New Years Resolution – Manage My Credit Cards Better

We're on the 4th day of a New Year, and that means that many people are making resolutions, vowing to improve their situations this year. This, of course, includes personal finance goals. Personal finance resolutions are popular, since everyone wants to improve their money situation. And, usually, paying down debt is right at the top of the list. While this is a worthy personal finance resolution, let's not forget to attack the source of the problem as well.

Consider making a New Year's Resolution to manage your credit cards better.

Improving Your Credit Card Management

One of the best things you can do for your money situation is to have a plan. Credit cards can be great financial tools. Low interest credit cards and 0% credit card offers can help you pay off your debt quicker. Additionally, there are plenty of credit card rewards programs that can help you earn cash back and free stuff. A credit card can be a great tool -- especially if you pay off your balance each month so that you aren't paying interest. But you need to have an idea of what you are doing with your credit card in order to avoid the costs associated with credit cards debt. Here are some ideas for managing your credit cards better in the New Year:

• Incorporate your credit cards into your budget: Many of us just think of the budget as including what happens with the checking account. Instead, consider credit card spending as part of the budget. Track it as you would checking account spending, and set aside a certain amount of money to charge, making sure that it is an amount that you can pay off each month.
• Have a plan for your rewards credit cards: Credit card rewards can be quite valuable. You should have a plan for using your cards. Evaluate rewards programs and decide which are most valuable for you. Make a spending plan based on what will provide you the most points. For example, whenever you buy items at Shoppers Drug Mart, use your Shoppers Optimum Mastercard to maximize points. You might put large purchases on your travel rewards card to earn airline miles faster. Create a shopping strategy that will help you earn rewards. (And be sure to stay within budget.)
• Consider when you make your payment: Find out how your credit card charges interest. In many cases, you can schedule an electronic payment of your credit card for the day before it's due. This means that money can sit in your bank account, available for your use (and possibly earning interest, depending on the account). And you won't pay interest. It's a way to maximize your money.

With the proper planning, credit cards can be quite useful. Like so many things, how use it depends on whether or not it brings you profit. With a little effort, you can manage your credit cards so that they bring you advantages in 2011.

Image source: Michiel1972 via Wikimedia Commons

This post was included in the 18th Canadian Finance Carnival at Canadian Finance Blog.