Profit in 2008: Your savings, your credit

How to get the best deals on home loans, credit cards and your bank accounts.

By Asa Fitch, Money Magazine staff reporter

(Money Magazine) -- Lending standards will be tighter, credit-card deals skimpier and savings rates will remain in a holding pattern. These moves will help you nab the best borrowing and savings deals next year.

Shore up your score

To get the lowest rates on loans, you'll need a higher credit score next year. Put it this way: 750 is the new 720.

Make money in 2008:
22 profitable moves
CDs & Money Market
MMA 0.34%
$10K MMA 0.30%
6 month CD 0.54%
1 yr CD 0.93%
5 yr CD 1.67%

Find personalized rates:

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The quickest way to boost your score? Pay down the balances on your credit cards and home-equity line of credit.

The ratio of debt used to available credit counts for about a third of your score; get that ratio under 10% and you could raise your number by 50 points, says credit expert Gerri Detweiler.

Also check your credit reports for errors (you're entitled to one free report a year from each of the credit reporting agencies at One in four reports contain a mistake serious enough to result in a denial of credit.

Make your own deal

Next year, 0% introductory-rate offers and low-interest balance transfers are likely to get scarcer. Lock them in while you can.

Blue from American Express, for instance, offers a 4.99% rate on transfers until you pay off the balance and an introductory 0% rate for up to 15 months, depending on your credit standing (after that the variable rate jumps, recently to 11.74% for cardholders with top credit scores).

Unfortunately, you'll have to pay a fee of 3%, up to a maximum of $99, to transfer that balance - standard practice in the industry.

But many issuers are willing to negotiate a lower fee (or eliminate it altogether) if you have a large balance to transfer and a credit score above 720 or so. They won't publicize that fact, though; you have to call and ask.

Try a little variety

Economists expect savings rates a year from now to be about the same as they are today - or maybe a little lower...or higher.

What's the best way to deal with the confusion? Divide your savings among cash accounts and CDs of varying maturities.

Put some money in a one-year CD to lock in a higher yield (the best of the bunch were recently paying around 5.5%). Keep the rest in six-month CDs (tops in that category: around 5.2%) and money-market funds (recent average: 4.6%) to stay nimble if better deals come along later in the year.

Another good option: short-term bond funds, which offer investors an opportunity for a little price appreciation if interest rates drop, in addition to yield (4.7% recently).

Safety with the prospect of a little pop - that's the right strategy across the board in 2008. Top of page