by Kevin Cash
As someone of historic note once said, "April showers bring May flowers." Somehow that person forgot to mention that April showers also bring a fresh new round of NerdWallet credit card tips!
Every month, the Nerds round up a new set of pointers to help you maximize rewards and minimize costs with each use. Here are our tips for May 2016.
Upgrade your student credit card
If you're a college student who just graduated, now is a perfect time to evolve into adulthood and get yourself a proper nonstudent card. Upgrading to a standard credit card can have multiple benefits:
- Lower interest rates.
- A higher credit limit.
- Better rewards rates and redemption.
- Rewards that are more specific to your spending (e.g., travel, gas, groceries).
- More general perks (e.g., airline incidental coverage, free hotel stays, discounted travel).
Not all issuers have specific policies on how and when customers can upgrade student cards. The easiest way to know your options is to call your issuer and ask about upgrading. If you've already landed a job upon graduating, you can also report higher income to the issuer when you ask about the upgrade, which may better your chances of approval and getting a higher credit line.
If you are still a student, there are a handful of great student cards available if you want to start building credit.
Put together a debt payoff plan
For those with interest-accumulating debt, there's no better time to start paying it off than today. But preparing a payoff strategy on your own can be intimidating and confusing. To take the guesswork out of paying off credit card debt -- and to help you save the most money -- try using a Credit Card Debt Payoff Calculator.
This tool allows users to visualize credit card debt payoff in three ways:
- Minimum Payment -- How long will it take you to pay off your debt making only the minimum payment?
- Fixed Payment -- If I pay this amount every month, how long will it take me to be debt-free?
- Debt-Free Deadline -- I want to be debt-free by this day. How can I make that happen?
Enter your balance, interest rate and minimum monthly payment for each one of your cards to find the best method to pay off your debt. Knowing how your debt responds to different payments could mean finally ridding yourself of debt entirely.
Reconsider your cards
It's always possible you're not using the credit cards that best align with your spending. But there are a few easy ways to decide whether you should keep your card or cut it in half. First, take all of your cards, lay them out on a table, and divide them between the ones you use and the ones you don't.
For the cards you aren't using:
- Are you paying an annual fee? Doing so on cards you don't use is throwing money away. It's likely best to cancel these cards as long as you have others you can use.
- Not paying an annual fee? Keep these cards open. Closing unused cards that aren't costing you money can hurt your credit score.
For the cards you are using:
- Do their rewards offerings match up with your spending? If not, consider finding cards with rewards that do. There are credit cards for grocery store shoppers, travelers, gas guzzlers and cash-back seekers. If earning while you spend is on your to-do list this month, make a note of where you use credit cards the most, and find the ones that match up. Just don't apply for too many cards at once.
- Are the annual fees worth it? You should pay an annual fee on a card only if it's reasonably outweighed by annual rewards earnings, including a sign-up bonus. Look at your card's annual fee and compare it with your anticipated rewards for the year. If the rewards exceed the fee by a decent margin, the card's probably worth paying for.
- Are you holding an interest-accumulating balance? You may be able to transfer that debt to a card that temporarily delays interest. Doing so will save you money and provide more time to figure out how to pay the balance off completely.
Like checking your car's oil and calling long-distance relatives, conducting a self-audit of your credit cards is a good regular habit to keep at least every few months. Doing so can save you a bunch of money on fees and earn you more on spending.
Kevin Cash is a staff writer at NerdWallet, a personal finance website. Email: kcash@nerdwallet.com. Twitter: @kevin_cash.
This story originally appeared on NerdWallet.