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Your Post-Balance Transfer Checklist

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So you’ve decided to take charge of your financial health and transfer your high-interest debt to a new low (or no) interest credit card. The balance transfer was completed—all done, right?

Not quite! Capitalize on your low-interest grace period by taking the following smart-money steps:

Make a payment plan 
Transferring your debt from one card to a low-interest option is a great first step. In order to bank those interest savings, you need to firm up your budget and start paying off debt! Unless you have higher interest debt elsewhere, your goal should be to zero out your balance before the annual percentage rate (APR) on your new card increases.

Hop on the autopay train
If you have trouble making your payments on time, the last thing you’d want after transferring your debt is to get hit with late payment fees that eat up your account balance. Set up automatic bill pay on day one and check that hassle off your list. Use a credit card payoff calculator, like this one from Mountain America Credit Union, to determine how much you need to pay each month to meet your goal.

Track your transfer rate expiration
All good things eventually come to an end, and your transfer rate is no exception. Most promotional rates increase within 6 months to a year of sign up—reassess your plan regularly to stay on target. Be aware of the promotional period expiration, tighten up weak areas in your budget and set calendar reminders to track your progress.

Don't close old accounts
As cathartic as it may be to end the relationship with your high-interest lender, resist the urge to close old accounts. Why? Financial expert Jade Beckman, vice president consumer loans at Mountain America Credit Union explains, “Credit utilization, or your percentage of credit used versus your total credit available, is a major factor in calculating your credit score. A lower utilization percentage can add up to a higher credit score, and transferring your debt to a new card reduces your overall percentage.” So keep those unused lines of credit open, but feel free to celebrate that upcoming credit boost by cutting up your old card—with relish.

Read the fine print
You might think that new promotional interest rate applies to new purchases as well as transferred debt. But buyer beware! Many balance transfer credit cards only apply that stellar APR to the transferred balance. New purchases then collect interest at a different, much higher rate.  Worse yet, some lenders may require you to pay off the entire transferred balance before you can allocate payments to new debt. Check your new card's rules prior to swiping for ongoing spending, and use a card with no balance to make your paid-in-full monthly purchases.

If you’re in the market for a new credit card, check with Mountain America. We have three options and one is sure to fit your lifestyle. Choose from low rate, rewards or cash back. Apply today online, through the app, over the phone or in a branch.

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