You can check your credit reports at no charge once a year for each credit bureau at annualcreditreport.com or by calling 877-322-8228.
Are your credit cards lazy, or is it you?
Maybe you have a card that gives you some cash back on purchases, or hotel points, or airline miles. But if you’ve had the same credit card for more than a year, you can probably do better.
Maybe you’re carrying a balance and paying high interest. Wouldn’t it be better to pay zero in interest while paying down that balance?
Sure, you might have to do a small amount of comparison shopping, and make a phone call or fill out a form. But it could be worth several hundred dollars.
Unless you have a poor credit score, I’d suggest taking a look at credit-card offers at least once yearly, for several reasons.
Issuers typically offer promotional incentives to new customers. The best perks can be worth $500 or more, and as long as you don’t carry a balance and pay interest charges, that’s free money.
Different cards offer different benefits that you can use to your advantage. Maybe you’re planning a vacation overseas, and you want a card that doesn’t charge for purchases made in foreign currencies. Or perhaps you have a credit card to pay down, and you want one with a lower rate or a zero-interest offer.
Some cards have annual fees. Sometimes those fees are waived for the first year, but at renewal time it’s worth deciding if the card’s benefits are worth paying for, when there are so many competing offers out there.
For example, last year my family went on vacation and flew with Delta Air Lines. Because I had a Delta card, we didn’t pay luggage fees, saving us more than $200. Plus, Delta gave me frequent-flier miles for signing up. But I have no plans to fly Delta in 2014, so I’ll probably cancel that card at renewal time rather than pay to keep it.
Then, I may sign up for a different card. Maybe a Marriott Rewards card, which has no fee for the first year and comes with up to seven free hotel nights. Or maybe I’ll get a Chase Sapphire card, which promises $500 worth of travel points and no fee for the first year.
That’s the thing: They dangle sign-up incentives with the hope that you’ll pay $85 or $95 in a year to keep the card. Some fees are worth it, but they need to be considered.
Of course it’s not a good idea to sign up for lots of cards, because each one is a “hard” inquiry on your credit report, and multiple requests can be seen as a bad sign if you’re applying for something like a mortgage. But in my experience, signing up for a new card every year or so, and often canceling an old one, shouldn’t be an issue.
When it comes to credit cards, what helps your credit score is paying the bills on time, and using only a small percentage of your total available credit on all cards.
For those people, credit cards can be a good financial tool. They improve cash flow by pushing expenses out about a month, and they typically come with benefits such as cash back and fraud protection. Some will even cover the cost of an item that’s accidentally broken within a few months of purchase.
For those who are carrying a balance and paying interest, shopping around is also a good idea.
If your credit is good enough, you should be able to find a deal offering zero interest on balance transfers, typically for a year to 18 months. In most cases, a fee of about 3 percent is required, but that could be a good trade-off if it means you’ll be able to repay the debt over that time.
For example, say you have $4,000 on a card with 20 percent interest, and you want to pay that off in 15 months. By paying just over $300 a month and taking on no new debt, you could erase the balance in 15 months. But you’d also pay about $550 in interest.
Transfer that $4,000 to a card offering zero percent interest for 15 months, and a 3 percent fee would cost $120. Paying $300 a month, you’d pay off the $4,120 in less than 14 months and save $430 in interest charges. Plus, the new card may come with sign-up incentives. Of course, you’d have to stick with your debt-reduction plan to make a balance transfer pay off.
To shop around, look for offers in the mail. Also consider looking at one of the many card-comparing websites, such as cardhub, nerdwallet or bankrate. Always read the fine print, and if you do it right, credit-card issuers can pay you, instead of the other way around.
Reach David Slade at 937-5552
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