continues on. Take a look at your wallet and the cards you’re using or not using. Make best use of them and use them for your greater benefit.