After you complete a balance transfer, it's essential to follow some guidelines so you can ensure you pay off debt within the introductory 0% APR period. Transferring a balance is only the first step toward becoming debt-free. You'll need to make consistent, sizeable payments and avoid overspending to rid yourself of debt once and for all.
If you haven't yet completed your balance transfer, consider some of the best balance transfer credit cards, such as the Citi Simplicity® Card with a 0% APR for the first 21 months on balance transfers from date of first transfer and 0% APR for the first 12 months on purchases from date of account opening (after, 19.24% - 29.99% variable APR; see rates and fees). Balance transfers must be completed within four months of account opening. You'll pay an introductory balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Select spoke with two financial experts who shared some best practices you can follow once your balance transfer is complete.
1. Confirm your old card has a $0 balance
Once you transfer a balance to a new credit card, you might assume that your old card has a $0 balance, but it may not.
"Make sure no last-minute interest or fees hit your old credit card that you transferred the balance from. You'll want to monitor that card for a month or two, ensuring you have a $0 balance," Priya Malani, founder and CEO of Stash Wealth, tells Select.
This is known as residual interest, which accrues in the time between when your bill was sent and when your transfer was made. Keep an eye on your old card for a couple of months to confirm there's no balance.
2. Set up autopay for more than the minimum due
"Sign up for autopay to ensure you always make payments on time and commit to paying in full when you can," Farnoosh Torabi, financial expert and host of the podcast So Money, tells Select.
Autopay is a helpful feature provided by most credit cards that allows you to schedule payments for any amount. Set up autopay for at least the minimum due, but ideally more than the typical $25 or $35 minimum payment.
"If possible, calculate the exact amount you need to pay every month to have the balance paid off before the 0% teaser rate ends and set up a monthly (or biweekly) automation for that amount," Malani says.
For example, if you transfer a $3,000 balance to a card with no interest for 15 months, simply divide your $3,000 balance by the length of your intro period (15 months). You'll find you need to pay $200 a month to ensure your balance is $0 before the intro period ends, assuming you don't make any new charges on the card.
3. Cut costs where possible
When you're paying off a balance, it's key to avoid racking up unnecessary charges that can further add to your debt.
"Establish spending thresholds for different expense categories whereby you know you can pay off the balance comfortably. It may also help to detach your credit card from subscription websites or other services that automatically charge you, since you can easily overspend." Torabi says.
You can allot money first for fixed expenses, such as rent, car payments, gas, groceries and debt payments, then unfixed expenses, such as gym memberships and dining out.
4. Use a different card for new charges
"Do not put any new charges on the card with the transferred balance while you're paying the balance down," Malani says.
Instead of using your balance transfer card for new purchases, Malani recommends you use a different credit card and preferably one without a balance. Consider a rewards card, such as the American Express® Gold Card, or a cash-back card, such as the Citi Double Cash® Card. (see rates and fees.) Terms apply.
"Pay the card off in full and on time every single month. If you don't trust yourself, use a debit card," Malani says.
5. Have a backup plan
Make sure you have a backup plan in place in case you have a lingering balance after the intro period ends. The post-intro period APR can be quite high, which may cancel out any benefits of completing a balance transfer.
"You could transfer the balance to a new 0% card when the intro period ends, or consider a personal loan," Malani says.
Check out our lists of the best balance transfer credit cards and best no-fee balance transfer credit cards for alternative options.
