Your Post–Balance Transfer Checklist

So you’ve decided to take charge of your financial health and transfer your high-interest debt to a new low-interest credit card. The balance transfer was completed—all done, right?

Not quite! Capitalize on the lower interest rate by taking the following smart-money steps:

1. Make a payment plan 
   Transferring your debt from a high-interest credit card to a low-interest option is a great first step. To bank those interest savings, you need to tighten up your budget and start paying down your debt. Unless you have higher interest debt elsewhere, your goal should be to pay off the balance on your new card as quickly as possible.
   
   
2. Hop on the autopay train
   Now that you've committed to paying down your debt and have made an action plan, the last thing you’d want to do is rack up late payment fees. Stay on top of your payments by setting up automatic bill pay on day one. Use a credit card payoff calculator to determine how much you need to pay each month to meet your goal.
   
   
3. Use promotions to your advantage
   Introductory APRs—Some financial institutions offer a lower annual percentage rate (APR) on their credit cards during a promotional period—usually the first six to eighteen months after you transfer a balance. If you take advantage of an introductory APR, be sure to keep track of when it ends, signaling the switch to a higher rate. If possible, make a goal to pay off your balance before the promo period ends. Set calendar reminders to track your progress.
   
   Cash bonuses—Keep an eye out for cash bonuses, which are usually calculated as a percentage of the balance you transfer. Immediately apply that money to the balance on your new card, and you're one step closer to being debt free!
   
   
4. Don't close old accounts
   As satisfying as it may be to end the relationship with your high-interest lender, resist the urge to close old accounts. Why? Credit utilization. Simply put, this is how much of the total credit available to you that you are currently using.
   
   "Credit utilization is a major factor in calculating your credit score," explains Jonathan Brouse, vice president of direct consumer lending at Mountain America Credit Union. "So, keeping a credit card account open—even if you don't use it very often—can help you keep your utilization number low, which can translate to a higher credit score." Ideally, you should try to keep that number below 30%.
   
   For example, if you have three credit cards, each with a credit limit of $5,000, you have a total credit line of $15,000. If your total balance among all three cards is $4,000, your credit utilization would be 26%—right in the ideal range! But if you close one of those credit cards, your utilization goes up to 40%. This could have a negative effect on your credit score.
   
   
5. Read the fine print
   You may assume your promotional interest rate applies to new purchases as well as transferred debt. Beware! Many financial institutions only apply that stellar APR to the transferred balance. New purchases then accrue interest at a much higher rate. Some lenders may also require you to pay off the entire transferred balance before you can allocate payments to new debt. Check the terms and conditions for your new card before you swipe or tap!
   

If you’re in the market for a new credit card, consider Mountain America. We have three options, and one is sure to fit your lifestyle. Choose from Low Rate, Rewards and Cash Back credit cards. Apply today online, through the app, over the phone or in a branch.