Many people are struggling with credit card debt, so paying yours off would be a significant accomplishment. This might take months and even years to accomplish. Once you have paid it off, it’s up to you to decide what to do with the money and available credit you now have.
The process of paying off a credit card is a long and grueling one for many people. So, when the balance finally hits zero, you may feel like celebrating. However, while paying off your card is a means for celebration, be wary of treating yourself too much. After all, that may be what got you into the position of having a high credit card balance in the first place.
Now that you do not have to make monthly payments on your credit card balance, that money can be strategically used to help you in other ways. Here are some ways you can use that money each month.
Pay Off Another Credit Card
If you have several credit card balances, it can be quite hard to pay all of them at once. It is, therefore, prudent to first pay one and then use the same money to pay the second, and so on. Also, you can make a huge lump sum payment to your balance each month, which is more effective compared to spreading payments across your debts.
Pay Off Your Mortgage
If you have a mortgage you are paying for, you can speed up the process by diverting some money towards that cause. Furthermore, paying your mortgage on time saves you from incurring interest fees and makes you a homeowner sooner than usual. Also, before you make any payments, check the fine print and see if you will incur any charges if you pay your mortgage sooner than the agreed date.
Put the Money Into a Savings Account
If you do not have any other debts to clear, the next thing you do should be to focus on saving. You can channel the money towards your retirement, emergency fund, kid’s college funds, or even save for your next vacation.
Once you finish paying your debt, set up automatic transfers to put the money into your different savings accounts. This is helpful because once you get used to spending, saving might not come easy.
Decide What to Do With Your Credit Card
Unless you decide to close your account, it will remain open. Paying for a credit card is different from paying for a loan. This is because once you clear your loan, the account will be closed.
So, you will need to decide if you want to continue using the credit card and can do so responsibly. The most important thing is to make sure your account is in good standing order, either way.
If you thought your credit score would go up immediately after paying off your credit card, we might have to disappoint you. As you pay your debt and become consistent in payment, your credit score will improve steadily. To maintain this score, be sure to pay your debts responsibly.
Paying off debt is not a walk in the park, and you should pat yourself on the back for a job well done.