Editorial Policy

How to use summer holidays to improve your credit

Jeffrey Steele

May 27, 2016

Ah, summer. It’s an ideal time for barbecues, ballgames and kicking back with friends. But the summer calendar celebrating the flag or remembering veterans and revolutions also can serve to remind us of smart steps to more effectively use credit.

“Credit is a financial tool, and debt is a financial problem,” says Rod Griffin, director of public education for Experian, one of the three big credit bureaus. “If you manage your credit well, it can help you spend effectively on all the summer holidays to come.”

To that end, you can use the calendar below so that the red-letter dates of summer can be milestones on your way to both a better grasp of credit and savvier use of your cards: 

Memorial Day, May 30
While the first summer holiday recalls those who died in active service in the military, it also marks the official opening of many municipal swimming pools and often the first big day of grilling with family or friends.

As you relax on the long weekend, David Bakke of MoneyCrashers.com suggests taking a few minutes to review some credit basics to position yourself for a better credit score and increased rewards through the summer and beyond.

“Never put a purchase on a card if you can’t afford to pay it off before the bill comes in,” he says. “And keep old credit cards open and use them sparingly, so they don’t get closed and your credit takes a hit.”

“Credit is a financial tool, and debt is a financial problem. If you manage your credit well, it can help you spend effectively.”
— Rod Griffin,

And to maximize your cash back — or any other rewards you’re getting — do a quick checkup on the cards in your wallet. “Keep in mind which credit cards come with the best cash back rewards depending upon your various purchasing habits,” Bakke says.

Flag Day, June 14
June isn’t just about brides, dads and grads. Saluting the red, white and blue on Flag Day also can be a good time to warily eye red flags on your credit report. Those warning signs, such as too many credit card accounts or the number of “hard” credit inquiries, can quickly deep-six your credit application.

Four of five consumers have errors on their credit reports, and many of those deal with credit cards, says Priyanka Prakash, finance specialist at Fit Small Business in New York City. Flag Day is a good time to flag those errors — and take steps to correct them.

Start by pulling your credit report for free at AnnualCreditReport.com. Then check for anything that looks amiss, Bakke says.

“Look for accounts that don’t belong to you or any other sort of inaccurate information that might result in dings on your credit score,” Bakke says. Then contact the credit bureau. You can file a dispute online through any of the three man credit reporting agencies — TransUnion, Equifax and Experian. But many experts recommend that you submit your dispute in writing and include any evidence to back up your claim of an error.

Independence Day, July 4
As our Founding Fathers did in 1776, declare your independence — with a twist. Make this your Independence Day from credit card debt. Then feel free to celebrate with a few fireworks.

According to CreditCards.com, the average credit card debt is $5,540 per U.S. adult with a credit card and $9,600 per household with credit card debt.

Consumer finance expert Andrea Woroch says that much debt can make any cardholder feel like a prisoner to credit cards.

How do you break free of the chains of card debt?

Woroch suggests this plan of action: Call creditors to learn payment options that may provide lower interest rates. Create a debt payoff strategy targeting the highest APR card first (the avalanche method) to save more money over time. And always pay double or triple the minimum due on all cards to more quickly dig yourself out of debt.

Other advice? “You may benefit from consolidating debt into one, low-interest personal loan that’s easier to manage,” she says. “Use debt repayment apps like ReadyForZero to hold you accountable and on track while keeping you motivated.”

Bastille Day, July 14
Associated with the French Revolution, Bastille Day, which is celebrated in many U.S. cities, may also mark your uprising against cards that aren’t offering the benefits and perks you thought you were signing up to receive.

For instance, maybe you’ve discovered your cash back is capped on your card. You didn’t realize that when you signed up for that card. It may make sense to switch cards.

“Money forgiven by a credit card company above $600 will in most circumstances count as income taxable on your tax return, so there’s that to consider.”
— David Bakke,

It just makes sense to always read the details of your card to know what it offers, such as rules on cash back or details on rental car insurance coverage, roadside assistance, price protection and foreign transaction fees.

“If traveling overseas, you might get socked with foreign transaction fees if you don’t use the right card,” Bakke says, citing just one example.

Or take that balance transfer card that seemed like such a great deal. Now that you’ve had it for months, you’re no closer to paying down your debt and the end of that introductory period’s 0 percent interest is drawing near. Or you may just be struggling to pay your credit card bill every month.

And any revolution starts with focus and a plan of action. “Use this time to re-commit to paying off your balances in full — so as not to lose the credit card interest battle — and keep your finances on an even keel,” Bakke says. 

International Forgiveness Day, August 7
One of the lesser-known days unique to summer, International Forgiveness Day, may also be an opportunity to reassess your card debt and payment options.

Different types of debt settlement programs are available if you’re struggling with credit card debt, Prakash says. Call your card issuer and explain the difficulty you are experiencing. “They may work with you to postpone your payments or forgive a portion of your debt,” she says.

Though debt forgiveness programs are available, the consequences include severe damage to your credit score. In addition, Bakke says, “money forgiven by a credit card company above $600 will in most circumstances count as income taxable on your tax return, so there’s that to consider as well.”

Finally, use this day to forgive yourself for credit card debt, says John Roegner, financial adviser with Savant Capital management in Naperville, Illinois.  “Don’t wallow in it,” he says of debt. “Forgive yourself, take responsibility, make a plan and make it happen.” 

Labor Day, September 5
Summer’s last blowout holiday, Labor Day, also is a reminder that extricating yourself from card debt can be hard work.

“You need to add up your total amount of debt in order to know what you’re dealing with, and you must get on a budget in order to better understand your spending” so that you can reduce it, Bakke says.

Establishing a budget, setting spending goals and rewarding yourself in little ways upon reaching them is an ideal way to mark your progress, he adds. For example, consider getting cards that shoulder some of the labor for you — cash back or miles, travel protection and credit trackers.

Finally, utilize a rewards card strategically, Roegner says. “Use it with a specific goal,” he says, as a way to keep your eye on the prize.

“It might be that I’m going to put my rent on it for a year, but after that, I’ll have enough frequent flier miles to fly home for the holidays,” he says.

As Labor Day fades into the fall, you’ll likely look back on a memorable summer season, and you also may have taken steps to boost your credit card rewards and reduce your debt.

After all, staying smart about your credit is a lifelong endeavor.

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