Credit Cards

How to Reorganize Your Wallet

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Now that the holidays are over, this is the perfect time for Americans to take stock of their finances. As we come to grips with how much we spent during the holidays, and anticipate our income and expenses for 2014, we factor these into our household budgets. Likewise, now is also a good time to go through your wallet and decide which credit cards you should be using in the new year.

Select the Best Card to Pay Off Debts

Those who are starting the new year with some credit card debt need to reduce their debt as quickly as possible. Their first priority should be to utilize any card with a 0% APR promotional balance transfer. The best offers available can feature this interest-free financing for as long as 18 months. If you don’t have a promotional financing offer, this is a great time to consider one.

If you carry a balance but are outside of any promotional financing offers, you’ll want use the credit cards with the lowest interest rate first. In fact, now is a great time to ask for a lower interest rate. Finally, you might consider charging some expenses to a card that you don’t carry balance on. This way, you can pay off that card in full every month and avoid interest. For example, if you travel on employer-reimbursed business trips can keep all travel expenses on one card, and use their expense checks to immediately make payments.

Use Reward Credit Cards Strategically

If you pay your credit card statement balances in full and on time each month, then you should be earning maximum rewards for your spending without paying interest. These rewards can take the form of cash back, or some type of points or miles. So which type of rewards should you focus on?

Look at your credit card spending the way you look at your investing and focus on the returns you are receiving. Start by calculating the value you have been receiving from your points or miles. If the rewards you earned were worth more than 2% of what you spent, points and miles are offering you a competitive rate of return.

At the same time, you should be examining your use of cash-back cards. Learn which of your cards have bonus categories of spending that can offer 5x rewards or more. Furthermore, those who hold a card with rotating bonus categories of spending should learn which purchases will qualify for extra rewards in the first quarter of 2014. These cards include the Chase Freedom, Citi Dividend Platinum Select, and the Discover It. Also, all three of these cards require customers to log in and “activate” the bonus categories, so don’t forget.

Consider a New Credit Card

Another way to reorganize your wallet is to consider whether you need a new credit card. Start by using’s Credit Report Card — it can match you with credit cards you’re more likely to qualify for based on a look at your credit report. Better yet, this tool performs what is known as a “soft pull,” which will not have any effect on your credit. New applicants can look for a card with a promotional financing offer, a sign-up bonus or more valuable rewards.

Those who continue to select a credit card based on old habits are often selling themselves short. By taking the time to go through your wallet and evaluate your credit card usage, you can save money on interest charges or earn more valuable rewards. Reorganizing your wallet might not be the most fun and exciting thing you can do this January, but it will be time well spent.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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