Small changes go long way with credit cards

During your annual review of your credit cards, you can make small changes or request adjustments that will add up incrementally over the course of the next year. These changes can help you pursue your larger debt goals, or simply help keep your debt balances low and your finances in shape.

Add a specific amount or percentage to your minimum payments. If you’re on a tight budget, but resolved to pay down your debts, try adding 10% to your minimum payments. Or, you can add a specific amount, such as $10 or $20, to each payment.

Paying more than the minimum will help you shrink your debt, and those amounts will add up over the year. The small change will also help you acclimate your budget to your debt payment goals. You can increase this amount periodically to pay down debts.

Set a fixed automatic payment for the year. A minimum payment on a credit card adjusts every month, because it’s calculated as a percentage of your current balance. As long as you don’t add purchases to the card, and your APR doesn’t change, your balance and your minimum should shrink with every payment.

A fixed payment will help you pay down your balance more quickly. Resolve to stop using the card for the next year or six months, and choose an amount above the minimum payment. Automatic transfers will eliminate a bill payment chore, and the temptation to fall back to minimum payments.

Ask your credit card issuer for a lower interest rate. If you have a solid credit history, you can try negotiating with your issuer on your interest rate. The reduction of a percentage point, or even half a percentage point, can make a large difference if an emergency requires you to take on debt in the future.

Review your credit reports and credit card file thoroughly, and take note of any pre-approved offers that you have recently received. You can talk to your credit card issuer about your positive credit patterns, your long customer history with the company, and other comparable offers you have received.

Because a financial institution’s willingness to extend credit is determined in part by larger economic circumstances, keep this negotiation on your annual checklist. You may be unlucky one year, and lucky the next. Your credit history could also steadily improve, putting you in a stronger negotiating position for the following year.

Ask your credit card issuer to waive your annual fee. Not all credit cards charge an annual fee. If you have a card that charges this fee, compare it to other offers you receive or cards that you have that do not include the fee. How do interest rates and reward programs compare?

If you have a responsible credit record, a good history with the company, and you receive offers for similar credit cards that do not include annual fees, you can try asking your credit card issuer to waive the annual fee on your card. It doesn’t hurt to ask, and you can end up with substantial savings in fees for the year.

Use your rewards. Using your points can be a great way to reward yourself for completing your annual debt review or meeting your debt goals. Some reward programs have points that expire, which is all the more reason to use them now.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at


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