NerdWallet’s Best Credit Card Tips for January 2022

As you're navigating expenses this month, some credit card strategies may offer additional savings.
Jan 3, 2022

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The new year is filled with possibilities to uplevel to a better you. Whether you're starting 2022 on track to fulfill your goals or you're carrying the weight of financial circumstances, a new year offers a fresh start with room for improvement.

A credit card can be a valuable tool along the way whether you’re ditching debt, planning to save money or creating healthier habits. Here are some ways that credit cards can support your resolutions this year.

Use your credit card to meet New Year’s resolutions

If your credit card no longer aligns with your spending patterns, consider changing it. You can upgrade or downgrade a card with the same issuer if it makes sense or apply for a different card elsewhere.

Building credit

Discover it® Secured Credit Card
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Whether you’re establishing credit for the first time or rebuilding it, a secured credit card can serve as a stepping stone. A card with a path to upgrade to a regular credit card is ideal. With the $0-annual-fee Discover it® Secured Credit Card, for example, the company begins reviewing your account after seven months to determine eligibility for an unsecured card. It requires a minimum $200 security deposit, but you’ll get it back with a good track record when you close the account or upgrade with the issuer.

It earns 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. All other purchases earn 1%. INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match. The sign-up bonus and rewards can defray the cost of the security deposit over time.

Paying down debt

With debt, it’s critical to set up a plan. A good option for those with good credit (a FICO score of 690 or higher) is a low-interest balance transfer credit card that allows you to move debt onto it from a high-interest credit card.

Wells Fargo Reflect Card
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A card like the $0-annual-fee Wells Fargo Reflect℠ Card can offer a 0% intro APR on Purchases for up to 21 months and 0% intro APR on Balance Transfers up to 21 months from account opening on qualifying balance transfers, and then the ongoing APR of 13.74%-25.74% Variable APR For transfer requests made within 120 days from account opening, a balance transfer fee of $5 or 3% intro applies, whichever is greater. After that, the card charges up to 5% of each transfer amount, with a minimum of $5. The fee is worth paying if it saves you money on interest charges over time.

Don’t put new purchases on your credit card when getting out of debt is the goal. Set a realistic debt-free deadline and use the balance transfer card’s promotional window to make a dent.

Making lifestyle changes

Without debt, you can explore credit cards that reward new lifestyle changes.

Wells Fargo Active Cash Card
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A card like the $0-annual-fee Wells Fargo Active Cash® Card can offer 2% cash back on all spending, meaning you’ll get a solid rate on that gym membership, fitness subscription, health food delivery service or next-level career-development training. There's also a nice sign-up bonus: Earn a $200 cash rewards bonus after spending $1,000 in purchases in the first 3 months.

Maximizing rewards

If optimizing rewards is on your list of resolutions, look for a card that offers elevated rewards in specific categories. A credit card that earns rewards on groceries offers some value as you work on a goal to save money by cooking at home. If you’re picking up a side hustle like ride sharing, a credit card that earns rewards on gas can prove fruitful.

Citi Custom Cash℠ Card
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You can also pair a card like the Wells Fargo Active Cash® Card with a card that earns rewards in custom categories. The $0-annual-fee Citi Custom Cash℠ Card, for instance, earns 5% in a top eligible spending category, on up to $500 each billing cycle. Top spending categories consist of a list of 10 options that include grocery stores, gas stations and fitness clubs, to name a few. All other purchases earn 1% back. But, instead of letting purchases default to that lower rate, you could get 2% back by also adding a card like the Wells Fargo Active Cash® Card to your wallet.

Travel

Chase Sapphire Preferred Credit Card
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A travel credit card and its sign-up bonus can help get you to those dreamy destinations. A card like the Chase Sapphire Preferred® Card has a healthy introductory offer: Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus, there’s a $50 annual credit on hotel stays purchased through Chase Ultimate Rewards®.

You’ll also earn 5 points per $1 spent on all travel purchased through Chase Ultimate Rewards®; 3 points per $1 spent on dining (including eligible delivery services and takeout), select streaming services, and online grocery purchases (not including Target, Walmart and wholesale clubs); 2 points per $1 spent on travel not purchased through Chase Ultimate Rewards®; and 1 point per $1 spent on other purchases.

The points boost on every account anniversary earns bonus points equal to 10% of total purchases made the previous year. And points are worth 25% more — 1.25 cents apiece — when redeemed for travel booked through Chase. It’s also possible to transfer them to a dozen airline or hotel programs instead.

The card packs plenty of perks to offset the annual fee, but if this cost is a deal breaker, no-annual-fee travel credit cards are also worth exploring.

Use your credit cards to advance finances

When debt isn’t in the picture, you can use your credit cards to budget. Here are a few additional ways to save money.

  • Budget with each credit card: Set an alert to be informed when each card reaches a spending limit and stop using the card to avoid going over budget.

  • Pad an emergency fund with rewards: Depending on how much you spend, those extra rewards could add up to several hundreds of dollars for an emergency.

  • Save with merchant-specific discounts: Look at credit card offers for potential discounts on planned purchases.

  • Use your credit card’s benefits: Log in to your account or call the issuer to understand your card’s sometimes "hidden" benefits and use them wisely. Your issuer may offer benefits that save money like cell phone protection or exclusive discounts through the credit card’s network.

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