4 Things To Do After a Credit Card Balance Transfer

Finding yourself in debt is something that no one wants. Unfortunately, 80 percent of American have some form of debt (including a mortgage) and 38 percent find themselves in credit card debt. Debt can cause a strain on a person's life and can cause friction within a marriage.

If you find yourself in credit card debt, then the first thing you need to do is create a plan of attack. You need to eliminate as much of the interest on your debt as possible. This will allow you to pay it down at a much faster pace. One of the best ways to accomplish this is with a credit card balance transfer.

Most balance transfer cards will provide you with zero percent interest for up to 18 months. Depending on the amount of debt you are carrying, this should be a good amount of time to complete your debt repayment.

Once you complete your credit card balance transfer, there are a few things that you need to make sure you do. These will both help to eliminate your current debt and prevent you from falling back into debt in the future.

1. Construct a Budget

It's likely that you got yourself into debt because you didn't have a budget set up. Because of this, you ended up spending more money than you actually made. To solve this problem, you need to sit down and examine your monthly expenditures. Having a better understanding of where your money is going each month will help you plan a reasonable budget that you can stick with.

2. Cut Up Your Balance Transfer Card

Pay close attention to the terms for your balance transfer credit card. Some of them will offer the zero percent interest on both balance transfers and purchases, but that is not always the case. Some cards will actually have no introductory period for purchases. You could be charged interest from day one if you are not careful.

The best solution for this problem is to simply cut up the new balance transfer card when you receive it. The sole purpose of the card is to move your balance so that you can pay down your debt faster. It wasn't to be used for purchases. Stick with cash or your debit card for that.

3. Make a Debt Payment Plan and Stick To It

Once your balance transfer is complete, it's time to make a plan to pay off that debt. Most balance transfer cards come with either 12, 15 or 18 months of zero percent interest on transfers. Let's assume that you have $5,000 of debt and your card has a 15-month introductory period. That means that over the 15 months, you will need to make monthly payments of $333.33 in order to pay off your debt before interest is charged once again.

Set an alarm each month so that you have a constant reminder to make your monthly payment. It's much easier to pay $333.33 once a month than it is to try to catch up with a $999.99 payment if you miss a couple months. Most credit card issuers will even allow you to set up auto-pay each month.

4. Don't Close Your Old Accounts

One of the biggest mistakes people make when getting out of credit card debt is closing old accounts. The reason they do this is to avoid overspending with their cards. The problem, though, is that each credit card that's open has two big advantages – it increases the amount of available credit available, which can improve your debt utilization ratio, and it helps your average credit length.

By closing a credit card, you will lower both of these, which will negatively affect your credit score. Instead of closing the card, just stick it in a dresser drawer so you don't have any temptations.

By following these steps, you will be able to pay off your debt and allow yourself to not get back into the same situation in the future.

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