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What to do after transferring a balance to a new credit card: 3 important steps

Tips for Maximizing a Balance Transfer Credit Card’s Interest-Free Period

The 2023 Consumer Credit Card Report from the Consumer Financial Protection Bureau revealed some alarming statistics about credit card debt. According to the report, 82% of the debt held by major credit card issuers is revolving, meaning it is carried over from month to month. Additionally, 1 in 10 personal credit card accounts are charged more in interest and fees than is paid toward the principal each year.

For individuals struggling with high interest rates on their credit card debt, a balance transfer credit card may offer some relief. By transferring debt to a card with a 0% APR promotion, consumers can avoid paying interest for a certain period, which can be as long as 21 months.

However, simply transferring the debt is not enough. To make the most of a balance transfer credit card’s interest-free period, individuals need to have a plan in place to pay off the debt before the promotional period ends. Here are three tips to help maximize the benefits of a balance transfer credit card:

1. Calculate your monthly payment: Determine the amount you need to pay each month to eliminate the debt before the 0% APR period expires. Be sure to consider any upfront balance transfer fees that may apply.

2. Prioritize debts: Decide which debts to pay off first, considering factors like interest rates and potential future rate increases. Focus on eliminating high-interest debts first, especially those with variable rates.

3. Have a Plan B: Be prepared for unexpected events that may impact your ability to pay off the debt before the promotional period ends. Consider options like transferring the remaining balance again, asking for a lower interest rate, or seeking help from a nonprofit credit counseling service.

Overall, using a balance transfer credit card can be a valuable tool in managing credit card debt, but it requires careful planning and discipline to be effective. By following these tips, individuals can make the most of the interest-free period and work towards becoming debt-free.

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