It might seem a bit premature to start planning holiday shopping and travel. But there’s no time like the present if you want to maximize holiday savings and avoid a nasty financial hangover in the new year. After all, it takes some time to convince a creditor to foot much of the bill.
You see, credit card sign-up bonuses are more valuable than they’ve ever been, according to WalletHub’s latest Credit Card Landscape Report. People with good or excellent credit can now get $400 or more by opening the right card and spending a certain amount within the first few months of account opening — usually $3,000 in three months. That’s obviously a lot of money — both to spend and to earn — which is why such deals are especially well-suited to the expensive holiday season.
[See: 12 Habits to Help You Take Control of Your Credit.]
More specifically, you could use your holiday expenses to meet your card’s initial spending requirement, and then have your resulting bonus available to pay for last-minute expenses or to replenish your coffers after the fact. But such a strategy necessitates acting soon in order to make sure that you have your new plastic in hand in time for Black Friday, Cyber Monday and the bulk of your holiday spending. After all, it usually takes at least two weeks to get a new credit card after submitting an application, and many of us need some time to whip our credit into shape before even getting to that step.
Credit scores can fluctuate by 100 points within a month’s time, so the manner in which you manage your credit in the coming weeks could dictate your wallet’s happiness this holiday season. With that in mind, here are a few tips to get your credit ready for showtime as well as some of the best credit card deals to target.
1. Check your latest credit score. You’re flying blind if you don’t know where your credit stands, and 44 percent of us haven’t checked in the past 12 months, according to the National Foundation for Credit Counseling. Reviewing your updated score will therefore tell you whether you’re ready to apply for a new card and, if not, how much work remains to be done before you’ll be in a good position for approval.
[See: 10 Easy Ways to Pay Off Debt.]
2. Review your credit report for errors. Successfully disputing inaccuracies on your credit report is one of the fastest ways to see a quick bump in your credit score. After all, one in four consumers in a Federal Trade Commission study of credit-report accuracy identified errors that could affect their credit scores. The biggest things to look for are on-time payments mischaracterized as being late, collection accounts for debts you didn’t rack up and public records that you don’t recognize.
In reviewing your reports, remember that the most recent records aren’t necessarily the most important. In fact, you should review all your credit history, even things that are a few years old. People check their credit reports even less frequently than their credit scores and free 24/7 credit monitoring wasn’t widely available until fairly recently. So, there’s a good chance you could have missed something.
3. Minimize your credit utilization. Credit utilization — the amount of a credit card’s spending limit that you use each month — is one of the most fluid ingredients of your credit score. That means it’s among the easiest to change in a short period of time. Your goal should be to reduce the utilization of each of your credit cards as far below 30 percent as possible. And there are a few ways to accomplish that.
[See: What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments.]
One way is to simply change when you pay your bill each month. By bringing your balance as close to zero as possible by your account’s statement date, you’ll naturally minimize your utilization. Alternatively, a somewhat more drastic approach would be to consolidate your credit card balances using a personal loan, which does not count toward your utilization.
When you consider that the average holiday shopper spent $805 on gifts last year, according to the National Retail Federation, it’s clear that a $400-plus credit-card bonus can make or break your holiday budget. So, get to work preparing your credit for some serious saving and enjoy a season without financial stress.
More from U.S. News
9 Ways to Save When Holiday Shopping With Credit Cards
9 Financial Tools You Should Be Using
11 Money Moves to Make Before You Turn 40
How to Get Your Credit In Shape for the Holidays originally appeared on usnews.com
