Are you getting the most out of your credit card — or your credit history? First and foremost, you want to protect your downside. For all their influence, the credit bureaus are far from infallible and often get basic information wrong, like reporting resolved debt as unpaid or even by mistakenly declaring people legally dead: a common, if surprising, occurrence.
That’s just one reason why it’s important to regularly take a look at your credit report, the record of on-time payments and loans that help determine your credit score. An estimated 1 in 5 credit reports has an error on it, according to a 2012 (and 2015 follow-up) review by the Federal Trade Commission; for some consumers, fixing errors can mean a higher credit tier. Plus, last year’s Equifax breach heightened the need to protect your credit against fraudsters and scammers, particularly during tax season.
Even if you have already completed this basic “financial hygiene” move, there’s a good chance you are not totally maximizing all the ways to save money and even grow richer through expert-level credit behavior — from negotiating for better terms to nabbing tip-top card rewards.
Here are three credit power moves you can use to both thwart thieves and get more bang for your buck.
1. Check your credit report
Checking a credit report isn’t difficult nor costly; you’re actually entitled to receive one free from the three major credit bureaus each year. That means that by reaching out once a year to Equifax, TransUnion and Experian through annualcreditreport.com, you can monitor your report without paying a dime — and even stagger them out so you can see one once every four months.
Only a third of consumers said they had checked their credit report in the last six months, according to a new CreditCards.com survey, a “disturbing” number, senior industry analyst Matt Schulz said in an email, given the large number of consumers who may have been implicated in the Equifax breach. According to the latest count, the financial information for more than 145 million people may have been compromised.
If you do find an error, you’ll need to write to the credit bureau behind the faulty report and get them to correct the information. The FTC has created a template letter for consumers to use, but you should also include copies of any transcripts or communications that strengthen your case. Most of the time, the credit bureau in question will have to respond to you in less than 30 days.
The great news? There could be a real payoff: Fixing an error can save you thousands or even tens of thousands of dollars by improving your credit score and getting you loans on better terms. That might mean it’s easier to get a mortgage to buy a home or finance a car in the longer term — but it could also help you refinance student loans in the nearer term.
2. Negotiate with your credit card company
Customers of the consumer banking giant Citibank recently got a welcome surprise: On Friday the company announced it would be applying refunds to nearly 2 million customers of its credit card business after it accidentally overcharged customers on their annual interest rates. The average refunds are expected to be about $190 a pop.
Even if you don’t have a Citi refund check coming to you, your bank doesn’t actually need to mess up for you to be able to convince them to lower your APR — or get you other more favorable terms (like waived late fees or an increase to your credit limit, which can help improve your utilization ratio and thus your credit score).
In fact, getting your bank to lower your annual percentage rate is surprisingly easy: A 2016 survey from Bankrate found that 78% of consumers who asked their banks for a lower APR were successful. Yet that same survey found that only 1 in 5 consumers even try.
The same is true if you’re asking for a larger bonus for staying with the same card company, like a higher rewards rate for spending, or the recategorization of expenses that should qualify you for higher rewards (for example, if you buy higher-yielding groceries from a store that’s not being categorized as a grocery store). To bargain for anything — including better perks — check out Payoff’s previous guides to saving money through phone calls and successfully negotiating with a customer service agent.
To get your card company or bank to lower your annual rate, it helps if you have offers from other credit card companies that you can use as leverage in your call. LifeHacker also has a popular script to follow with your bank’s customer service representative: Simply quote them two or three competing credit cards and ask for a lower rate.
3. Get the most points, miles or cash back with the best credit card for you
If your attempts to play hardball with your bank fall on deaf ears, you might consider making good on your threat to take your business elsewhere. That’s doubly true if your lifestyle has changed considerably since the last time you opened up a new account.
A frequent business traveler, for example, is probably missing out on sweet perks if they’re still carrying around the student credit card they got in college.
On the other hand, a former globetrotter who’s decided to settle down in the suburbs is probably going to want to trade in their travel card for a card that comes with more reliable (if boring) cash back.
Why? In a 2016 study, NerdWallet estimated that it takes nearly $9,000 in annual spending for a travel card to pay off. And even if you do spend that much, you might still want to do the quick math to see if cash back nets you more benefits than points: a 2% cash back card will get you about $360 in rewards for the year, for example, if you spend around $1,500 a month.
Finally, remember there are other ways to get even more value from certain cash back cards: like by buying gift cards for other spending at supermarkets, if grocery expenses qualify you for higher cash back rates.
Particularly as credit cards are increasingly tailored to serve more niche constituencies, from frequent restaurant diners to Amazon Prime customers, the payoff to getting the right credit card for you has grown. And yet, a recent J.D. Power and Associates survey estimated that as many as 70% of consumers could find better match than the credit card they’re currently using.
If you’re thinking about getting a new credit card, you can check out our guide to the best travel cards, balance transfer cards and more.
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