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 0.39%
$10K MMA 0.35%
6 month CD 0.39%
1 yr CD 0.72%
5 yr CD 1.50%

Find personalized rates:
 

Rates provided by Bankrate.com.

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 annualcreditreport.com). 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

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.