1. Know your credit limit.Start the year by checking your credit limits on all your credit cards. Some of your card issuers may have given you an increase since you last checked. Remember to keep your balance below 30% of your credit limit for ideal credit utilization. Not only will it keep you from creating too much debt, you'll also build a better credit score in the process.
2. Get a better credit card.
Credit card issuers ramped up credit card offers in 2012 and even started offering better credit cards to consumers with lower credit scores. If you haven't opted-out of credit card offers, expect to see more offers hitting your mailbox. People with good credit scores will notice better offers on reward cards and balance transfer deals, with introductory rates lasting as long as 24 months. If you previously decided you didn't want to get prescreened credit card offers, you can opt-in by visiting OptOutPrescreen.com.
For years, readers have complained about unauthorized iTunes charges on their credit cards. Credit card fraud has always been a problem, but it's increased in the bad economy. Watch your credit card statement closely and report any suspicious charges immediately. The sooner you respond to fraudulent charges, the easier it is to get them settled.
Many banks have eased their credit standards making it easier for people with so-so credit to get approved. You'll still need to have a great credit score to get approved for the best credit card deals - high rewards, signup bonuses, and long introductory rate periods. Note that you'll get a free credit score if you're not approved for the most ideal credit card terms because of your credit score.
An emergency fund of three to six months of living expenses should be a part of your finances. Under current job conditions, it's a must have. A sizable emergency fund will supplement any unemployment benefits you receive and help bridge the gap in your income. If you can't build a $20K+ emergency fund right now, focus on setting aside $1,000 to $2,000 to cover minor emergencies. Then, work toward your larger emergency fund goal.
If you've already started an emergency fund, make sure you continue contributing to it this year. The larger your fund, the more coverage you'll have if an emergency comes up.
The good news is that credit card issuers can only charge you the greater of your minimum payment or $25 ($35 if you've been late within the past six months) as a late fee. The bad news is that two consecutive late payments will increase your APR to the default rate (often higher than 30%) for six months. And if you're late just one time, you can lose your promotional interest rate. Honestly, it's easier to pay your accounts on time than it is to get caught up on late payments.
The increase in credit card offers is a sign that the credit industry is improving. Credit card issuers are once again mailing out great credit card offers to people who have good credit scores. Improve your credit score, not just to get a great credit card, but also to get better rates on your loans and insurance. If you already have a good credit score, take care to maintain it.
9. Only take out the loans you need.The more money you borrow, the more you have to pay back. Adding another loan to your monthly expenses puts too much pressure on a budget that's already stretched. You also want to keep your debt as low as possible while the job economy is so risky. One less loan will make it easier to make ends meet in an unfortunate job loss.
When you notice you're having trouble making ends meet, it's time to take out your budget and make some changes. Pay attention to what you're spending money on and cut back as much as you can. Avoid taking out expensive payday loans, especially when you're already having financial diffculty. You'll have a hard time paying the loan back and will end up owing a lot more than you borrowed.