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- While credit cards can absolutely spell trouble for your finances if you use them to rack up debt, they can also be valuable tools.
- Opening a credit card that matches your financial or travel goals now can be a good way to get a head start on making progress in the new year.
- Travel credit cards like the Chase Sapphire Preferred Card can help you earn rewards to pay for a bucket-list vacation, and some even let you earn big bonuses worth hundreds of dollars right away.
- Also note that balance transfer credit cards let consumers save money with an intro APR for offer. If your goal is getting out of debt in the new year, you may want to consider one as you craft your plan to get out of debt and stay out.
- See Business Insider's list of the best rewards credit cards »
The end of the year is a time for reflection and, for many, a time to set goals for the new year. While there are a ton of goals to shoot for, many people's hopes and aspirations center around their finances and their happiness. Perhaps you have a goal of finally getting out of debt in 2020, or maybe you want to start planning a dream trip you've been quietly hoping to take for your entire adult life.
Believe it or not, a credit card could help you achieve myriad financial and travel goals in the new year and beyond if you're able to use credit wisely and responsibly. Here are a few reasons why the end of the year may be the perfect time to pick up the card you want.
Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back.
Save money on holiday debt with 0% APR
If you're starting the new year with debt left over from the holidays - and especially if you have high-interest credit card debt - you may believe that a new credit card is the last thing you need. However, a certain type of credit card called a balance transfer credit card can actually help you save money on interest and pay down lingering debt faster.
With a balance transfer credit card, you can usually secure 0% APR on transferred balances for up to 21 months. A 3% or 5% balance transfer applies with some cards with the longest 0% APR offers, but keep in mind that some cards, including the Amex EveryDay® Credit Card from American Express and the Chase Slate, don't charge a balance transfer fee in the first 60 days.
Either way, not paying any interest for up to 21 months could easily save you hundreds or thousands of dollars that would otherwise be wasted each month.
Start saving up for next year's award travel
If you're hoping to make your travel dreams a reality in the new year, signing up for a new travel rewards card now makes a lot of sense. Keep in mind that it can take months or years to rack up enough rewards to pay for international airfare plus the cost of a luxury hotel. And, even if your travel sights are lower than that, you still need time to rack up points and miles and for them to post to your account.
Also keep in mind that, by and large, you'll get better results with travel rewards if you redeem your points at least six months ahead of time. All of this creates a case to start earning rewards sooner rather than later, which becomes considerably easier once you start using a travel credit card for all your spending and regular bills.
Earn a sizeable bonus right off the bat
While picking up a travel credit card can help you start earning airline miles, hotel points, or flexible rewards, note that many of the top cards make it easy to earn a big bonus right away. Some of the top credit card sign-up bonuses are worth $500 or more that you can redeem for statement credits, gift cards, or even the trip of your dreams.
The best part is you can earn multiple sign-up bonuses from different credit cards provided you can meet all the minimum spending requirements. It's possible to earn a big bonus from one card in January or February, for example, then earn another bonus with another card or two throughout the remainder of the year. This strategy will net you a lot more rewards by the time the next new year is here.
Work on improving your credit score in the new year
If your credit isn't great, this is another area of your life where a new credit card may be exactly what you need. A credit card can help you build important credit history since each of your monthly payments will be reported to the three credit bureaus - Experian, Equifax, and TransUnion. Some credit cards for average credit or minimal credit history even let you earn rewards while you build up positive credit that will make life easier and make borrowing money considerably less expensive over time.
If you don't have any credit at all, you can also start building credit from scratch with a secured credit card - a type of card that requires a cash deposit as collateral to get started.
Some of the top credit cards to consider for your new year's goals
No matter your financial or personal goals, a credit card may be able to help. Here are some of the top credit cards to consider whether you want to earn travel rewards, build a positive credit history, or start saving for a goal.
Best travel card sign-up bonus: Chase Sapphire Preferred Card
The Chase Sapphire Preferred lets you earn 60,000 points (worth $750 in travel) after you spend $4,000 on your card within three months of account opening. You also earn 2x points on travel and dining and 1x points on all other purchases.
Since the rewards you earn with this card belong in the popular Chase Ultimate Rewards program, you can use them to book travel through the Chase portal (and get 25% more travel for free) or cash them in for gift cards, statement credits, and more. You can also transfer points 1:1 to popular airline and hotel partners like Southwest Airlines, United MileagePlus, Marriott Bonvoy, and IHG Rewards.
A $95 annual fee applies.
Best flexible travel card: Capital One® Venture® Rewards Credit Card
The Capital One Venture card offers unbeatable flexibility compared to many other travel credit cards, mostly because you can transfer miles to airlines or redeem them for any travel purchase at a rate of 1 cent per mile. You'll also earn 2x miles for each dollar you spend, and that's on top of the 50,000 bonus miles you can earn when you spend $3,000 on your card within three months of account opening.
There's no annual fee the first year, but you'll pay $95 per year thereafter. You'll also get up to a $100 credit toward Global Entry or TSA PreCheck membership.
Best card with no balance transfer fee: Amex EveryDay card
The Amex Everyday card lets cardholders save money on interest for a limited time. You'll qualify for 0% APR on purchases and balance transfers for a full 15 months, followed by a variable APR of 14.49% to 25.49%. Best of all, you won't pay any balance transfer fees on balances transferred within 60 days of account opening.
This card also offers rewards in the form of Amex Membership Rewards points, although you shouldn't focus too much on rewards if your real goal is paying off debt. This card also comes with no annual fee, which makes it easy to pay down debt without a financial commitment.
Best for building credit: Discover it® Secured
If you need to build credit from scratch and don't know where to start, you may need a secured credit card. The Discover it® Secured is frequently considered the top credit card in this space since it lets you earn rewards and build credit without an annual fee or any other fees.
Once you're approved, you'll need to put down a cash deposit (usually up to $500) to secure a small line of credit. From there, you'll earn 2% back on up to $1,000 spent at gas stations and restaurants each quarter (then 1%) plus 1% back on all other purchases. Even better, all of your credit card payments will be reported to the three credit bureaus, thus boosting your credit score along the way. You'll also get a free FICO score on your monthly credit card statement, and like we said, this card doesn't charge any fees.
Click here to learn more about the Chase Sapphire Preferred card »
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Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.