A new year means a new beginning, and 2024 can be a fresh start when it comes to your credit card strategy. You can use credit cards to build or rebuild your credit, pay off debt, earn rewards and access valuable perks. Whether you’re new to credit cards or are a more experienced user, the following credit card tips for 2024 can help any type of card-seeker craft a fruitful credit cards strategy for the year ahead.
Credit cards come in a wide spectrum of types, aimed at different users. We break down the different types of credit cards for you.
If you’re new to credit
Start the year off right with a plan to build a solid credit foundation. Building credit and increasing your credit score takes time and effort, but it’s worth it. A good or better credit score can save you money in the form of lower interest rates, as well as help you access better financial products. Owning and using a credit card responsibly is an excellent way to start building credit. Here are a few tips if you’re new to credit:
Don’t delay building credit
Your credit score is an essential factor that can determine what financial opportunities you qualify for in the future. It’s best to start building credit in early adulthood — and by doing so, you can also develop responsible financial habits. When used with care, credit cards can be a great tool to help establish credit. But make sure you only charge what you can afford so you stay out of credit card debt.
Not quite sure how to apply for a credit card? We’ll walk you through how to apply for a new card.
Consider a secured credit card
You may want to apply for a secured credit card if you have no credit history. These credit cards require a refundable security deposit to open an account. Since a cash deposit is required, it can be easier for those with little to no credit history to be approved for secured cards.
After showing that you can use the card responsibly, your card issuer may allow you to graduate to an unsecured credit card — one that doesn’t require a deposit. Secured credit cards are ideal for credit card beginners who are establishing credit for the first time or someone who has made some credit missteps and is looking to repair their credit score.
Always pay your entire credit card balance
As you use credit cards, only charge what you can afford. By doing this, you’ll be able to pay your entire balance off every month. It’s never a good idea to carry a balance on your card. You’ll be charged interest if you carry a balance, which can be costly. Paying your credit card balance off is an excellent strategy to avoid accumulating debt and incurring interest charges as you build credit.
Your credit card grace period can help you avoid interest charges. Here’s how a grace period works.
If you’re repairing your credit
If your credit score could use some work, you’re not alone. It’s never too late to make positive changes toward improving your credit. As you work to repair your credit, these tips may help:
Reduce your credit usage
It may be obvious to say that you should pay attention to your total debt, especially if you have high credit card balances, but that doesn’t make it any less crucial. Your credit utilization, or how much of your available revolving credit you use, makes up 30% of your FICO Score. As you take steps to repair your credit, reducing your credit usage could have a major impact on improving your score.
Experts recommend keeping your credit utilization under 30%. That means, for example, if you have a total credit limit of $5,000, it’s best to use less than $1,500 of your available credit at any time. Using only a portion of your available credit can help to repair credit and boost your credit score.
Pay your credit card bills on time
Payment history makes up 35% of your FICO Score. Late and missed payments hurt your credit report, so staying on top of bill payments is necessary. As you rebuild your credit, pay every bill on time. This can improve your payment history and raise your credit score over time. You can set up automatic bill pay for your everyday expenses so you don’t fall behind on payments accidentally.
If you have credit card debt:
You’re not alone if you have credit card debt. But because credit card debt is high-interest debt, you’ll want to pay it off as soon as possible — otherwise, your debt can grow rapidly. Here are some tips:
Get a clear picture of your financial situation
First, you’ll want to determine how much debt you have to develop a debt payoff strategy. Outline your total debt, the APR on each credit card, and the due date and minimum amount due for each card. This way, you’ll have the information needed to create a realistic debt payoff plan.
Prioritize debt payoff and stop making new purchases
It’s best to tackle your credit card debt immediately to pay less interest over the life of your debt. You should put any extra money in your budget toward making payments to your card to eliminate the debt faster. It’s also recommended that you stop using your credit cards until you pay off all your debt. If you continue to charge purchases to your card, your balance will continue to climb.
Consolidate your existing debt
Consolidating your debt can make it more manageable – and it could help you save on credit card interest charges. A popular debt consolidation tool is a balance transfer credit card, which allows you to transfer an existing credit card balance to your new card (as long as the two cards are from separate issuers).
