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| The Basics | Spring-clean your finances
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Review your bills
Telecom and cable companies are battling for your business, so it can pay to review your cell, landline, long-distance, Internet and pay television bills at least once a year to see if you can find a better deal.
Start by seeing how well your current choices suit your life. Do you regularly watch those premium channels you're paying extra for? Are you using more or a lot less than your monthly allotment of cell phone minutes? Do you still even need a land line, or could you substitute a cell phone or investigate Internet calling? (For more details on the latter, see "Time to ditch your land-line phone for VoIP?")
Once you have a better idea of your needs, you might check with a Web-based comparison shopping service like LowerMyBills.com to see if you can get a better deal on individual services.
Also, check with your providers to see if they can offer you a better plan for one or more services. Many telecom and cable companies are offering bundles that combine phone service, high-speed Internet access and cable or satellite television, sometimes for substantial savings. The deals vary, so see what your providers -- and their competitors -- have to offer.
Clean up your credit
First, get your credit reports. You're entitled to free annual reports from each of the three major credit bureaus, which you can view online at Annualcreditreport.com. Dispute any serious errors -- accounts that aren't yours, or negative marks that are older than seven years (or 10 years for bankruptcies).
Then, review your rates and terms. If your credit score is good -- FICOs of 720 or above --your credit card interest rates should be in the single digits, said Curtis Arnold of CardRatings.com. If they're higher, contact each card issuer and ask for a better deal.
If your credit is poor, make a plan to improve it -- by paying bills on time, paying down debt and using credit responsibly. You'll find a host of articles on how to improve your credit scores at the MSN's Decision Center on credit.
Also, if you've paid even a single late fee this year, you may want to consider setting up an automatic debit to make sure at least the minimum gets paid on time.
If you carry credit card balances, rewards cards usually aren't the best choice, since their interest rates are typically high. Better to concentrate on getting the lowest rate possible and make a plan to pay off your debt.
If you pay your bills in full every month, though, you should be earning some additional benefits, like cash back or other rewards. Just make sure they're the right rewards:- Airline rewards aren't a good deal for most. When they first appeared, credit cards that offered frequent flier miles seemed like a great deal. Unfortunately, financially strapped airlines have been making it harder for most people to use their miles for upgrades or free flights. Elite frequent fliers still can get priority access to first-class seats and free tickets on their preferred airlines, but less frequent fliers might want to explore other rewards.
- Hotel rewards might be a better choice for travelers. Hotel chains tend to be a lot more flexible than airlines about redeeming rewards points, said Randy Petersen, publisher of Webflyer.com. You may be able to convert your frequent flier miles to hotel points, or you can apply for a card that's affiliated with a major chain, like the Hilton Honors Visa Signature card or the Starwood Preferred Guest card.
- Otherwise, stick to a good cash-back card. Arnold of CardRatings.com recommends the Citibank Dividend Platinum Select card for "light" chargers and the American Express Blue Cash card for heavier users.
The Citibank card offers 5% cash back on "everyday purchases"-- meaning grocery, gas and drugstore purchases -- plus 1% back on other purchases, but puts a $300 annual cap on rebates, which you'd hit after $6,000 in grocery, gas and drugstore buys.
The American Express card, meanwhile, has a tiered structure that means you don't get the maximum cash-back benefit until you charge at least $6,500 a year. Once you're there, though, you get 5% cash back on grocery, gas and drugstore purchases and 1.5% back on everything else.
Maximize your rewards
"Earn and burn" is the mantra of smart frequent fliers and should be yours when it comes to any kind of reward program.- Concentrate your spending on the credit card that gives you the best rewards, while being careful to protect your credit scores by not using more than 50% of your credit limit at any time. (If that's a problem, ask your issuer for a higher credit limit or pay your bill a few days before your statement's closing date to minimize the impact on your credit scores.) If you're also earning rewards through an airline or hotel chain, try to book most of your travel through those programs.
- Keep track of your rewards. Most rewards programs will notify you by e-mail once a month or so of your account balance and any special promotions that could allow you to earn extra rewards. If you've got a lot of these accounts, you might consider using a paid service like MaxMiles ($29.95 a year with a 90-day free trial) or MileageManager ($14.95 with a 30-day free trial) to keep track and to alert you to special deals. Or check with your bank or brokerage, some of which offer reward-program tracking as part of their account consolidation services.
- Cash in your rewards frequently. Some cards, like Blue Cash, automatically credit your account, but most require some action on your part. Don't let your rewards languish too long, since card issuers, airlines and other reward givers can change the terms at any point to make benefits harder to get or redeem.
- Rescue orphaned miles or points. You may have switched airlines or credit cards, but you shouldn't let your rewards from the old program expire unused.
In some cases, you can transfer your benefits. I recently rescued 15,000 points from Continental's OnePass program, for example, by transferring them to my Amtrak Guest Rewards account. The 15,000 flier miles were useless to me, since I no longer fly that airline, but with Amtrak we can score a sleeper car bedroom on the Los Angeles-to-Seattle route, something that would otherwise set us back more than $300.
If we decide not to ride by rail, I could transfer the same points yet again to my Hilton Honors account, which would double their value to 30,000. That would get me a free night or two at one of the chain's hotels, depending on what specials are running.
You can use the mileage converter at Webflyer.com to explore the possibilities, or check with the reward program's Web site. At the very least, you should be able to trade your orphaned rewards for magazines, gift certificates or discounts on merchandise with affiliated stores, although your exchange rate might not be great. Currently, for example, you can trade 26,738 Alaska Airlines Mileage Plan miles for a $50 Amazon.com gift certificate through swap site Points.com -- an exchange rate of less than .2 cents a mile. That's far less than the 1 cent to 2 cents frequent flier experts say your miles should be worth, but it may be better than nothing.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
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