8 Smart Moves to Make After You Pay Off Your Credit Card

It wasn’t easy. You budgeted, saved, and budgeted some more. You didn’t give up, even when you felt discouraged. It may have taken months. Or years. Some days, it seemed impossible.

But you finally did it: You paid off your credit card.

So, now what? What do you do with the extra hundred or so dollars you won’t be sending to your credit card lender? Should you change your budget? How can you make sure that you don’t end up battling debt problems in the future?

Not sure what to do now that you’re free of credit card debt? Here are some ideas that will help you stay out of debt and build on the good money habits that helped you achieve that zero balance:

Don’t close your card. I know, it’s super-tempting to just cancel your card the minute you pay it off – but resist the temptation. Your pool of available credit is one of many factors that determine your credit score. When you close a card, that pool gets smaller, and that can have a negative effect on your credit score. Instead of closing your card, leave it open and simply avoid keeping it in your wallet – that will help cut down on unplanned spending without affecting your available credit.
Use your card – sparingly! Yes, you read that right. Responsible credit card use is a critical component of a good credit score. Try using your card to auto-pay for a small, recurring monthly bill, like your Netflix account, or something similar. Just make sure you pay it off in full every month.
Celebrate! Paying off a credit card is a really big deal. Treat yourself to a nice dinner at your favorite restaurant or a small, splurge-y purchase that you wouldn’t normally buy. Just remember to pay cash.
Start setting new financial goals. You’ve made it a priority to pay down your debt – and your hard work has paid off. Now, it’s time to set the next goal. Do you want to bulk up your retirement finds? Save for a family vacation or a project around the house? Put away some cash for the kids’ college fund? Pick a goal and start planning!
Check your credit report. Everyone is entitled to one free credit report per year from the “big three” reporting agencies, Experian, TransUnion, and Equifax. Now is the perfect time to get yours. Review your reports and be on the lookout for any information that is out of date, or any charges that look unfamiliar or suspicious. You can get your free credit report here. And beware of any site that requires you to pay a fee or provide your credit card info – you never have to pay for your annual report.

Identify your spending weaknesses and/or triggers. Some people shop when they’re feeling stressed out or anxious; others give in to pressure from financial frenemies. Some people are suckers for online shopping and can’t pass up sales emails. If you want to make sure that you don’t end up back in debt, you’ll need to know what compels you to spend – and how to avoid going back to old behaviors.
Review your budget. Budgets are meant to be adjustable – and it’s especially important to revisit your budget after a major financial change. In addition to figuring out what to do with the extra money you’ll have each month, consider looking for additional ways to cut costs – can you cut the cord on your cable TV or landline phone service? Cancel that unused gym membership? Pare down your grocery bill?
Beef up your emergency fund. When you’re drowning in debt, your emergency fund is often one of the first things to fall by the wayside. Now that you’re out of debt, you can start putting aside some extra money to help you cover the cost of unexpected expenses. Choose an amount that you can afford, and consider setting up a monthly automatic transfer into a dedicated savings account.

And don’t forget to give yourself a well-deserved pat on the back! Paying off debt is not easy, and it took you a lot of work and dedication to get there! Now that you’re debt-free, you can work on planning for the future and enjoying the freedom that comes from having a zero balance. Enjoy!

Struggling to pay off high-interest credit card debt? Looking for strategies to put you on the path to a debt-free future? Remember, you can always reach out to Debt Guru for more advice credit cards, debt, and budgeting. Contact the Debt Guru team today for a free credit card debt relief consultation.