Many balance transfer credit cards offer a 0% introductory APR for a set time, and during that time, you won’t be charged additional interest — as long as you pay the entire card balance off before the promotional period ends. You’ll typically pay a balance transfer fee, but the money saved on interest charges can make such fees well worth it.
What’s the best debt payoff method? We break down the debt snowball vs. debt avalanche methods.
If you want to earn rewards with a credit card:
Credit card rewards are a great way to partially offset expenditures you’d have to make anyway. If you want to a card that can help you earn rewards, check out these tips to help you select the best one for your needs:
Consider your spending habits
Consider your typical spending habits before choosing a credit card that earns rewards. Some rewards cards and cash-back credit cards offer flat-rate rewards for every purchase, regardless of the spending category. But other credit cards offer elevated rewards in select spending categories. Choosing a card that fits your spending habits can allow you to maximize your rewards.
Additionally, consider how many credit cards you have in your wallet before getting a new card. You want to ensure you’re not opening too many cards too quickly and can manage your cards effectively to maintain a good credit score.
Research how you can use the rewards
Earning points, miles or cash back when you use your credit card can be rewarding. But it’s important to research how to use your rewards. Not all rewards credit cards offer the same redemption choices. Knowing this before you choose your next credit card can help you get the most out of your rewards and make it easier to choose the right card based on your goals.
If you want the swanky credit card perks you’ve been hearing about:
Some of the best travel rewards credit cards include benefits like airport lounge access, trusted traveler credits and credits for various hotel or dining options, or elite status with various travel programs. If you’re interested in exclusive credit card perks that could add value to your life, these tips may be useful:
Decide what perks are most important to you
Some of the more premium credit cards offer incredible benefits. But not every perk will be the right fit for you. Before you settle on a new rewards credit card, figure out what benefits are most important for you and which ones you’d use the most. Doing this can help you better compare your options so you end up with a card that will provide you with the most value.
Want to learn more about airport lounge access? Read our guide on Priority Pass lounges.
Don’t ignore annual fees
Many premium cards with exclusive perks, including some of the best business credit cards, have high annual fees. Reviewing your budget before adding a credit card with a high yearly fee to your wallet is essential. You should also consider whether your rewards opportunities and the benefits offered are worth the annual fee. If the rewards and perks aren’t worth it, choose a different card.
Final verdict
Credit cards are a powerful personal finance tool — and when used responsibly, they can provide many benefits. With the new year approaching, consider how to get the most out of your credit cards in 2024. Whether you’re a new or more experienced credit card user, you can likely adjust your credit card usage strategy in the year ahead to improve your financial health and get more value from your cards.
Frequently asked questions (FAQs)
The 20% credit card rule recommends that you keep your debts below 20% of your annual income. Following this strategy can help you keep your debt under control as you work to eliminate it. If your debt gets out of hand, it becomes harder to pay it off quickly.
As a result of continued Federal Reserve interest rate hikes, credit card interest rates are higher than they were in recent years. Credit card interest rates could drop in 2024. But that likely won’t happen unless the Federal Reserve reduces the target level of the federal funds rate, which influences the prime rate that variable credit card APRs are typically tied to.
No. It’s best to pay your credit card bill in full to avoid interest. If you consistently pay your balance in full and on time, you typically won’t be charged interest and can also avoid accruing credit card debt.
There are many rewards credit cards, including cash-back credit cards and travel rewards credit cards. The best rewards credit card for you depends on your credit situation, budget, spending habits and goals. Researching each card’s rewards structure, redemption options and annual fee if any can help you choose the right card for your particular needs.
You can use a credit card to pay your bills. But only do this if you can pay off your entire credit card balance. By paying your total balance, you can avoid interest. You should also confirm that you won’t be charged credit card convenience fees for using a credit card to pay a bill.
Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A.; Members FDIC. The secured Credit Builder card issued by Stride Bank, N.A.
¹Out of network ATM withdrawal fees may apply. See here for details.
²Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month.
³To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.
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